UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 1011 - i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Business, Innovation and Skills Committee

Pre-appointment hearing for the groceries CODE adjudicator

wednesday 27 February 2013

christine tacon

Evidence heard in Public Questions 1 - 55

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Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Wednesday 27 February 2013

Members present:

Mr Adrian Bailey (Chair)

Paul Blomfield

Mike Crockart

Caroline Dinenage

Julie Elliott

Rebecca Harris

Ann McKechin

Mr Robin Walker

Nadhim Zahawi

________________

Examination of Witness

Witness: Christine Tacon, the Government’s preferred candidate for the post of Groceries Code Adjudicator, gave evidence.

Q1 Chair: Please excuse me while I go through the formalities. First of all, I have to declare an interest: as a Labour and Co-operative Member of Parliament, I have had a long association with the co-operative movement. Indeed, prior to becoming a Member of Parliament I worked for 18 years for the co-op movement. Having got that out of the way, can I first of all congratulate you, Christine, on your proposed appointment and invite you just to introduce yourself for voice transcription purposes?

Christine Tacon: Good morning. I am Christine Tacon and I am the Groceries Code Adjudicator designate.

Q2 Chair: Looking through your CV, which is very impressive, you have significant experience in farming and agriculture, and indeed in private business overall. There did seem to be a bit of a gap in terms of supermarket experience. Given the fact that supermarkets are obviously part and parcel of the portfolio of interests you are going to have on this, could you outline why you think you are particularly well-suited to represent, or at least understand, the supermarket sector as well?

Christine Tacon: Certainly. The Co-operative farming business that I ran was owned by the Co-operative Group, which is an £8 billion turnover food business. Certainly by the time I left the business, almost everything that we grew on the farms was sold to the Cooperative Group. Prior to that, when I first joined, actually, we sold to virtually every other retailer as well, so I have a lot of experience of selling to them all. In my final year in the Co-operative Group I was actually on the Food Executive Board, so was very much on both sides of the fence-a foot in both camps. But also when I was at Anchor I was Sales Director, and therefore again had very direct relationships with retailers.

Q3 Chair: I understand that; that is on the farming side. What sort of involvement have you had with the supermarket sector? In the past, the Co-op certainly had supermarkets, although it now concentrates on community stores. Have you had any dealings?

Christine Tacon: I have not worked for them, but I have dealt directly with them. I think the Co-operative Group, with an £8 billion turnover in food, see themselves as among the top five retailers in terms of size, and they certainly have all of the same challenges of trying to keep the cost of food down as any of the other retailers.

Q4 Chair: Do you think there is a danger that you may be perceived by the other major supermarket retailers as perhaps being one-sided in terms of your experience?

Christine Tacon: They might say that, but the code is very clear as to what it is there to represent, and effectively it is just judging whether or not the code has been broken. I have a good understanding of both sides, but I do not intend to favour one side over the other. I am just going to interpret the code.

Q5 Chair: Just looking at your farming experience, you have demonstrated the scale of Co-op farming and certainly I never lose the opportunity of telling the public that the Co-op is the largest farmer in the country. But what about smallscale farming? There is possibly an issue where supermarkets can exercise power against small farmers rather than big farmers. Do you feel that you have adequate experience of small scale farming to ensure that their interests are upheld in any dispute with the supermarkets?

Christine Tacon: Within the Co-operative Group, we had packing businesses and two thirds of the land we farmed actually belonged to other people, so I had direct relationships with over, I would say, 200 other farmers in terms of buying products, such as potatoes, from them, sourcing land from them, and sourcing services from them.

Also, I was very often asked to go and speak to NFU discussion groups and speak at conferences, and I have met and I know very well a lot of small farmers. The key thing is that people feel that they would be able to trust me, and I have a lot of evidence to believe that they would. But of course the code is about the direct suppliers to the retailers and the majority of small farmers are selling on to somebody else, so the small farmer themselves is not the direct supplier.

Q6 Nadhim Zahawi: The post requires a track record of resolving disputes, acting as a mediator in a sense and overseeing investigations in a commercial environment, having strong negotiation and arbitration skills. Can you give us examples of your experience of mediation and arbitration in a commercial environment from your previous roles?

Christine Tacon: A lot of my mediation has been informal, with problems coming to me before they have actually got too serious. I have been involved in litigation with one potato farmer that was claiming that we had not done our job correctly, which involved quite a lot of legal work. I have been involved in industrial tribunals. Those really teach you that a lot of these things need to try and be sorted out before you get to the advanced stage, and I have been involved in situations where people come to me and say that something in the business has not been done appropriately, and I have managed to step in and find ways of resolving it before it gets too serious. My experience is mainly in trying to defuse things before they get really heated.

