Tuesday 26th January, 2016

To protect groceries suppliers, Groceries Code Adjudicator Christine Tacon, has told Tesco to introduce significant changes to practices and systems after the supermarket seriously breached the industry wide Supply Code of Practice.

She found that the retailer had acted unreasonably when delaying payments to suppliers.

Ms Tacon said: “The length of the delays, their widespread nature and the range of Tesco’s unreasonable practices and behaviours towards suppliers concerned me. I was also troubled to see Tesco at times prioritising its own finances over treating suppliers fairly."

Her investigation started in February following the supermarket’s announcement on its profit over-statement and the receipt of information from the retailer and the sector.

During the investigation she found delay in payments arising from data input errors, duplicate invoicing, deductions to maintain Tesco margin; and unilateral deductions resulting from forensic auditing, short deliveries and service level charges.

Ms Tacon said: “The sums were often significant and the length of time taken to repay them was too long."

"For example one supplier was owed a multi-million pound sum as a result of price changes being incorrectly applied to Tesco systems over a long period. This was eventually paid back by Tesco more than two years after the incorrect charging had begun."

Her five recommendations include stopping Tesco from making unilateral deductions from money owed for goods supplied. Suppliers will be given 30 days to challenge any proposed deduction and if challenged Tesco will not be entitled to make the deduction.

“I am pleased that many suppliers have reported improvements in their relationship with Tesco to me since the period under investigation. Tesco has also kept me informed of changes it is making to deal with the issues."

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