Grocery Adjudicator launches Tesco investigation

By Gemma McKenna

Published: 05 February, 2015

The Groceries Code Adjudicator has launched an investigation into Tesco over evidence that it delayed supplier payments and demanded fees for better positioning on shelf.

Christine Tacon said she has formed "reasonable suspicion" that the Groceries Supply Code has been breached, after receiving information on practices linked to the £263 million profit overstatement from September 2014.

Following discussions with Tesco, Tacon is now seeking more information from suppliers before deciding what action to take.

The investigation is expected to last between six and nine months, and she has called for evidence to be submitted by April 3, 2015, covering Tesco's conduct from June 25, 2013, when her office was created, to today, February 5, 2015.

The inquiry will focus on delayed payments relating to

Short deliveries, including imposition of penalties

Consumer complaints where the amounts were not agreed

Invoicing discrepancies such as duplicate invoicing where two invoices were issued for the same product

Deductions for unknown or un-agreed items

Deductions for promotional fixed costs (gate fees) that were incorrect

Deductions in relation to historic promotions which had not been agreed.

The investigation will also consider the existence and extent of practices where suppliers have been required to make payments for better shelf-positioning on goods that are not on promotion.

While the adjudicator has underlined that currently the investigation relates only to Tesco, if evidence comes to light on other retailers' practices, she may widen the scope of the investigation to include them.

A recent survey of 200 wine and spirits suppliers carried out by Harpers.co.uk showed that 95% would like to see reform in the sector, with Tesco being singled out as the worst retailer to work with by one third of the 200 respondents.

Tacon said: "This is the first investigation I have launched and it is a significant step for the GCA. I have taken this decision after careful consideration of all the information submitted to me so far.

"I have applied the GCA published prioritisation principles to each of the practices under consideration and have evidence that they were not isolated incidents, each involving a number of suppliers and significant sums of money."

Tesco said it has "worked closely with the office of the Adjudicator since its creation to put in place strong compliance processes".

A spokesman continued: "Following our announcement last September regarding commercial income, we have worked with her to identify any relevant GSCOP issues. An internal review we carried out and shared with the GCA identified some areas of concern.

"We have taken action to strengthen compliance and, as we have announced, we are changing the way we work with suppliers.

"We will continue to co-operate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback."

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