Q7 Nadhim Zahawi: How do you think the industry should deal with the horsemeat crisis?

Christine Tacon: I do not think that is relevant to the Groceries Code.

Q8 Nadhim Zahawi: I know; I am just asking your opinion. What does the industry need to do, whether it is the retail or the farming industry?

Christine Tacon: We need to have full traceability and understanding. When retailers are pushing their supply chain very hard they need to know what the impact of it is, and not turn a blind eye to the consequences.

Q9 Nadhim Zahawi: And what about on the supplychain side?

Christine Tacon: That is the same thing. We have all got responsibility all the way down. If you are buying something below the price that feels right, you need to try to dig a bit deeper and work out how that has happened, rather than just take it and accept it.

Q10 Nadhim Zahawi: The post also requires the ability to act independently, having sound judgment and be seen to be impartial, not just being impartial-the perceptionisreality thing. How will you ensure that your previous work in farming does not influence your view of the supermarket industry?

Christine Tacon: I just see the code as actually quite straightforward, in terms of what you are looking for and whether there has been a breach or not. I will be, and I am already, out and about in the farming industry, encouraging people to talk to me and encouraging suppliers to talk to me. I intend to do exactly the same, and have started with my first meeting with the British Retail Consortium, to build a similar relationship with the compliance officers who really are going to be the power of the Adjudicator actually in the businesses. I am quite prepared to build relationships with the chief executives if they have got time, but I expect the code compliance officers to be my main allies in the retail trade.

Q11 Nadhim Zahawi: How have they reacted? What has the response been like?

Christine Tacon: It has been very positive-positive in my approach to it. Certainly, the concern I got from the British Retail Consortium meeting was the potential cost of the office, and how I was going to cope with not getting absolutely barrages of complaints that were not what the code is there for. One of things I told them is I had already planned to meet the NFU county advisers to train them so that they understood what the code was. The more I can actually push the filter of what the code is and what it is not-because I expect a lot of farmers would talk to the NFU before they came forward, and that meeting is all agreed and set up-so that I only get the genuine complaints, the better. I think that went down very well.

Q12 Chair: Just before I invite Robin Walker in, can I just pick up this point about horsemeat, which may not be directly relevant but does potentially impact on the relationships between the supermarkets and their suppliers? Indeed, this whole code was implemented as a result of complaints by suppliers against supermarkets, and it would appear that, where suppliers are providing goods that do not adequately reflect the composition of the those goods, supermarkets may have a complaint against suppliers. Does the code cover this? I do not pretend to know the code off by heart. Do you think it could influence relations between the supermarkets and suppliers, and that you may have a role in mediating between them on that?

Christine Tacon: My interpretation of the code-as you know, I am new to the job as well-is that it definitely does not cover issues that the retailers have with the suppliers. It is all the other way round.

The good thing that I hope is going to come of all this horsemeat scandal is recognising that adversarial relationships between retailers and suppliers lead to things going on that people do not talk about and leads to pressures being put on businesses that they dare not actually raise. The reason why I really wanted to do this job is to try to build better relationships between suppliers and retailers, because there are gross inefficiencies in the supply chain that are not being addressed because there is not enough trust in that relationship.

This whole horsemeat thing is making everybody realise that we need to have better relationships and we need to have more trust, and I think we need to take out all of this fear of, "Are they going to come after me this?" and "I have been asked to do this, and I do not know what to do". It does not create an atmosphere of trust where people can talk about whether something is short or whether they have got too much of something. You have not got open relationships and that is where trust comes from-when you can both talk to each other about issues.

Q13 Nadhim Zahawi: I am just interested in the choice of words-"adversarial relationship". Would you not think that actually the relationship is one-sided, i.e. because so much power is concentrated in the hands of a handful of very large retailers, it is an asymmetric relationship rather than an adversarial one, where the suppliers are constantly being pushed on price? For a long time, it is all about price, price, price, which is what has caused this breakdown in trust, rather than it just being purely adversarial, as if two equals were fighting.

Christine Tacon: Your English is better than mine.

Nadhim Zahawi: I doubt it.

Christine Tacon: There is very much an atmosphere of fear and people thinking, "If I do not pay this money that I have been asked to pay, I am going to lose the business". The atmosphere of fear, which I think you referred to in your Committee, is definitely there.

Q14 Mr Walker: You will be required to publish guidance on when and how investigations are going to proceed, and how enforcement powers are going to be used. What do you think the timetable is going to be for that publication?

