Tesco to be investigated by grocery industry watchdog over supplier practices

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An official investigation is to be made into Tesco to find out whether the supermarket giant broke the grocery industry watchdog’s rules, including through delayed payments to its suppliers.

The Groceries Code Adjudicator (GCA), Christine Tacon, announced the move today, saying she had formed a "reasonable suspicion" that the retailer had breached the Groceries Supply Code of Practice.

Tacon said she had come to a decision after contemplating information submitted to her in regards to practices associated with the profit over-statement announced by Tesco last September.

She has discussed the practices with Tesco and said she now needs more information from direct suppliers and others to determine what further action to take.

The role of the Adjudicator was set up in 2013 to regulate the relationship between the 10 largest retailers and their suppliers.

The investigation into Tesco is the first of its kind and is expected to take up to nine months. Evidence is to be submitted by3 April.

It will cover the conduct of Tesco plc from June 25 2013 (when the GCA was created) to February 5 this year, and focus on part 4 (paragraph 5) of the code - no delay in payments - and part 5 (paragraph 12) -

A statement said: "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:

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 plc 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.

Ms 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."

A Tesco spokesman said: "We have worked closely with the office of the Adjudicator since its creation to put in place strong compliance processes.

"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."

Additional reporting by Press Association