Supplementary written evidence submitted
by the British Retail Consortium
I appreciated the opportunity to explore issues in
more detail with the Committee on the 23rd June but wanted to
add some more comments to support those that were raised and those
that have arisen in other sessions. These additional comments
reflect all of our members' views with the exception of Waitrose,
they are eight of the 10 retailers covered by GSCOP.
1. NEED FOR
AN ADJUDICATOR
I wanted to make two further points to support those
that were made. Firstly, although we discussed the role GSCOP
has played in remedying supply chain issues with the Committee
we did not have a chance to explore specific elements of it. In
particular, I wanted to stress that GSCOP specifically covers
retrospective changes to contracts which was the primary concern
for the CC who stated.
"We concluded that the principal manner in which
excessive risks or unexpected costs could be transferred from
grocery retailers to suppliers was through retailers making retrospective
adjustments to the terms of supply."
It was notable that all the statistical evidence
that was referred to by the supplier groups in their oral session
was from the period before the introduction of GSCOP. We believe
GSCOP addressed those points and that would not be the case if
those surveys were repeated today.
Secondly, I made reference to a press release by
the Food and Drink Federation which I have attached, regarding
investment in innovation. The threat to innovation and subsequent
reduction in consumer choice was the key issue that persuaded
the Competition Commission (CC) to recommend supply chain remedies.
The press release gives clear evidence that contrary to investment
in innovation being affected it has increased since the CC inquiry
and substantially increased since the introduction of GSCOP.
2. THIRD PARTY
REPRESENTATIONS
We didn't have an opportunity to discuss our view
on whether third party organisations should be one of the sources
of information the adjudicator uses to consider the need for an
investigation.
Our position concurs with the Government and also
the concerns raised about indirect suppliers that these bodies
will not have access to details of the contractual relationship
between the retailer and the supplier and therefore will not be
in a position to comment on potential breaches of GSCOP. Adding
these bodies would simply increase the regulatory burden on the
adjudicator and add nothing that could not be obtained from the
supplier or retailer.
3. COSTS
Firstly, I would like to clarify the comments I made
about funding. The Committee was right to point to the unfairness
of expecting the taxpayer to fund the costs of exploring breaches
of GSCOP by individual retailers. The point I was hoping to make
was also about unfairness, but in relation to those investigations
that lead to no identification of a breach and where the costs
are therefore shared amongst all 10 retailers as abortive cost,
despite no faults being attributed.
Secondly, whilst we did have a discussion about the
scrutiny of the adjudicator we didn't expand that to consider
the budget process. We believe retailers should have a more direct
route to challenge the original budget and subsequent ones, a
point which had been proposed in previous Government proposals.
Finally, a minor but important point that we neglected
to raise in the discussion on costs and the Regulatory Impact
Assessment (RIA). The Government's better regulation policy has
introduced the concept of one in one out, a policy that wasn't
applicable at the introduction of GSCOP. The purpose is to ensure
no net increase in regulatory burden for business. The one in
one out policy relies on accurate RIAs to balance the introduction
of new regulation against the withdrawal of another to meet the
Government's objectives. We would ask the Committee to reflect
on the estimated costs and burdens associated with the adjudicator
in this context, as it is important the figures are accurate to
ensure the Government withdraws regulation of equivalent burden.
Andrew Opie
Director of Food & Sustainability
5 July 2011
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