Christine Tacon: We have already briefed the Council on it and the first draft has arrived back. My brief was to make it short and simple, so that everybody could understand it, but they are also looking at other guidance from other regulators, so we are not reinventing the wheel, and that is really where this first draft has come from.

We are hoping to issue it as soon as Commencement, which is after Royal Assent and all that. We should be ready by then, so as soon after Commencement as possible we will issue it. Then it has obviously got to go for consultation, and then we have got to do the response to it. Obviously, we cannot predict parliamentary process but I am quite keen that the guidance should be complete by the end of this year.

Q15 Mr Walker: Would the consultation process be with both suppliers and retailers?

Christine Tacon: Everybody, yes. When I say "everybody", I mean that trade associations can respond as well; it is not just those two parties.

Q16 Mr Walker: Just coming back to the point the Chairman raised about it being a one-way thing and really that you are dealing with the complaints from suppliers about the retailers and the supermarkets, you may have followed the Third Reading debate the other day in Parliament, in which there was this argument about the DavidandGoliath relationships, focusing on the fact that actually some suppliers, say CocaCola or Mars, could be much bigger than some of the retailers that they are dealing with. The argument was rejected, I think, in the parliamentary vote, that there ought to be powers given in the other direction. Do you think that is something that, over time, might be able to be looked at again?

Christine Tacon: I would like to know that there are some issues first, and I have not heard any but I have not actually been out looking for it. There is enough to go for in the code as it stands. There is lots of evidence out there that the code is not being adhered to, and that needs to be done first, and then I have the ability to go back to the OFT in due course if I think there is any way of expanding it. I have got enough work to do at the moment.

Q17 Mr Walker: A lot of the focus for the discussion we have had so far has been around price and pricing power. How important is terms of payment rather than sheer pricing power when implementing the code and trying to protect retailers?

Christine Tacon: Terms of payment are being played about with quite a bit and they can be enormously unsettling to people, but they do tend to be a oneoff and once it has happened it is being lived with. Things that are going on all the time, like paying a premium for haulage, paying a premium for packaging, or suddenly being asked to contribute towards a year-end profit, are far more disruptive to business than a negotiation over payment terms. However, payment terms are something that I would like to come round to, when we have sorted some of the other things out.

Q18 Mike Crockart: You talked about the guidance being ready hopefully relatively quickly but due to the consultation process and review of responses, it will be by the end of this year. How do you imagine you will manage complaints submitted before that guidance is finalised? The worry, of course, is that there are a lot of people and suppliers out there with grievances that they previously did not want to raise or did not feel they could raise, so there may be an immediate flow of complaints. How are you going to manage that?

Christine Tacon: Anything that anybody has done wrong prior to Commencement I do not actually have any jurisdiction over. Also the prediction is that I would only be doing between two and four investigations a year. So if I have 3,000 complaints, what I am trying to find out is: what are the big ones? What the ones that are costing the industry the most money? I will be asking people, "What are the three things you most want me to investigate?" I want to try and tackle a big area, such as haulage. I think I will be able to start looking at things like that and identifying which of the big ones I ought to be going for while the guidance is being prepared.

Q19 Mike Crockart: So it is much more of a kind of thematic approach that you will be taking.

Christine Tacon: Yes. If you look at the cost of the office and the idea that there are only to be two to four investigations, I have got to look at things that are endemic across the industry. I am also finding that, by talking about these things on the public record, things are starting to move already, which might be useful.

Q20 Mike Crockart: Do you think you might have a difficulty in managing expectations, because your position has been massively looked forward to by a great many people in the industry? If it is going to be only two to four investigations on a fairly high, thematic level, there are great expectations of what you are going to manage to achieve.

Christine Tacon: A complete bonus that I had not expected was the huge amount of publicity that has being generated around the position, and I have been using that to explain to people that is how I am going to work, and taking up invitations to conferences to the right sort of audiences to make sure that I can get that message out. If you speak to many of the suppliers, they would be delighted if I just picked off one or two of these themes at a time. Once you start picking them off and giving warning that you are coming at this one next, or the next one after, I am hoping they will be sorted out before I get too deep into it.

Q21 Julie Elliott: One of your roles will be to arbitrate disputes between large retailers and their direct suppliers. How can this be managed alongside any requirement for anonymity?

Christine Tacon: The anonymity, I understood, does not relate to arbitration; I think it is just to the investigations. So it is confidential to both parties but they are not anonymous. The process for the arbitration is that the supplier has to have gone to the compliance officer, and the compliance officer has to have not given them a satisfactory response within, I believe, 21 days, before they bring it to me. I think the anonymity is to the outside world but they will be known to the retailer. But also the advantage of the arbitration is that the Adjudicator can award compensation, whereas in the investigations they cannot. I would not be surprised if the arbitrations that I get are somebody who has been delisted.

