Whitbread Info
Compliance with MMC Orders Dominating the Early 1990s
The year 1989 was also important because it was the year that Whitbread began to plan for its compliance with new rules on tied houses set down by the British government's Monopolies and Mergers Commission (MMC). After an investigation into the system of tied houses that had been created from the numerous mergers in the brewing industry in the 1960s and 1970s, in early 1990 the MMC ordered brewers with more than 2,000 pubs to sell or lease half of the number greater than 2,000, meaning that Whitbread would have to do so with about 2,300 pubs. The MMC gave brewers a November 1, 1992, deadline to comply. Meanwhile, Peter Jarvis, who had joined Whitbread from Unilever in 1976, took over as chief executive in 1990. Later, in August 1992, Michael Angus, chairman of The Boots Company PLC and former chairman of Unilever, became chairman of Whitbread as well, taking over from Samuel Whitbread, who remained on the board as a nonexecutive director. This management team--noticeably minus a Whitbread for the first time in the company's 250-year history--led the company through the MMC compliance process.
Following the issue of the MMC orders, Whitbread first pulled its pubs out of its brewery division. It then sold about 1,300 of them by the deadline, and leased the remaining 1,000 on a short-term basis. At the time the United Kingdom had too many pubs, and property values had fallen sharply since the boom years of the early 1980s. Consequently, Whitbread's profits took a large hit from the forced sales and squeezed its plans to expand its retail activities. A plan for Whitbread to take the Pizza Hut chain into continental Europe fell apart when the company could not afford to commit the initial £100 million needed.
A further consequence of the MMC orders was that Whitbread had to untangle itself from its complicated system of cross-holdings in regional brewers--held through Whitbread Investment Company--that it had
The year 1989 was also important because it was the year that Whitbread began to plan for its compliance with new rules on tied houses set down by the British government's Monopolies and Mergers Commission (MMC). After an investigation into the system of tied houses that had been created from the numerous mergers in the brewing industry in the 1960s and 1970s, in early 1990 the MMC ordered brewers with more than 2,000 pubs to sell or lease half of the number greater than 2,000, meaning that Whitbread would have to do so with about 2,300 pubs. The MMC gave brewers a November 1, 1992, deadline to comply. Meanwhile, Peter Jarvis, who had joined Whitbread from Unilever in 1976, took over as chief executive in 1990. Later, in August 1992, Michael Angus, chairman of The Boots Company PLC and former chairman of Unilever, became chairman of Whitbread as well, taking over from Samuel Whitbread, who remained on the board as a nonexecutive director. This management team--noticeably minus a Whitbread for the first time in the company's 250-year history--led the company through the MMC compliance process.
Following the issue of the MMC orders, Whitbread first pulled its pubs out of its brewery division. It then sold about 1,300 of them by the deadline, and leased the remaining 1,000 on a short-term basis. At the time the United Kingdom had too many pubs, and property values had fallen sharply since the boom years of the early 1980s. Consequently, Whitbread's profits took a large hit from the forced sales and squeezed its plans to expand its retail activities. A plan for Whitbread to take the Pizza Hut chain into continental Europe fell apart when the company could not afford to commit the initial £100 million needed.
A further consequence of the MMC orders was that Whitbread had to untangle itself from its complicated system of cross-holdings in regional brewers--held through Whitbread Investment Company--that it had