9 Concluding remarks
Possible extension of the Code
168. The 2006-08 Competition Commission study also
looked at supply chain practices not involving retailers. The
Impact Assessment explained the Commission's findings:
The original SCOP was designed to govern the relationship
between retailers and their direct suppliers, not between intermediaries
and primary producers. However, during their investigation, the
CC reviewed some complaints from primary producers and found that
it was not uncommon for processors and other intermediaries, in
discussions with their suppliers (including primary producers),
to attribute particular supply chain practices to direct intervention
or pressure placed on the processor or intermediary by grocery
retailers. The CC was told by grocery retailers that, in many
cases, this attribution was incorrect and that the supply chain
practices were in fact instigated unilaterally by the processor
or intermediary, with no input from the retailer.[139]
169. Andrew Opie of the British Retail Consortium
expanded on the large retailers' view:
I think there is a lack of understanding of the influence
of retailers generally on the supply chain and primary producers.
That extends beyond supply relationships to things like the influence
of global markets and traded commodities, for example. So the
retailers are very high profile; they are large buyers in the
market. Therefore a primary producer tends to think that all of
his product and the price that he is getting for his product is
influenced by retailers.[140]
170. On the question whether GSCOP should be extended
to relations higher up the supply chain, the Department commented:
The Government's current position is that they would
want to see evidence that the GSCOP and the Adjudicator's role
in enforcing compliance with it at the top level is insufficient.
[
] One would expect that, if the Adjudicator supports the
removal of any adverse practices that transfer cost and risk inappropriately
at the top layer, then you also remove the incentive for the direct
supplier to pass that down the chain. [
] [The Government]
wants to see evidence that that does not work-it ought to work-before
considering extending the Code.[141]
171. Fairtrade Foundation favoured an extension of
the Code to the entire UK supply chain, while recognising that
the Competition Commission (on the back of the incomplete evidence)
had recommended only future consideration of such a move.[142]
Importantly, however, Waitrose took the view in oral evidence
that even without any extension of GSCOP an Adjudicator could
improve matters further up the supply chain because indirect suppliers
would for the first time have a right to draw attention to problems
under GSCOP which at present they do not have at all.[143]
Other bodies such as the Food and Drink Federation,[144]
Dairy UK[145] and the
NFU[146] were in similar
vein content to wait and see how adjudication of GSCOP works before
any extension of the Code more broadly, not least because of the
possibility of regulatory creep.
172. The evidence we received suggested that it
would be premature to extend the GSCOP to relations other than
directly with retailers and that the GSCOP in its present form,
duly enforced and administered by an Adjudicator, might well bring
benefits to other elements of the supply chain. However, we believe
that this area should be closely monitored as we suspect that
large retailers may to some extent have been taking the blame
for the practices of certain processors and intermediaries.
Should the Adjudicator distinguish
between different sizes of supplier?
173. A number of bodies argued in favour of restricting
the size of supplier that could complain to the Adjudicator.[147]
174. The Minister told us that he did not think this
an appropriate course of action:
I think you would get yourselves into a lot of problems
and indeed the Competition Commission did not recommend itif
you were to limit the scope of the GSCOP and the GCA just to small
producers and suppliers. I think that would be unnecessarily
complicated. You may well be right that some of the big suppliers
can take care of themselves, but I think if we had tried to somehow
arbitrarily find some boundary between small suppliers and large
suppliers, we would have tied ourselves up in knots.[148]
175. The British Brands Group took a similar view:
The Competition Commission considered that it would
be difficult to draw a line between large and small suppliers.
It concluded that such an approach would be impractical:
- the GSCOP
applies to suppliers of all sizes so its monitoring and enforcement
should too;
- the Adjudicator
is the gateway to the dispute resolution procedure; with no access
to the [Adjudicator], large suppliers [would] only have the courts
for redress;
- the Adjudicator's
role will be significantly more difficult if evidence from large
suppliers on retailers' compliance cannot be taken into account;
- larger suppliers
may be better able to bring widespread potential breaches of the
GSCOP to the adjudicator's attention than small suppliers;
- to exclude
large suppliers would run counter to the interests of consumers.