Q22 Julie Elliott: Are you expecting to get many of those kinds of cases?

Christine Tacon: No, but I think if you have been delisted, if you believe that the code has been broken, then I think that somebody might just think, "Well, I have got nothing to lose".

Q23 Chair: Can I just explore this point, because one of the issues that was constantly raised during our pre-legislative scrutiny was the disincentive effect of lack of anonymity for a complainant? What you just told me slightly concerns me because it would appear that the retailer, the supermarket chain, would know who had complained against it. I was under the impression that the process would actually hide the identity of a complainant. Is that not correct, and the supermarket chain would actually know? If that is the situation, do you think that will act as potentially quite a significant disincentive for a supplier to make a complaint?

Christine Tacon: That is why the investigations are so important, because it is the investigation where the anonymity is protected. In particular, on the investigation, certainly where I would expect-I speak about it as if I am in the position; I apologise for that, but it is easier from a language point of view.

Chair: Let us assume that you are for the purpose of this.

Christine Tacon: I would expect that in the first year or two I will be looking at things that are endemic across the industry and therefore it is just a matter of making sure I am getting the facts coming into me. Those will be entirely anonymous, and I am able to and I have to spread the breadth of an investigation to guarantee anonymity. My understanding is that I cannot see how an arbitration can be done anonymously, because they are supposed to have already complained to the compliance officer, so I think the two routes have different understandings of anonymity. I am very happy to be corrected if anybody knows better than me. So the investigations are where there is anonymity, and that is why the investigations are what are really going to change the industry. I think the arbitrations are just allowing somebody to bring a case and get compensation.

Q24 Chair: I understand that. I think I am broadly in agreement. What you are saying in effect-and forgive me; I do not want to put words into your mouth-is that you will investigate as a result of potentially a number of complaints. The scale of the number of the complaints will in itself provide some sort of protection for those who have complained. Is that a reasonable summary?

Christine Tacon: Yes, exactly that. If I am doing an example where packers are required to buy packaging from a thirdparty supplier, and it is more expensive than they know they can buy it in the open marketplace and they suspect that a kickback is going on, that will tend to be happening to every single packer that is packing for a retailer, so that sort of thing will be widespread.

Q25 Julie Elliott: You will be able to appoint another person to carry out the arbitration if you choose to. Given the importance of the position, should it not be the Adjudicator that carries out the role, or will you be appointing another person?

Christine Tacon: I was not intending to appoint anybody. That would just be a matter of workload, and it did also say that in a case where there was a conflict of interest. I do not have any conflicts of interest, but somebody could rightly say, "You have spent 11 years working for the Co-operative Group; I do not think it is fair that you should be adjudicating on it." That is the sort of circumstance where I could see that I would appoint somebody else, but I think it would be a workload issue. If I was right in the middle of a massive investigation on something really big and important, and an arbitration came along, I would be relieved that that facility was there. However, I think it is a pressure point rather than a norm.

Q26 Julie Elliott: So you will not expect it to be the routine.

Christine Tacon: No.

Q27 Rebecca Harris: I have a question about whether you think that the staffing levels you are going to be given for this role are going to be sufficient. Mike has already touched on this-about the investigations you are going to have and that you do not know how many cases of adjudication will come forward-but do you think you are sufficiently staffed for the role?

Christine Tacon: At the moment, we are in the process of already recruiting a head of office and an assistant and a parttime legal resource, which, with the way I am trying to cope with what I am doing at the moment, would be a delight, just to have some resource, because I am getting a lot of requests for interviews and going to conferences and things like that.

I do not know; I would very much like to make this role happen through persuasion and through telling people I know about things and "I would like you to go and sort that out", rather than to do a huge number of investigations. Therefore, the office might be about right just for the general running of it, and I understand I can second in people if I am doing an investigation, just for the length of that investigation. I do not really know, but it feels big enough to me for the moment.

Q28 Caroline Dinenage: With that in mind, in creating a new regulatory post there is always a risk of mission creep, with the result that more resources and funds might be necessary. Therefore, how would you ensure that this would not happen?

Christine Tacon: I find it difficult to conceive of that at the moment because I just think there is so much available straight away to get my teeth into that is absolutely right on message. I expect probably the mission creep that people will be concerned about is whether it should go beyond direct suppliers to retailers. You have got to sort out everything in the code first, and then I expect it will be the likes of you that will be trying to get the mission creep going, rather than me. I do not know whether you agree. I just feel I have got so much to go for that I am not worrying about spreading it out any further.

