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Tesco to face reprimand over dealings with suppliers

26 January 2016

Tesco has been reprimanded by the industry watchdog after a report found it delayed payments to suppliers.

The Groceries Code Adjudicator found the supermarket giant breached the groceries code on one count, following a year-long investigation. 

Another allegation that Tesco demanded payments for better shelf positioning was thrown out. 

Christine Tacon, director of the GCA first discussed her mandate at the Appetite for Engineering conference in 2013. 

She said last year when the Tesco investigation was announced that she had “reasonable suspicion” the company had breached the groceries code. 

She told BBC Radio 4 at the time: “I can legally require suppliers to give me the information I want for an investigation. I have a legal duty to protect their anonymity. And in this case there is very much safety in numbers and I frequently hear about the same issues from every sector in groceries from toilet rolls, to apples, to wine. I’m just looking for a large amount of evidence and anonymity will be protected.”

She added: “My sanctions are to issue legally binding recommendations on their processes and how they should behave in future. I can require them to name and shame - take out adverts in terms of what they have done.”

In the last year the GCA has since been handed new powers to fine retailers up to 1 per cent of their annual revenue. However, because those new powers were introduced after the Tesco probe was established, the company is unlikely to face any financial penalties as a result of the breach. 

Tesco has already admitted in its latest annual report that it may have breached the code. 

“Regrettably, we have concluded that there have been a number of instances of probable breaches of the code which fall short of the high standards we expect to uphold in our dealings with our suppliers,” the report said.

The GCA ruling comes at the same time as a Serious Fraud Office investigation into a £326m accounting scandal at Tesco. Analysts have warned that the company could face a £500m fine over the scandal. 

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