Groceries Code Adjudicator Bill [Lords]

Debate between Justin Tomlinson and James Paice

Tuesday 26th February 2013 Commons Chamber

[Sir James Paice]

I listened carefully to what was said by my hon. Friend the Member for Shipley (Philip Davies). I fully accept the logic of saying that there are some very large food producers in the world whose market dominance is such that they do not need the protection of the Bill. However, I think that a careful reading of it demonstrates that it will ensure that the instances cited by my hon. Friend will not actually come to pass. I remind him of my earlier point—which was endorsed, in different terms, by the hon. Member for Ogmore (Huw Irranca-Davies)—that this was purely about the groceries code adjudicator. Many of the businesses listed by my hon. Friend may be only partly involved in groceries. For instance, a number of the products of Procter & Gamble, about which he spoke at length, are not grocery products. Moreover, the trading arms of big multinational conglomerates are likely, as individual suppliers, to be much smaller organisations.

Let me now deal with a point of principle raised by my hon. Friend. He sought to pour scorn on those of us who are also Conservative Members, but who support the Bill. He said that he was entirely in favour of a free market. I too am in favour of a free market, but I also believe in a fair market. If we took the definition of a free market to its extreme, which my hon. Friend came close to doing, we would end up with a single retailer and a single supplier, because that it is the eventual aim. The game of Monopoly is the arch-example of a total, unfettered free enterprise. I strongly believe, not that markets must be regulated, but that when there is a clear imbalance in a market, some element of fairness is necessary. I remind my hon. Friend that one of the great market philosophers, Adam Smith, said that a true market was one in which there were equal numbers of suppliers and purchasers.

[Justin Tomlinson]

That is the point of new clause 2. It would focus time, resources and attention on the suppliers whom we need to protect in order to ensure that there is no monopoly from their point of view.

[Sir James Paice]

I will come to that specific point, but let me first deal with the more philosophical point raised by my hon. Friend the Member for Shipley, who made it clear that he did not consider those of us who share these Benches with him to be true Conservatives if we supported the Bill. I wish to rebut that view. The Bill is necessary because—as has just been suggested by my hon. Friend the Member for North Swindon (Justin Tomlinson)—notwithstanding what was said by my hon. Friend the Member for Shipley, there are plenty of examples of supermarkets exceeding what I believe to be fair terms of trade.

During my time as a Minister, I had a number of meetings with supermarket chief executives, either alone or in a group. Most of them—and, indeed, other senior directors and officials from supermarkets—would argue, as has my hon. Friend the Member for Shipley, that there is no need for the Bill, and that they are already doing everything fairly, above board and properly. I can only conclude that many chief executives do not know what is being done in their names by people operating much further down the chain. Reference has been made to buyers. Since the code was introduced in 2010, there have been numerous examples, some quite recent, of suppliers being verbally required by supermarkets to use a nominated haulier, even though the supplier may be able to find an equally good and competent haulier to do the job for less money. There are also examples of supermarkets seeing that a supplier has made a certain amount of profit in one year, but instead of saying to them, “We think you’re being excessive and therefore we should pay you slightly less for your product next year,” which we could all accept, they say they want a cheque now—today—for £1.5 million or more before they will even consider doing business with that supplier next year. That is not acceptable; it is not a moral way of doing business, which is why I strongly believe the supermarkets need to be investigated. The debate has understandably ranged over a number of different types of commodities, but the most glaring examples of these practices have been in the fresh produce sector.

My hon. Friend also said that having a supermarket adjudicator would be a waste of time if it turned out that he had nothing to do. My attitude is different. I would be delighted if the adjudicator had nothing to do, because it would demonstrate that everything was being done in accordance with the code and that all suppliers were being treated fairly—although I have to tell my hon. Friend that I do not believe there is any chance whatever of that being the case. Indeed, a number of cases are already being brought forward for the adjudicator to deal with, and I have described a couple of them. I think the threat of such action may well prove to be the answer to our problems, but it is wrong to suggest that there is no need for an adjudicator on the basis that the code is in place, as it is clearly not enforceable through the Office of Fair Trading.

My hon. Friend also seems to ignore the point made by my hon. Friend the Member for St Ives (Andrew George). The Competition Commission’s reason for all this was to look after the consumer. The whole thrust of its argument was that shifting risk from the retailer to the supplier was putting the long-term interests of the consumer at risk, with the result that while items may be cheaper today, they may be far more expensive in future, or the supply chain may no longer exist. That is not in the long-term interests of the consumer.