Q29 Caroline Dinenage: It is not a danger at the moment.

Christine Tacon: No. There will be requests for me to do it, but I have got enough to do as it is.

Q30 Chair: That comes to the nub of the problem, really. You have got a very small staff, and there would appear already to be quite a significant demand on yours and their services, and there is quite a legitimate temptation to ask to expand that office in order to comply with the pressures that are being placed on you. Do you not think that that could happen?

Christine Tacon: What I would like to do is to work with the compliance officers and if necessary with the chief executives of the business to demonstrate that, "If we know something is going on, we will come after it and we will sort it out. Because I am doing that, you might as well sort it out anyway without me having to do an investigation on every one of these." They do not want me to do investigations because it is going to cost them a lot of money.

I am hoping that I will be able to get the change just by saying, "I know about this and I am finding evidence of it, and there will be an investigation unless I hear very quickly that you are doing something about it." That is how I would prefer to work, rather than get a bigger and bigger office and trying to catch them out all the time. I am pleased I have not been targeted on how much money I am going to raise from fines, or how many investigations I am going to do.

Chair: That may be coming.

Christine Tacon: I feel I am targeted on cleaning up the chain. That is what I want to do, and I think I can do that through persuasion, with the odd stick.

Q31 Mr Walker: On the point that obviously you have got an enormous amount of demands on your time, I note the terms of appointment specified three days a week. Was that something that was in advertising for the role or is that something that you specified-that if you were taking it on, you wanted to be doing three days a week?

Christine Tacon: That was in the advertisement for the role, but it is only one day a week pre-Commencement.

Q32 Mr Walker: Are you comfortable that three days a week is going to enable you to do all the things that you need to achieve the demands of the job?

Christine Tacon: Yes, in the way that I am currently envisaging doing it, which is much more of an ambassadorial role, speaking at conferences, engaging with compliance officers, and building trust so that people are telling me what is going on. But if I start getting embroiled in three concurrent investigations, it will get a bit overwhelming. It certainly feels right to start with. That is really what I am doing at the moment. The demands on my time at the moment are about speaking to conferences; it is an education role that I am doing.

Q33 Paul Blomfield: You talk about hoping to resolve problems by persuasion, which is admirable, but also about having the odd stick. The Government has amended the Bill to give the Adjudicator the power to impose fines. Do you welcome having that stick?

Christine Tacon: Before I had it, or before it was being discussed, I thought the naming and shaming would be sufficient, and if you look at the humiliation of the retail chains at the moment on the horsemeat thing you can see how much they desperately care about their reputations. But since I have been in the role, I think it does strengthen the role enormously and I have been hearing in the last few weeks about lumpsum payments being demanded by the retailers; that incenses me, and I am delighted to have the power to retaliate with a fine if something like that is going on.

Q34 Paul Blomfield: That sort of leads me into my next question, which was about how you would envisage using the power to fine. You have given one potential example there. Could you develop that point at all in other areas?

Christine Tacon: I would like to start with the idea that if certain things are going on-it might just be a misinterpretation of the code and that they have always done it that way and they had not realised that they could not-then the idea of being able to do recommendations in the first place is probably where I would be starting. However, if you have got an agreement in place and you turn round and say, "You have just had a good year last year. I have just looked at your results. I want you to put X million on the table," that to me is a hard and fast, straight for a fine. There is no recommendation needed there; that is not right. I should preface that with the fact that I need to put out guidance. I might get different advice on that, but that is certainly what I am feeling at the moment.

Q35 Paul Blomfield: Just looking at this relationship between naming and shaming and fining, which you alluded to, do you see it as a staged process, or do you think that you might go down the namingandshaming route before imposing a fine? Is there a sequential relationship or is how you would impose naming and shaming or fines more judged by the particular case?

Christine Tacon: As I said, this will go out to guidance but I would expect it will be certain sorts of breaches you might decide really just need a recommendation to make sure they do not happen anymore, other sorts of breaches are naming and shaming, and then other sorts are the fines. I cannot see them progressing between them. I think it would just be about how much benefit of the doubt you give to the retailer that they were not aware of what they were doing.

Q36 Ann McKechin: Could I just declare an interest as a member of the Co-operative Group and a member of the Scottish Co-operative Party? Good morning, Christine. I wonder if you could you give us some clarification. Third parties and trade bodies will be able to make complaints to you. How do you anticipate that that is going to work in practice?