Large suppliers impact far more consumers than small suppliers.[149]
176. Although we are sceptical whether large suppliers
will need the protection of the Adjudicator, we accept that in
practical terms it would be difficult to draw a justifiable distinction
between classes of supplier. Given that many larger suppliers
will generally have the negotiating power to look after themselves,
however, we expect that the Adjudicator will wish to prioritise
cases from smaller suppliers.
Plain English drafting
177. Before pre-legislative scrutiny, the draft Bill
was adjusted to a style of plainer English.[150]
The written ministerial statement published on the same day as
the Bill says:
The draft Groceries Code Adjudicator Bill is
presented in a way that helps wider understanding of the purpose
of the proposed new law and how it would work. This is part of
the Government's commitment to increase transparency and accountability
of Parliament to the public. The Bill is drafted in simpler language
and an explanation is given alongside each part of the legal text.
It is hoped that this approach will allow those
affected by the legislation, Parliamentarians, interested groups
and the public to engage more actively in the legislative process
and understand the impacts of the Bill, without compromising its
legal clarity and force.[151]
178. While we are not entirely convinced that replacing
the classic sub-heading "Consequential amendments" by
"Will this law mean other changes to the law?" represents
a great leap forward, other sub-headings were helpfully drafted.
We asked what other specific changes had been made in drafting
approach and the Department gave the example of Clauses 3(1),
4(1) and 20(5) having been drafted in a more continuous, less
fragmented style. We approve of this approach. We also appreciated
the approach of reducing the overall number of clauses even if
it meant one or two longer provisions.
179. We have one suggestion of our own. The fact
that the term "suppliers" as employed in the draft Bill
includes both direct and indirect suppliers does not exactly leap
up off the page. The actual definition in Clause 23 is, taken
alone, overly elaborate. We understand that there might be a wish
to retain the connection with the definition of supplier in the
GSCOP, but that would not prevent a supplemental provision "for
the avoidance of doubt" to clarify that both direct and indirect
types of supplier are covered.
Other practical matters
180. We note, in the spirit of co-operation, that
there were some respects in which the Department seemed not to
have considered the draft Bill's practicalities. Officials had
not, for instance, considered whether costs of the Adjudicator
would be passed on to consumers.[152]
There was also some inconsistency on the right evidence base for
assessing overall future compliance.[153]
Pre-legislative scrutiny is an opportunity to ensure that such
points are not overlooked, and we trust that the process we have
undertaken in this inquiry will assist in that, as well as in
achieving a workable set of legislative provisions.
Making progress with the Bill
181. The Minister gave us his assessment of the timetable
for the introduction of legislation:
We very much hope that we will be able to bring [the
draft Bill] to the House after the pre-legislative scrutiny in
the second Session of Parliament. I do not want to raise expectations
too much, but I still have a glimmer of hope that if the business
managers find a little slot in the remaining months of the first
Session, we could get it before the House in this first session.
I am told the timetable is pretty full up at the moment.[154]
182. This Bill has been some time coming. In order
to push matters forward, we have, exceptionally, undertaken the
pre-legislative scrutiny stage of the draft Bill in eight weeks
rather than the usual twelve, and we trust that the Government
will now proceed with legislation speedily.
183. We have suggested a number of areas for amendment
to the draft Bill. We expect that the Government will give due
consideration to all our suggestions. The truncated timetable
we have worked to has meant that we were unable to present all
of our recommendations as amendments to the draft Bill. It would
be helpful, if the Department, in its response to our Report,
could provide us with an outline of how those recommendations
could be incorporated into any future legislation.
139 Paragraph 87 Back
140
Q 115 Back
141
Qq 28-29 Back
142
Ev w15 Back
143
Q 228, Dole Back
144
Q 222, Jones Back
145
Ev w13 Back
146
Q 222, Kendall Back
147
See responses to consultation from: Tesco (paragraph 14), Co-op
Group (paragraph 24.2, restricted to an argument that anonymity
should not extend to large suppliers, and British Retail Consortium
(paragraph 21) Back
148
Q 291 Back
149
Ev w8 Back
150
The Department and Parliamentary Counsel were very keen to point
out that all legislative drafting is intended to be clear and
accessible (Responses to questions at Ev 93, Heading 3, paragraph
9b)) Back
151
24 May 2011 Col 47 WS Back
152
Q 79, Swift Back
153
Q 24 Back
154
Q 284 Back
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