Groceries Code Adjudicator Bill [HL]

Lord Teverson Excerpts

Tuesday 22nd May 2012 Lords Chamber

[Lord Teverson]

My Lords, I declare an interest in that I chair a modest company that supplies supermarket retailers who will not be affected by the Bill.

I enjoyed the speech of the noble Baroness, Lady Sherlock. She asked why we need an adjudicator. Clause 1 says, in a completely Book of Genesis style:

“There is to be a Groceries Code Adjudicator”.

What more do we need? It then carries on with a rather less biblical “(see Schedule 1)”, but that does not help us much.

I agree in many ways with the noble Lord, Lord Howard of Rising, on his philosophy about the market. However, this is the one area in the UK economy where there is a huge concentration of buyers and a fragmented base of suppliers. The purist answer would be that the supermarket chains should not only be further referred to the Competition Commission but have their market dominance broken up. I do not suggest or advocate that, but it may be the alternative to this. As my noble friend Lady Randerson said, 75% of the groceries market is controlled by five suppliers. That is indeed some market concentration and it is why we need supplier protection in this sector rather than the consumer protection that we have in most others.

As many other noble Lords have said, there has been a gradualism over the past decade. In 2001 the groceries code was invented, if you like; it was written and then put into contracts between suppliers and supermarkets; and now we are moving towards an adjudicator. That is why I, too, think that after 11 years of experimentation we should surely do the deal and go ahead with the fining side as well. For example—again this is not directly applicable—the Financial Services Authority, which is to do with customer protection, is perhaps a mirror image of what we are doing, and one of its great strengths is that it can fine the large organisations with which it deals.

There are many hurdles at the end of the Bill, which states:

“Before making an order, the Secretary of State must consult … the Adjudicator … the Competition Commission … the Office of Fair Trading … the large retailers … one or more persons appearing to the Secretary of State to represent the interests of suppliers … one or more persons appearing to the Secretary of State to represent the interests of consumers; and … any other person the Secretary of State thinks appropriate”.

So we are up to 9 billion at that point. The Government are really saying, “Guys, we are not interested in this at all. We are going to put it in there because we want to give ourselves a backstop, but it is not very applicable”. The Government should be courageous here, move ahead and do it now. That would be a good thing. Having said that, I welcome the fact that the adjudicator can impose costs on both supermarkets and vexatious complainants. That is very good.

I particularly welcome the fact that—although it is not in the Bill, this is a part of what business has been saying—this applies not only to UK suppliers but to world-wide suppliers. That is important, not because I am championing French farmers but because it will stop supermarkets avoiding this obligation by importing even more food. It stops, if you like, regulatory hedging beyond the United Kingdom.

I congratulate the Government on getting on with this. However, it is very important that this is not a supermarket-bashing Bill. I am often surprised to read that supermarkets and multiple retailers have restricted choice to consumers. Frankly, it is because of our retail organisation, our retail management and efficiency in this country that we are able to go out and buy tens of thousands of products, normally within only a few miles of where we live. Having said that, yes, I shop in supermarkets and I am pleased to do so, but I also get a local food box from the Cornish Food Box Company, and I think that is a good balance. I am sure that organisations such as that one will be championing competition with supermarkets as well.