Recommendation 4

HM Government Not Addressed

Exclusion orders are intended to be used in exceptional circumstances only. Effective competition is good for consumers and the economy and exclusion orders should not be in place longer than necessary. The exclusion orders1 issued during the COVID-19 response make clear that agreements can only benefit from the exclusion where they meet all the necessary criteria. In particular, they must relate to specified ‘qualifying activities’, and be made for the purpose of preventing or mitigating disruption to the supply of the relevant goods or services caused by a reason relating to COVID-19. Defra worked closely with the Department for Business, Energy and Industrial Strategy (BEIS) and the Competition and Markets Authority (CMA) in implementing the groceries exclusion order2 which provided a specific and temporary relaxation of elements of UK competition law, enabling grocery retailers, their suppliers (directly or indirectly) and logistic services to work together for the purpose of feeding the nation during these unprecedented circumstances. The groceries exclusion order specifies what kinds of agreements are temporarily permitted. This does not include the direct sharing of information relating to costs or prices, for example. As the exclusion only applies to activities undertaken in relation to the COVID-19 response, the sharing of information or collusion on future business planning is also not included. The exclusion orders require agreements to be notified to the BEIS Secretary of State and the Government has published details of these on gov.uk. This has assisted in understanding the ongoing need for the exclusions. We have also maintained regular discussions with the relevant sectors to understand how trading conditions are evolving and monitor whether notified agreements are still actively required. In total, 18 notifications relating to the groceries exclusion order were published on gov.uk covering activities aimed at increasing the supply of food to consumers such as coordination on opening hours and delivery activities. Companies also notified activities to coordinate delivery of food to the vulnerable, including those who were shielding and unable to access supermarkets. Contracts to provide food to the shielded, enabled through the groceries exclusion order, have already ended in England and Wales, and are timed to end in October in Scotland. The Government laid the necessary SI to revoke the orders on 3 September and will come into effect on 8 October in line with the ending of these contracts. The order for the dairy sector expired on 1 August by virtue of its sunset clause. Throughout the COVID-19 response, the Government has worked closely with the appropriate bodies to ensure the protection of consumers and suppliers. We also worked with representatives of small retailers to ensure they were supported during COVID-19. To ensure protection of consumers, the CMA has established a COVID-19 taskforce and has been carefully monitoring complaints received during the pandemic. The taskforce’s report3 shows that price-related complaints, whilst initially high at the end of March, have fallen sharply since then. The Government has also engaged with the Groceries Code Adjudicator (GCA) in order to protect suppliers. The BEIS Secretary of State reappointed the current Groceries Code Adjudicator, Christine Tacon, for a short third term to provide continuity and reassurance to the groceries sector through the COVID-19 outbreak. The GCA has been working closely with large retailers and their direct suppliers since the beginning of the pandemic in response to the considerable challenges faced by retailers and their suppliers in working together to ensure people have access to food and other essentials during the COVID-19 outbreak. The GCA has published three statements on current supply arrangements making it clear that notice periods may need to be very short and that suppliers should not wait to raise issues with retailers; encouraging the retailers to consider their payment practices during this period; and reassuring retailers’ CEOs that it would not take regulatory action when all parties were working in the best interests of the consumer. The GCA has contacted each of the 13 retailer Code Compliance Officers on a monthly basis throughout the pandemic to establish if suppliers were reporting any issues: there have been none of any significance. The GCA continues to urge suppliers to raise any issues straightaway with the retailers and, where appropriate, to refer them to the GCA. Throughout the response to COVID-19 Defra worked closely with the Association of Convenience Stores to understand the challenges for smaller retailers. We recognise the crucial role carried out by the convenience sector to support customers, including by offering more flexible payment options, home deliveries and adjusting product ranges to support local requirements. As part of this work we carried out monitoring of service