Groceries Code Adjudicator Bill [HL]

Baroness Byford Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Baroness Byford]

My Lords, I am happy to follow other noble Lords in saying how much I welcome the Bill. I remind the House of my family’s farming interest. Indeed, we used to supply pigs to Waitrose but we no longer have them. Many suppliers have good working relationships with supermarkets. I would hate anybody reading this debate to think that that was not true. However, there are circumstances in which those relationships break down and are abused. Therefore, it is right that the Government have quickly brought forward this Bill.

The Bill has been eagerly awaited for months by many hardworking and dedicated food producers. They feel, rightly or wrongly, that large retailers make a significant portion of their considerable profits by browbeating smaller suppliers into paying for a variety of selling techniques used in the stores, by failing to honour orders they have placed and by altering purchase prices downwards without notice.

As others have said, the groceries code was established by the 2009 groceries supply order, which itself arose from work carried out by the Competition Commission between 2001 and 2008, so the measure has been a long time in gestation. That at least tells us that the allegations made by producers have some validity and that the issue has been “live” for a long time.

I am hopeful that the role of the adjudicator will be self-limiting and that eventually he or she will not be needed. Either it will be found that the large retailers have reorganised and trained their staff to observe the code so that there is no longer a problem or the adjudicator and his staff will rapidly ensure that such reorganisation, training and observance will become the established way of working.

The EFRA Select Committee sent seven recommendations to the BIS committee, four of which I have highlighted as the Government have listened and taken them on board. First, the ability of suppliers to make anonymous complaints is fundamental to the success of the groceries code adjudicator. Secondly, the adjudicator should have the power to launch proactive investigations. Thirdly, third parties such as trade organisations should be able to make complaints to the adjudicator on behalf of suppliers, but appropriate restrictions would need to be included in these provisions so that they are not abused. Fourthly, the adjudicator should have the power to levy financial penalties without the need for an order from the Secretary of State. I am grateful that the Government have taken on board some of these recommendations but we shall return to these issues in Committee.

I wonder whether it is just me but I was struck by the rather “folksy” way in which the contents of the Bill are set out. That worries me. Why are the headings between each clause in the form of questions? For example, the question: “How does the Adjudicator arbitrate disputes?” appears before Clauses 2 to 13. The question: “What are the Adjudicator’s reporting requirements?” appears before Clause 14. Other questions follow in the same vein. For example, “Will this law mean other changes to the law?” appears before Clause 21. I hope that when she responds, my noble friend will say that this approach will not give the impression that the Bill, as law, is open to doubt or dispute. It is unusual. Having dealt with many Bills over the years, I found it slightly strange.

I must reinforce what other noble Lords have said on the need for the Bill. Over the years there has been a real climate of fear among some suppliers. I am very grateful that the Government have recognised this and are enabling third parties to bring forward evidence. It is impossible for suppliers to do this themselves because they feel cut off at the knees and there is nowhere else to go. They run the risk of losing a contract—even one that has been reduced—and probably not getting it again in the future.

There have been few changes from the draft Bill and most of my detailed questions will come up in Committee. However, I feel that there are—or may be—issues of principle involved in the significance of some of the alterations as well as in the basic content. The Minister may therefore wish to comment on the following points. In the draft Bill there was a clause titled “Investigations: information” which introduced Schedule 2—then titled “Investigation Powers”. In this Bill, the clause has gone and Schedule 2—now titled “Information Powers”—is first introduced through Clause 4, “Investigations”. These are significant changes in terms of the detail of the work the adjudicator will be empowered to do. I would be grateful for some clarification.

The nature of the adjudicator’s staff is vague, with a reference in Schedule 1 to,

“staff working for the Adjudicator”.

Schedule 1 also states that the Office of Fair Trading,

“may provide staff, premises, facilities or other assistance … (with or without charge)”.

There is also reference to a “Deputy Adjudicator” and “acting Deputy Adjudicators”. All of this seems to indicate a very small establishment and yet the adjudicator is charged, under paragraph 15 of Schedule 1, with keeping proper accounts, with preparing an annual report, under Clause 14, and with receiving both financial penalties and costs. Will the Minister supply more detail on the adjudicator’s establishment?

Clause 15 held my attention for some time. There is a potential imbalance between the large retailers, all of which have to be consulted by the Secretary of State, and those representing the interests of the suppliers, where he is required to consult only one. How does the Secretary of State intend to proceed with such consultations? Will the Minister also expand on the reasons for and the intention of the introduction of a new Section 4A, to which other noble Lords have referred, by Clause 15(10) of the Bill?

Clause 18 allows for the disclosure of confidential information,

“for the purpose of an EU obligation”.

I am not the only one to have referred to this. Who will decide what is obligatory and how and when will this decision be communicated to the adjudicator?

I do not wish to go into any greater detail at this stage, but there are some basic questions to which responses from the Minister would be enormously helpful. All of us welcome the Bill. We want to see fair trade for UK producers and overseas producers. We also want to make sure that financial penalties do have an effect on the way in which those who do not currently honour the code will in future honour it.