IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/930.html
   My bibliography  Save this paper

Beer - the ties that bind

Author

Listed:
  • Waterson, Michael

    (Department of Economics, University of Warwick)

Abstract

It started with the Beer Orders (1989). A watershed decision was made by the Law Lords in July 2006. For one man, Bernie Crehan, this was the culmination of a 15 year episode in the pub trade, in which he has made legal history as the first UK case of damages for breach of competition law being awarded by a court. Possibly hundreds of other cases hung on their Lordships’ decision and Nomura, the Japanese bank that took over the chain called Inntrepreneur, had a total potential liability of £100m. And it all concerns Article 81, vertical agreements, and the price of a pint of beer. In 1989, the UK Monopolies and Mergers Commission published its lengthy and longawaited report on Beer. The Commission “…recommended measures that eventually led brewers to divest themselves of 14000 public houses. The MMC claimed that their recommendations would lower retail prices and increase consumer choice. There is considerable doubt, however, that their objectives were achieved.” (Slade, 1998, p565). In their report, the MMC noted rising real prices of beer and seized upon the power of the then big six brewers exercised through their considerable tied estates as being a prime motor. Consequently, they recommended that the ties be substantially cut. At that stage, the MMC (unlike the present day Competition Commission) did not determine remedies and it was left to the Department of Trade and Industry (DTI) to formulate the remedies (the Beer Orders) and the Office of Fair Trading (OFT) to supervise their implementation. Thus the OFT found itself implementing the Beer Orders in the face of a brewing industry determined to fight back.

Suggested Citation

  • Waterson, Michael, 2010. "Beer - the ties that bind," The Warwick Economics Research Paper Series (TWERPS) 930, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:930
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2010/twerp_930.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. G.F. Mathewson & R.A. Winter, 1984. "An Economic Theory of Vertical Restraints," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 27-38, Spring.
    2. Bonanno, Giacomo & Vickers, John, 1988. "Vertical Separation," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 257-265, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oystein Foros & Hans Jarle Kind & Greg Shaffer, 2007. "Resale Price Maintenance and Restrictions on Dominant Firm and Industry-Wide Adoption," CESifo Working Paper Series 2032, CESifo.
    2. Babur De los Santos & Matthijs R. Wildenbeest, 2017. "E-book pricing and vertical restraints," Quantitative Marketing and Economics (QME), Springer, vol. 15(2), pages 85-122, June.
    3. Kai-Uwe Kuhn, 1997. "Nonlinear Pricing in Vertically Related Duopolies," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 37-62, Spring.
    4. Fumagalli, Chiara & Motta, Massimo, 2001. "Upstream mergers, downstream mergers, and secret vertical contracts," Research in Economics, Elsevier, vol. 55(3), pages 275-289, September.
    5. Gratz, Linda & Reisinger, Markus, 2013. "On the competition enhancing effects of exclusive dealing contracts," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 429-437.
    6. Foros, Øystein & Kind, Hans Jarle & Shaffer, Greg, 2015. "Apple's Agency Model and the Role of Resale Price Maintenance," Discussion Papers 2015/32, Norwegian School of Economics, Department of Business and Management Science.
    7. Milliou, Chrysovalantou & Petrakis, Emmanuel & Vettas, Nikolaos, 2003. "Endogenous Contracts Under Bargaining in Competing Vertical Chains," CEPR Discussion Papers 3976, C.E.P.R. Discussion Papers.
    8. Saggi, Kamal & Vettas, Nikolaos, 2002. "On intrabrand and interbrand competition: The strategic role of fees and royalties," European Economic Review, Elsevier, vol. 46(1), pages 189-200, January.
    9. Oystein Foros & Hans Jarle Kind & Greg Shaffer, 2013. "Turning the Page on Business Formats for Digital Platforms: Does Apple's Agency Model Soften Competition?," CESifo Working Paper Series 4362, CESifo.
    10. Hunold, Matthias, 2020. "Manufacturer Cartels and Resale Price Maintenance," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224645, Verein für Socialpolitik / German Economic Association.
    11. Barreda, Ivan & Georgantzis, Nikolaos, 2002. "Regulating vertical relations in the presence of retailer differentiation costs," International Review of Law and Economics, Elsevier, vol. 22(3), pages 227-256, September.
    12. Choi, Kangsik & Lee, DongJoon, 2017. "Welfare-improving vertical separation with network externality," Economics Letters, Elsevier, vol. 151(C), pages 115-118.
    13. Alain Bayet & Fabienne Rosenwald, 1997. "Relations verticales, intégration et barrières à l'entrée," Annals of Economics and Statistics, GENES, issue 48, pages 227-251.
    14. Patrick Rey & Joseph Stiglitz, 1995. "The Role of Exclusive Territories in Producers' Competition," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 431-451, Autumn.
    15. Salvatore Piccolo & Markus Reisinger, 2011. "Exclusive Territories and Manufacturers' Collusion," Management Science, INFORMS, vol. 57(7), pages 1250-1266, July.
    16. Etro, Federico, 2016. "Research in economics and industrial organization," Research in Economics, Elsevier, vol. 70(4), pages 511-517.
    17. Howard Marvel & James Peck, 2000. "Vertical Control, Retail Inventories & Product Variety," Working Papers 00-09, Ohio State University, Department of Economics.
    18. Cooper, James C. & Froeb, Luke M. & O'Brien, Dan & Vita, Michael G., 2005. "Vertical antitrust policy as a problem of inference," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 639-664, September.
    19. Irmen, Andreas, 1998. "Precommitment in Competing Vertical Chains," Journal of Economic Surveys, Wiley Blackwell, vol. 12(4), pages 333-359, September.
    20. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:930. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.