The Groceries Code Adjudicator, Christine Tacon, today launched an investigation into Tesco, having formed a reasonable suspicion that the retailer has breached the Groceries Supply Code of Practice.
The Groceries Code Adjudicator took the decision after considering information submitted to her relating to practices associated with the profit over-statement announced by the retailer in September 2014.
She has discussed the practices with Tesco and now needs more information from direct suppliers and others to determine what further action to take.
The investigation is expected to take place over the next six to nine months and the Adjudicator has called for evidence to be submitted by 3 April 2015. It will cover the conduct of Tesco plc from 25 June 2013 (when the GCA was created) to 5 February 2015 and focus on:
- Part 4 (paragraph 5) of the Code: No delay in Payments, and
- Part 5 (paragraph 12) of the Code: No Payments for better positioning of goods unless in relation to Promotions.
The investigation will consider the existence and extent of practices which have resulted in delay in payments to suppliers. This will include in particular, but not be limited to, delay in payments associated with:
- 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 positioning of goods (shelf-positioning) which are not related to a promotion.
At this stage the investigation will focus on Tesco only and not extend to other retailers. If, during the investigation evidence is presented to the GCA which indicates that the same practices have been carried out by other designated retailers, consideration will be given to extending the scope of the investigation to include them.
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.”