Christine Tacon: I expect that the practicalities of how it will work will come out in the guidance and will be subject to consultation. To be honest, the very first meetings I have had were with trade bodies, because I suppose they feel they have got the evidence and they are speaking on behalf of quite a few people, and it is very useful because they can make my life more efficient by having spoken to people themselves.

But I have to say that I cannot imagine going on to an investigation on the basis of just having had a complaint from a trade body. I would want to get some from direct suppliers just to make sure that you are hearing everything directly, rather than through third parties. The trade associations will be very useful at highlighting something that I maybe did not know about and can set me on a direction of being able to go and talk to people and find out how much of an issue it is.

Q37 Ann McKechin: We are in Fairtrade Fortnight at the moment. Obviously, supermarkets deal with suppliers in many parts of the world. I just wondered to what extent you may deal with complaints that might be brought to you-not by a trade body, but perhaps, for example, by a development agency, about exploitation of workers in a developing country who are supplying goods to a supermarket.

Christine Tacon: Clearly, they have got the right to bring a complaint to me. My understanding of the code is that I am not sure that it would actually cover exploitation of workers. It is much more about the variations to an agreement once it has been made.

Q38 Ann McKechin: If someone brought evidence to you that workers were being paid and their terms were under that of the International Labour Organization standards, would that be a cause for concern for you?

Christine Tacon: As a member of the public, it would be a huge cause for concern. I do not think that is in my remit as an Adjudicator to do something about it, but I am sure that there is somebody I should be talking to. If you are worried about mission creep, I should say that I do not think that comes under the Adjudicator role.

Q39 Ann McKechin: It is a distortion of the supply chain. You talked about cleaning up the chain in relation to the horsemeat scandal and about things at very low cost, and I think you made some sensible and pertinent comments about that. However, if someone came to you and said that goods are very low cost because in fact they are actually being paid sub-human wages or they are in conditions such as, for example, in the banana plantations, where people have been sprayed by chemicals-I am just wondering about the extent to which you would take that on board if a development group of agencies in this country brought that complaint to you.

Christine Tacon: I would resort to my legal advisers on it. Mine is a legally defined role, and I did not understand that my remit would cover that. Maybe I might be getting a different answer. I am right that the pay and conditions is not within my powers. I would like to think that there is somebody who would act on that. I would want to know who I can refer it to. I would not let it rest but I do not think it is for me to act on it. I would need to pass it to somebody who is going to act on it.

Q40 Ann McKechin: How would you act against suppliers who submit vexatious complaints? It might happen.

Christine Tacon: It might happen but, in the first instance, I think there are enough big ones that I would know that something is going on, on a reasonable scale. The vexatious ones are probably more likely to come down your arbitration route that you were talking about before where they are bringing it to arbitration. They would have had to have gone to the compliance officer and the compliance officer would have rejected it, and I think that is where I would use my legal advice to say, "Well, do we think there is a case to answer here?" I expect some people will try it on, particularly if they have been delisted, and I have got to be very strict as to whether there is evidence of a breach of the code or not. I am not there to work out why their relationship has broken up; I am only there to see whether the code has been broken.

Q41 Mike Crockart: You talked earlier about the atmosphere of fear and the key aspect of anonymity for complainants. I had a particular question about small markets and suppliers operating in those small markets. I wonder whether this actually applies any longer, given we have discussed that you will be looking at thematic inquiries. The worry, of course, is that if you are talking about a smaller marketplace with smaller suppliers, even if you are guaranteeing anonymity it becomes fairly clear, given the circumstances, who it is that is making the complaint.

My question was about how you would deal with that, but if you are talking about larger thematic inquiries, presumably you are talking about taking on things that are going to be applying across the whole of the UK; therefore, that would cover their anonymity.

Christine Tacon: If they were complaining that they were being told to use a certain packaging supplier that they were having to pay too much for, or they were being told to use a certain haulier, or they were being told to use crates that were costing them more, that would be applied to everybody.

The point about these smaller businesses is that it hurts these businesses so much more. I think it would be a cause that I would be fighting on behalf of all of them. When you talked about payment terms earlier on, it is those businesses that are really being hurt but it is the thematic thing that will pick up the small ones. I am very conscious of the ones where some of these activities put those businesses out of business.

Q42 Mike Crockart: You are not aware of any particular issues in geographic areas that you might want to hone in on for an inquiry that may cause this type of problem.

Christine Tacon: Not yet. I have not engaged in that so much. The areas that I have been picking up on are the ones that I was aware of and are talked about in the industry, and I have been asking around to see if they are still around and have been getting quite a bit of evidence that they are.

