Heineken’s pub chain is to be investigated over claims it imposed unfair terms on publicans who tried to cut the “beer tie”, a centuries-old arrangement under which they must buy beer from the owner of their premises.

The Pubs Code Adjudicator, which has been criticised for a supine attitude towards deep-pocketed pub companies, has launched its first investigation, examining the behaviour of the Heineken-owned Star Pubs & Bars.

The deputy adjudicator Fiona Dickie said Star’s alleged business practices may have disadvantaged publicans and could have raised the price of a pint for consumers.

If the PCA finds against Heineken, the Dutch beer group could be fined up to 1% of UK turnover – about £11m, based on Companies House filings by Heineken UK.

Dickie warned other pub companies that more investigations could follow. There have been widespread allegations by publicans that pub companies are doing everything possible to prevent them escaping the beer tie.

The PCA will look at whether Star, which has 2,700 pubs, tried to impose unfair terms when tenants applied for a “market rent only” [MRO] option, an arrangement designed to help them sever the beer tie but which critics say is ineffective and often has strings attached.

Publicans who rent from Star will be asked whether the company tried to force them to stock only Heineken keg beer, or an unreasonable volume of its brands or other drinks in which it has a financial interest.

Of the 111 MRO offers that Star has made to tenants looking to cut the tie, 40 have gone to arbitration. More applicants are thought to have given up on the process rather than dispute the terms the pub company offered them.

Dickie said: “It is important that Star tenants and other interested parties provide us with information to support this investigation. Their information will help us to determine whether the pubs code has been broken and, if so, what further action should be taken.”

The investigation will cover the period since the introduction in 2016 of the pubs code, which regulates companies with more than 500 establishments, including Admiral Taverns, Ei Group (formerly Enterprise Inns), Greene King, Marston’s and Punch Taverns.

The code, currently the subject of a government review of its effectiveness, is meant to ensure “fair and lawful dealing” by major pub companies and that landlords are not worse off than they would be if they were free of the beer tie.

The MRO section of the code is intended to provide a system under which landlords can escape the tie by negotiating a new agreement with their pub company, with the PCA overseeing an arbitration process.

Publicans have frequently criticised the MRO option for being ineffective and costly, while the PCA has come under fire for not doing enough to uphold its integrity.

Any landlords who submit evidence have until 5 August and will not be identified in the final report.

A Star spokesperson said: “The legislation is clear that as a brewer we have the right to ensure that the pubs we own sell our beer and cider. This reflects the significant ongoing investment we make and the jobs we support in our UK breweries, cideries and supply chain.

“While the principle of the brewers stocking requirement is clear, this part of the new legislation is complex and not clearly defined in the pubs code. We therefore hope that this investigation will provide the certainty and clarity that we have sought repeatedly over the past three years. We will of course cooperate fully with the PCA whilst robustly defending our position.”

‘I did it because I’m stubborn’

Tom Helliwell, the landlord of The Woodman in Highgate, north London, has been instrumental in spurring the Pubs Code Adjudicator’s investigation into Heineken-owned Star Pubs & Bars. He applied to cut his beer tie with Star after it tried to raise his rent during a regular review. Heineken proposed an agreement under which he would have to buy 100% of his keg beer and 60% of his cask ales from Heineken. He refused and went to arbitration with the adjudicator. Star’s second offer was 75% of his keg beer and one out of four cask lines. Again he refused and again he won.

His victory was among the factors that alerted the regulator to suspected breaches of the pubs code. But the tussle took its toll. “My professional fees came to about £130,000,” Helliwell said. “Most publicans earn about £25,000 a year. I just did it because I’m stubborn. The whole point is that they put so many barriers in the way because you’ll lose so much money.”

He thinks The Woodman is up to £150,000 better off per year without the tie to Heineken. “The long-term benefits will be on staff levels, wages, training and, on the back of that, benefit to the customer.”

While he welcomes the PCA’s investigation, he feels the regulator was too weak for too long, pushing for a difficult-to-achieve mutual agreement rather than forcing Star to toe the line.