Tesco is being investigated for potential breaches of the Groceries Supply Code of Practice following information from the investigation into its profit over-statement, it has been announced today.
Groceries Code Adjudicator (GCA) Christine Tacon said there is “reasonable suspicion” that breaches have occurred, and is now calling for direct suppliers to Tesco to come forward with more information.
The investigation, which is the first of its kind by Tacon and the GCA office, is expected to take place over the next six to nine months and any evidence must be submitted by 3 April 2015.
Possible breaches of the code include payments for better positioning of goods outside of agreed promotions, and the existence and extent of practices resulting in delayed payments to suppliers.
These may have included short deliveries, including imposition of penalties; consumer complaints where the amounts were not agreed; invoicing discrepancies such as duplicate invoicing; deductions for unknown or un-agreed items; deductions for promotional fixed costs (gate fees) that were incorrect; deductions in relation to historic promotions that had not been agreed.
A Tesco spokesperson said an internal review that the retailer shared with the GCA had flagged up “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 cooperate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback,” the spokesperson said.
GCA Christine 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.”
Although the investigation will only focus on Tesco at this stage, Tacon said other retailers may face the same process if any information comes to light during the Tesco investigation that indicates similar practices.
Managing director of analysts IGF Invoice Finance, Tracy Ewen, said: “The payment terms that many suppliers in the UK are subjected to would mean that goods delivered today wouldn’t need to be paid for until after the next general election.
“Clearly for many small businesses this isn’t a practice that’s sustainable, but it is a reality that they have very little power to change. The intense cashflow pressures that these firms face should be enough to push the government into taking a stronger regulatory stance about the abuse of power by some of the UK’s larger companies.”
No comments yet