Q43 Mike Crockart: There is a difficulty here in that there is a quite worrying balance that you are talking about, of a small number of highlevel thematic inquiries and a feeling that there is a lot to do. Does that almost give the nod to retailers that, "If you manage to keep your head down, if you manage to keep a relatively low profile, it is going to take years to get to you"?

Christine Tacon: Anything that is making the retailers a lot of money is going to get hit first. That makes the most sense. If there is something small going on that is endemic then I hope that I will hear about it, and although I might prioritise the big ones first-mainly to let people know that I am serious and that they have got to change. I am quite happy to pick up smaller ones that are endemic as well, just to keep proving the point.

At the end of the day, the code is quite clear. I will make sure the compliance officers understand the code and they are training people, so ideally once they start realising that breaches of the code are going to be followed through and they will be closed down, I am hoping that they will stop trying to invent new ways of getting round it.

Q44 Mike Crockart: There is a worry in smaller markets-for example, in Scotland-that there might be particular issues that would only relate in that marketplace and the worry is that by concentrating on highlevel thematic areas-

Christine Tacon: Sorry; I thought you were talking about a small section of the industry. I would not say Scotland was that small a market. It is a third of most of the agriculture in the UK.

Q45 Mike Crockart: But if you look at where the Scottish farmers supply to, it can be a very, very small number of places.

Christine Tacon: I will be responding to the number of complaints I get. If there is a large number of complaints on a particular area, or even if it is just a small section of the grocery sector, I would want to look at it.

Q46 Caroline Dinenage: Leading on from that then, in terms of investigations, do you think the Adjudicator should be more proactive or reactive-so reacting to a level of complaints, or are you actually looking for areas where you should investigate?

Christine Tacon: The proactiveandreactive thing is a matter of words, really, because I am putting myself out there, I am going to conferences, I am telling people to talk to me about things, and I am asking people directly, so I am being proactive in actually being there, but I will only react to something where people are saying, "Yes, there is an issue on something".

I will not suddenly demand to walk in somewhere and look at somebody’s books to see if they have made any payments. I will not be proactive in that sense, but I will be proactive in making myself available for people to feel they can come and talk to me, and tell me about things. I have to do that because I do not think I am going to get many letters. This whole idea of anonymity people feel is something where they can just come and talk to me. That is where it helps that I can build these things up.

Q47 Rebecca Harris: I think my question has already really been answered. It was whether you considered undertaking investigations on your own initiative, but I think you have probably answered that point.

Christine Tacon: I think so, yes. It will be on my own initiative, in response. I am quite likely to launch an investigation where I probably have not got a single written complaint, but that will be because I have heard enough about it that it needs to be looked at.

Rebecca Harris: You have a sense that something is going wrong in a certain area.

Christine Tacon: Yes. People are terrified of putting things in writing. It will just be me hearing about things.

Q48 Chair: I have got a number of questions that have emerged from the discussions. The first one is following on from Ann McKechin’s questions. Can an overseas supplier make a complaint?

Christine Tacon: Yes. Any direct supplier to any of the 10 retailers can make a complaint, which would be quite interesting. I am not sure if I have to go and visit them to follow up the complaint or not, though.

Chair: Yes, I could see some interesting stories emerging. Perhaps we could go. We will look particularly at the banana supply industry in the Caribbean-or maybe sugar, or something like that.

Christine Tacon: I will try and find something going wrong for you then.

Q49 Chair: I need to be careful here; it can be dangerous cracking jokes like that.

Could I pick up a number of notnecessarilyconnected issues that have emerged? First of all, you have talked about the compliance officers and individual supplier complaints against retailers. Can you clarify and talk the Committee through what the process would be if a supplier had a complaint against a supermarket? How would their complaint be dealt with by the compliance officer of that supermarket? How would you oversee the legitimacy of the handling of that complaint?

Christine Tacon: I think I might be evading that question because I think that the compliance officers were set up under the Office of Fair Trading order so they are not under the code that I am overseeing. In the order, it said that people had a right to bring a complaint to a compliance officer and they had a right to an answer, I believe, within 21 days. If they were not satisfied with that answer, they could then come to the Adjudicator with the complaint, and that is the arbitration role. It is actually the order that covers that bit; it was the order that set up the code compliance officers.

Q50 Chair: That is very helpful in terms of clarification. Another issue that came up is whether the BIS Department has set up a website yet to advertise or demonstrate the role that you will be performing.

