My Lords, I understand that the noble Lord, Lord Grantchester, is eager to see a living code that will be responsive to the adjudicator’s experience of the groceries market. Other noble Lords have said
they feel the same way, and I understand those concerns. I would like to discuss the noble Lord’s specific amendments but shall first address the issue of principle at stake here.
The adjudicator should clearly be responsive to needs within the industry, not only by prioritisation but by clarifying the code through advice and guidance. The adjudicator should also be able to use their front-line position to raise issues with the competition authorities, which are responsible for the groceries supply order and the groceries code contained within it.
As the noble Lord, Lord Grantchester, has said, the specifics of the dairy industry are being considered elsewhere in government. The adjudicator is not intended to address every problem in the sector, and the adjudicator’s role is clearly limited to the relationship between retailers and their suppliers under the groceries code.
Nevertheless, proposals in this grouping go beyond this natural evolution of the code’s interpretation, and risk undermining the basis for the code itself. Those involved in ensuring that this Bill reached Parliament—campaigners, Select Committee members or Ministers—have emphasised that the justification for this Bill lies in a rigorous market investigation and a finding by the independent competition authorities. This justification would be severely undermined if changes to the code were made without proper process through the competition authorities.
This principle goes beyond the issue of the groceries market and concerns the competition regime as a whole. It is a fundamental principle of the competition regime that remedying competition problems should be addressed by the independent and expert competition authorities, rather than directly by Ministers or Parliament. Oversight of these remedies is likewise the responsibility of the independent competition authorities.
This was at the core of the reforms introduced by the previous Government in the Enterprise Act 2002, which removed Ministers from competition decisions. As the then Secretary of State said at that Bill’s Second Reading:
“The Bill therefore provides that, in the vast majority of cases, with the exception of national security cases only, decisions will be taken by independent competition authorities, free from political interference”.—[Official Report, Commons, 10/4/02; col. 45.]
This principle is continued in the Government’s further reforms set out in the current Enterprise and Regulatory Reform Bill. Although the competition authorities are rightly accountable to Parliament for their overall performance, this is quite different from Ministers or Parliament debating or overseeing particular remedies.
In the case of the code, this means that responsibility for oversight of the code lies with the Office of Fair Trading under Section 162 of the Enterprise Act, not with the adjudicator, as Amendment 26 would have it, nor with the Secretary of State or Parliament, as Amendment 2 sets out. Equally, it is for the competition authorities to decide whether or not to amend the code—not, as the noble Lord, Lord Whitty proposes, the Secretary of State.
I remind noble Lords that the adjudicator has a statutory duty to make recommendations to the OFT if he or she thinks the code should be changed. This provides a flexible way for issues to be escalated
whenever needed and therefore contributes to a truly living code, while respecting the existing structure of the Enterprise Act.
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I also want to reassure noble Lords that this does not mean that a full market investigation is needed for any change. As long as evidence is provided of a change of circumstance, the Office of Fair Trading will be able to recommend that the Competition Commission amends the code. For instance, if the adjudicator comes across a new practice among retailers that was not present when the Competition Commission carried out its investigation, it could make a recommendation to the OFT which could lead to a change in the code. This would be far quicker than a market investigation, but crucially it would still be a decision of the independent competition authorities. Both this Government and the previous one as well as many noble Lords on the Cross Benches are strong supporters of maintaining the independence of the competition regime. This is a crucially important principle and one that we should not break, despite the significance of the groceries market to many of us, especially when the Bill already contains provisions which allow us to have the living code the noble Lord has been asking for. I therefore ask the noble Lord to withdraw his amendment.