Clause 201 - Consumers

Enterprise Bill – in a Public Bill Committee at 8:00 pm on 23rd April 2002.

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Question proposed, That the clause stand part of the Bill.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

We leave behind the arcane mysteries of cartels and move to consumer protection. We have precisely one hour and 44 minutes to cover clauses 201 to 226—many very important provisions—as a result of the guillotine imposed on us by the Government. That is a pity, but let us make progress. We cannot say that we dallied over cartels; some important issues had to be raised and we did so, as did Liberal Democrat Members.

My one point about clause 201 concerns the definition of consumers. It has been raised with me by the Retail Motor Industry Federation and the Petrol Retailers Association. They make the case that the definition of consumers all too often refers to individuals—little old ladies who buy things that are overpriced or do not do what they are supposed to do—whereas a small company can be a consumer of goods and services supplied by a big organisation. They say:

''This particularly applies to petrol retailers who are consumers of goods and services from very large multinational companies.''

One can see that there is as massive a disparity of bargaining power between a large petrol supplier and one independent petrol retailer as there is between a supermarket chain and one consumer, yet small retailers do not seem to be covered by the normal definition of consumers in the Bill. The issue is worth raising. They continue:

''. . .who is a consumer that the Bill proposes to protect and will it be wider than just an individual member of the public?''

I should be grateful for the Under-Secretary's clarification of what is meant by a consumer.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I should like to identify myself with those comments. We on the Liberal Democrat Benches regard the consumer protection provisions as possibly the most important parts of the Bill and, as I stated in my opening remarks to the Committee, until recently so did the Department for Trade and Industry. However, we have a ludicrously short time in which to discuss them and the Government amendments that we hope will improve them.

I share some of the concerns expressed about the definition of a consumer. The example of petrol retailers was cited. Another topical example is that

of newsagents, who have to buy from big distributors. Newsagents are retailers, but the terms on which they act as buyers—consumers buying from the two or three distributors that dominate that market—raise major competition issues. There are many similar examples of companies at different stages of the hierarchy of production and distribution being both consumers and producers. It is important that businesses that are themselves consumers should be protected.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry 8:15 pm, 23rd April 2002

I understand Opposition Members' points. They are right in their surmise that a distinction has been made between consumers for the purpose of domestic infringement, and consumers for the purpose of infringement of the legislation to which the injunction applies. Businesses are not treated as consumers in the Bill. Prospectus business may be covered by the provisions, but that is to address the issue of people hit by homeworking scams. Otherwise, relationships between businesses are not covered. What we have done is consistent with the approach of successive Governments to consumer protection legislation. We recognise the reality of relationships between consumers and businesses; in general, businesses have an advantageous bargaining position over consumers.

I accept that some small businesses, such as those mentioned by the hon. Member for Twickenham (Dr. Cable), might sometimes feel at a disadvantage when dealing with larger businesses. However, there is a clear difference between consumers and small businesses. Those who go into business do so knowing how to negotiate, bargain, form relationships with other firms and so on, and advice and support services are available to small businesses.

I am aware of calls for businesses, particularly small businesses, to be covered by consumer protection legislation. Indeed, we have looked into that, but the results of our consultation showed that it was not a major worry. The point was not pushed by business groups. Such provision would result in a significant extension of trading standards responsibilities, which are currently focused on consumer issues. We must be careful not to impose too much state intervention on normal business dealings. The hon. Member for Twickenham was hinting at a small business to large business provision, but it would be difficult to know where to draw the lines in the sand without covering all business-to-business relationships.

For the reasons that I have given, we do not propose going down such a path. I accept that there has been some interest, but business in general has not picked up on the matter. I hope that the Committee will accept that there is a coherence about our approach, which is in line with that taken by successive Governments over many years.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

I hear what the Under-Secretary says, but there are several instances—petrol retailers are a good example—of the matter having been referred to the OFT. However, the OFT has said that it has no standing in the matter and that it cannot investigate. If the problem cannot be dealt with by the route that we

propose, does the hon. Lady have any other suggestions on how business-to-business consumer exploitation issues can be dealt with properly under competition and consumer law?

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry

I shall need to check exactly what the OFT said about petrol retailing, but it has been decided that there are no competition issues. I am sure that the hon. Gentleman accepts that to try to intervene in the relationships between businesses would be to enter into a massive domain, and trading standards are not resourced to deal with business problems. Over successive years, Governments have taken the attitude that they ought not to be involved, and to do so would be fairly intrusive. Many members of the Committee would have criticised me if I had made such a proposal—for reasons that I would entirely understand. That is why I did not do so.

Question put and agreed to.

Clause 201 ordered to stand part of the Bill.

Schedule 13 agreed to.