Christine Tacon: No, we have a holding page that refers people to the code. However, it is something that we would like to do, and to my mind it is actually a matter of urgency, because the sooner I can explain on that website what the code is, what sort of complaints I can look at, and also the fact that if it is going wrong now they can tell me about it but I cannot take any action and I cannot do anything about it-so giving people a sort of timetable. I am very keen to have a website, which we are going to do, but it is not done yet. To be honest, it has not started yet; we have just got a holding page, but we have got the title.

Q51 Chair: Getting back to the issue of mission creep, it is perhaps unusual insofar as you are effectively part of a Government Department but your activities will be funded by a levy on the supermarkets. Therefore, there are no implications in terms of Government funding for you expanding your empire. It could well be that there will actually be pressure from MPs for you to do so, because they will have complaints, maybe from suppliers-we all know just what an effective lobbying organisation the NFU are-to investigate, and you will need to expand your capacity in order to do so. How do you see yourself handling these sorts of pressures?

Christine Tacon: If it is mission creep in itself, in terms of getting involved further down the supply chain, I basically do not have the legal right to do it. The process for me to have any involvement, I understand, would be to be making recommendations to the OFT to amend the code. Legally, it is quite tightly defined in terms of what I can look at. I do not think I can do mission creep without a much wider endorsement of me getting involved.

Q52 Chair: I accept that. On the other hand, you may have pressure to carry out more investigations that actually do come within the remit of the code.

Christine Tacon: That is not mission creep.

Chair: In that respect, perhaps my phraseology was a little loose. Those might goes beyond your existing capacity to carry out.

Christine Tacon: I suppose the main thing is that if I do get bigger because the retailers are not responding to the things that I am asking them to do, then they are going to have to keep paying for it, are they not? There is a sort of incentive for them to be responding, as opposed to me having to do loads and loads of investigations. I am an independent body, I have got a duty to keep the costs down, and I certainly do not want to get attacked for having a large department that is actually just adding costs to consumer products, at the end of the day. I hope I am not being naïve in saying that I think that the building of trust in the supply chain will end up leading to far more savings than the cost of my office. That is my ambition.

Q53 Chair: That covers all the questions that I have got. Is there anybody else on the Committee with a question that they feel has not been answered? Can I thank you? It was shall we say, rather briefer than our previous pre-appointment hearing.

Nadhim Zahawi: And less controversial.

Christine Tacon: Can I just say something? I know that you all have got very involved in this Bill, and I just wanted to say that I think it has been extremely well drawn up. I like the fact that I have got a very defined area to work on, so I actually feel I can tackle it, as opposed to being given a really broad remit where I would not know where to start. A huge amount of work has gone into it. I know it has taken-what is it?-13 years in its birth.

Chair: Something like that.

Christine Tacon: I do think I have actually got something that I can do something with, and it has provoked global interest in the role. I have had television interviews with Australia and radio interviews with Russia; we have been written up in the Scandinavian equivalent of The Grocer; I have been on Southern Irish TV; and the EU are interested in what we are doing. The issue we are facing in the UK is an issue globally, and it looks like we are the very first country to have done something, and I am very proud to be in that role. However, I think that is partly why it has been so difficult to do. Nobody wants to affect true competition and yet we all want a bit of fairness in it. We should all be proud of where we have got to.

Chair: Thank you. Actually, that has raised another question. Given the international interest in it, what sort of export potential do you think your department and role has for the country?

Christine Tacon: I am not sure I can raise any money from it. I certainly want to influence. I would be very happy to talk to people-particularly once it has got started-about how it is working and the reaction that we have had. I am not sure we are going to make any money from it, but I think it would be something that people are very interested in how we are doing.

Q54 Chair: Certainly, retail in this country is recognised as perhaps being the most sophisticated internationally. This is one aspect of it, and it is a model that is potentially exportable. As you say, I do not know whether there is potential for making money out of it, but would you not agree that if you can make a success of this, you could have an impact worldwide on relations between suppliers and the retailing industry that will be constructive and productive internationally?

Christine Tacon: I would be absolutely thrilled to have some impact. In Australia, for example, two retailers have got a 71% market share. They look at what we have got and say that it would be bliss. Yes, it could have a big global impact and they are looking to see how it works.

Q55 Chair: That is interesting. The downside of your comments is of course that we may want to re-interview you at some indeterminate time in the future just to see how things have moved.

Christine Tacon: I would be delighted

Chair: Downtime from your perspective, but I am sure it would be illuminating for us. Can I conclude by thanking you? We now have to agree a report arising from this meeting, so if you would like to go and if the public would go outside then we will do that.

Christine Tacon: Thank you.

Prepared 6th March 2013