DISPUTES PROCEDURE (Hansard, 23 June 1993)

§ Mr. Campbell-Savours
I beg to move, That the clause be read a second time.

§ Mr. Deputy Speaker
With this it will be convenient to discuss also amendment No. 83, in clause 3, page 3, line 27, at end insert '(aa) Whether the scheme makes sound provision for the settlement of diputes between the successor body and its customers;'.

§ Mr. Campbell-Savours
In winding up a few moments ago, the Minister used an interesting phrase. He said, "I think what people want is a speedy resolution of these matters." That is precisely what the new clauses are about. New clause 6 is particularly important to the processors as they move into a free market. The Government keep on saying, and said again today, that if the membership of the DTF—the processors and dairies—is concerned about what happens in the market, it can use the courts, the Office of Fair Trading, or the Monopolies and Mergers Commission, or it can go to the EC's regulatory authority. Of course, we all know that that is a long-drawn-out process and that much damage can be done in the interim period unless a proper disputes procedure is set up. The new clauses deal specifically with that disputes procedure.
Hon. Members may need to be reminded of what the previous Secretary of State said on those matters when we debated the Bill on 23 March this year. I asked whether Ministers had ruled out arbitration for the disputes procedures. The former Secretary of State replied: In advance of the board's proposals I would not like to say that I have ruled out anything of that nature but I see no role at the moment for further statutory interference in the way in which the market will operate. I shall certainly not be dogmatic as I am not a dogmatic person."—[Official Report, 23 March 1993; Vol. 221, c. 793.] Those are the words of the former Minister, to whom I refer as a Secretary of State. That is what he was and what the right hon. Lady now is. So much for dogmatism. In Committee, we saw no movement at all on the question of disputes procedure.
We have no fast-track approach to sort out problems such as unreasonable refusal to supply, disputes about the use of assets as marketing tools—we debated that issue at length in Committee—the poaching of contracts, the selective predatory pricing to producers and perhaps even unreasonable collection and delivery conditions. To some extent, collection problems can be dealt with in Milk Marque's own rules. Curiously enough, Milk Marque's rules provide for a disputes procedure, but, in the main, deal only with internal matters.
Section 19 of the Agricultural Marketing Act 1958 provides for consumer and investigation committees, to which reference has already been made. However, they are to be wound up under this non-statutory arrangement. The scheme proposed by the milk marketing board provides for a joint committee and an arbitration procedure. The problem with that scheme is that a draft scheme of reorganisation, which is not statutory, does not provide for a joint committee or arbitration. Therefore, there is no machinery in place to deal with the issue of disputes.
349 6.30 pm
What can we do if Milk Marque gets too big for its boots and finds itself embroiled in disputes? The answer is to insist on a procedure for the resolution of disputes to be clearly defined at the time that a scheme is approved. The Minister will have to do that because, effectively, he will approve the schemes. He can say to those who submit schemes, "I require that a disputes procedure in which I have confidence be inserted in the scheme before I approve it." The matter is in his hands.
The Dairy Trade Federation supports new clause 6. I quote: The DTFs concerns about dispute resolution under new milk marketing arrangements stems from the anticipation, on the Board's own reckoning, that their successor is likely to command a high percentage of the market in the supply of raw milk…Sub-clause I would require each successor body of a Milk Marketing Board to make provision for the settlement of disputes and for the appropriate authority not to approve a scheme of re-organisation without such provision. The arrangement for dispute resolution would cover not only those purchasing milk from a successor body, but also those supplying milk to it. At the heart of the proposal lie concerns that disputes relating to volume and supply can be speedily dealt with, rather than requiring the parties concerned to engage in lengthy court proceedings, possibly after the supply has been cut off. Amendment No. 83 would further extend the principles that I am arguing in this debate and contains another disputes procedure. That disputes procedure is from the Unigate stable. When Ministers determine whether schemes should be approved, Unigate wants them to have regard to whether the scheme. makes sound provision for the settlement of disputes, as is the case of the more widely represented Dairy Trade Federation.
On the referee issue, the Dairy Trade Federation proposes that the milk marketing boards' sale and conditions arbitration procedure set out in rule No. 30, effective from I May 1991, should be applied in the case of schemes approved by the Minister and suggests that a requirement to use that procedure must be built into the approval that Ministers might give. I do not know if the Minister is aware of that procedure—I understand that he has had to do a lot of reading since his new appointment. If he is not aware of it, I shall quote precisely what Unigate says: Unigate believe that a referee is necessary to safeguard the interests of producers of milk…Various suggestions have been made re a 'Referee' ranging from an 'OFMILK', to a supervisory body, to retaining the type of arbitration arrangements that exist between the MMB and milk buyers collectively…While Unigate recognises that there arc wider issues involved and that there are advantages and disadvantages to all of these options, Unigatc believes that there is a simpler approach which would satisfy those concerns, i.e.: Compulsory arbitration between individual purchasers, buyers of milk and Milk Marque, if a dispute were to arise which could not be resolved in any other way. The MMB current sale conditions currently provide for this type of arbitration between an individual buyer and the MMB (with the parties deciding on their own arbitrators). Is it possible for such an arrangement to be built into whatever approvals are decided by Ministers, or are they prepared to go further in the way that I have suggested in new clause 6 with perhaps a more substantial power?

