Time to bring on the referee? The Government's proposed Adjudicator for the Groceries Code - Business, Innovation and Skills Committee Contents

6  Advice and guidance by the Adjudicator

What the draft Bill provides for

127. Clauses 12 and 13 allow the Adjudicator to give advice on matters relating to the Code to suppliers or large retailers and to give guidance on various matters including the criteria to be used in deciding whether to carry out investigations and the application of the Code. Clause 14 allows the Adjudicator to recommend that the Office of Fair Trading consider changes to the Code.


128. The Department provided some helpful examples of the types of advice that the Adjudicator might usefully provide under Clause 12; for instance on the interpretation of terms such as "ordinary commercial pressures" and "fair and lawful dealing". It explained:

We see the power for the Adjudicator to give advice as helpful to the Government's broad objective of compliance with the Code. In particular, advice which encourages retailers to comply may be very cost effective, if it secures that objective whilst avoiding the much more substantial time and cost involved in investigations or arbitrations.[102]

129. The Co-op was exercised about the provisions relating to advice and guidance generally:

The Co-operative Group is unconvinced that it will be necessary for the Adjudicator to publish further guidance beyond that which covers the conduct of investigations (Clause 13 (1)) or to give advice on any GSCOP-related matter to suppliers or large retailers (Article 12). This will only increase costs unnecessarily given the presumed sophistication of the large retailer population, and we had not foreseen the Adjudicator constituting a "free advice" centre for suppliers who will be perfectly able to take advice on GSCOP from other sources at their own cost.[103]

130. In its response to the 2010 consultation, the Co-op was similarly concerned about the risk of the more delinquent retailers free-riding on the back of advice to retailers with good compliance records.[104] The Department's examples should go some way to allaying these concerns. In our opinion—subject to appropriate safeguards—access to advice from the Adjudicator might be a useful and cost effective recourse for all parties.


131. The British Retail Consortium wanted more immediate clarity around Clause 13 guidance:

Clause 13 sets out the need for guidance but we believe it should be more explicit. It should set out the thresholds that would need to be met before the Adjudicator undertakes an investigation.[105]

132. Sainsbury's set out some possible parameters:

We would want to see any guidance set a high bar before investigations are initiated, such as evidence of consistent breaches of the Code or a settled pattern of behaviour contrary to the Code, and should be clear about what will not be investigated as well as what will be.[106]

133. Asda went further, arguing that the absence of greater detail in the Bill would prevent appropriate parliamentary scrutiny:

The Bill proposes what is in effect a criminal offence with penalties, yet the draft Bill does not detail the investigatory framework and this will, therefore, prevent parliament scrutinising an important element of the legislation. This is not consistent with the Government's own principles for better regulation, and increases the prospect of regulatory creep from the original intention of such a body.[107]

134. One of the main issues on guidance was timing, because the Adjudicator will have to publish guidance before he or she can undertake any investigations, and the Government has taken the view that primarily the Adjudicator should determine its own guidance. Clause 13(5) sets a maximum timetable for this of six months from the day on which the Adjudicator's office is established, but this means that if the Bill is not brought fully into force until 2013, the first investigations might not begin until 2014.

135. When the Bill Team was asked whether there was a way to shorten the process, they responded that the six month period was a maximum and that an Adjudicator might already be appointed after Second Reading, commenting, "If we manage things smartly, it need not be sequential in the way that you suggest."[108] They suggested that the OFT and the Competition Commission could provide precedents. They also referred to the possible early appointment of an "Adjudicator designate" as a way to expedite matters.[109]

136. The Minister told us at some length why it would be difficult to shorten the process.[110] He estimated that as the earliest the Adjudicator could start on guidance would be within 3 months of formation, the 6 months maximum period provided for in the draft Bill would represent only a 3 month additional delay.[111]

137. We are not convinced by the argument put forward by the Government. To provide the Adjudicator with some preliminary precedents and parameters for guidance, based on the extensive views expressed in this inquiry and in the 2010 consultation, would in our view not be inconsistent with preserving the Adjudicator's freedom to determine the ultimate content of the guidance. The Department should manage things as smartly as they suggested they could.

138. The Adjudicator's guidance will need to take full account of the views of those who have a stake in making the office successful, fair and efficient, and reviewing the guidance will be an important part of the first overall review of the Adjudicator's efficacy. That should help address the concerns that Parliament will not have seen the guidance before enactment.

139. Work should commence now on determining suitable precedents and parameters for guidance, so that once the Adjudicator is appointed there is minimum delay in finalising the guidance and opening for business.

102   Ev 90 Back

103   Ev 71 Back

104   Response to consultation, 14.4 Back

105   Ev 63 Back

106   Ev 84 Back

107   Ev 58 Back

108   Q 48 Back

109   Ibid. Back

110   Q 336 Back

111   IbidBack

previous page contents next page

© Parliamentary copyright 2011
Prepared 28 July 2011