§ Mr. Jack
I have listened to the impassioned pleadings of the hon. Member for. Workington for a variety of approaches to the question of the resolution of disputes. On the basis of what he said, I am not persuaded that there 350 is a need for us to go beyond the normal way of dealing with disputes in situations of competition which will be created by the removal of milk marketing boards.
The flaw in the forensically based argument of the hon. Gentleman is that he seeks to impose a raft of new ideas on Milk Marque but does not reflect on the fact that there will be others in the business. Other people who are competing for supplies of milk will have to lay out to their prospective suppliers the terms on which they will do business. If I were one of them, a question that I, as a farmer who is used to buying a whole range of supplies for my enterprise, would ask is: what happens if I fall out with a supplier? I would want to investigate that.
I would want to examine the terms of trade—this shows the lack of understanding of Opposition Members of the way in which markets work. I am sure that one of the factors that may affect farmers in deciding their point of supply is the basis of the contract and what it says on these matters. I would want to make an informed judgment. For example, I might want to get my adviser to say, "Which of these processes will be the fairest to you?"
As a knowing and commercial man and one who has been in business for some time, I would know what to look out for in terms of a dispute and the resolution of such difficulties. The hon. Gentleman knows that arbitration in normal commercial terms is one route. Another route is legal action. His point was that those processes could take some time and that continuing practical day-to-day difficulties may result. He will know that the Department of Trade and Industry made an announcement on 14 April which pointed the way forward for a more developed and selective way in which competition policy might address some of those internal difficulties. As a humble Agriculture Minister, it is not for me to trespass into those areas, but it shows the Government's thinking to ensure that competition policy can deal with those matters.
My predecessor also mentioned the possible extension of the Competition Act 1980 into those areas. He rightly did not fetter his hand on that until he saw precisely the final scheme put forward by the milk marketing boards. If we look into the near distance, we can see some hopeful possibilities for dealing with some of those issues. But it is not our view—this is the central issue—that there is a requirement for new mechanisms to deal with such disputes. Farmers are business people. They understand what they are letting themselves in for and will read the fine print.

§ Mr. Campbell-Savours
Does the Minister accept that it is more likely that there will be a dispute when one is dealing with the operations of a voluntary monopoly, which might control 80 per cent. of the market, than in other conditions, in which the supplying organisation has a far smaller share of the market? Does he accept that the scale of share would aggravate the condition that could lead to a dispute?

§ Mr. Jack
The short answer is that the scale of share would aggravate the position only if the person who had the dominant position abused that position by unfair actions. That brings us precisely back to the arguments about the operation of competition policy. Such unfair actions would be an abuse of the privileges of having a dominant position.
The hon. Gentleman should examine any personal circumstances in which he has been in dispute with people 351 in trade matters. He will find that disputes occur in the normal day-to-day business dealings of small or large companies. II is interesting to note that many large companies are trying hard to improve their customer relations because they wish to minimise the besmirchment of their otherwise excellent record in matters of dispute. Urged on by the Government's excellent initiative on the citizens charter, many people are opening up the ways in which they deal with complaints. Perhaps the hon. Gentleman does not give weight to that point.

§ Mr. Campbell-Savours
It is a good example.

§ Mr. Jack
I am glad that the hon. Member says that it is a good example because the example is percolating its way into the private sector, into which we hope that supplies of milk will go.

§ Mr. Tyler
The Minister cast the hon. Member for Workington (Mr. Campbell-Savours) in the role of a latter-day Sherlock Holmes with forensic skills. I see him more in the role of an old testament prophet producing 10 commandments in the land flowing with milk and honey. The new clause is over-reaction and over-regulation.
There is a serious point here. I listened carefully to the Minister's response. His predecessor admitted on several occasions in Committee that we were in a sensitive transition from a robustly managed market into what we hoped would be a more competitive market. As both Opposition and Conservative Members acknowledge, that transition inherently contains stresses and strains.
The Minister's predecessor said in Committee that he would examine the scheme that was suggested. He said that he would not prejudge it because, as he rightly said, that would impede his judicial role when the scheme came before him in due course. However, he said that it was important to consider ways in which disputes could be avoided, not merely resolved, under the terms of the scheme.
I took the point made by the Minister today about the proposals that have been made by the Department of Trade and Industry. I hope that those proposals will be helpful in this and other matters. The central point is surely this. We do not seek to over-regulate. We are trying to reduce regulation and free up a market. It must be done in a way that does not damage any parties that we can help. But to include in the Bill some provision which would impede the progress towards a freer market would he a retrograde step.