Tesco admits to breaking grocery code of practice over treatment of suppliers

The grocer was accused of mistreating and delaying payments to suppliers in February by the Groceries Code Adjudicator (GCA).

Tesco stated in its Annual Report: “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.”

“We are taking effective action to prevent this arising again. We are fundamentally changing the way we work with our suppliers to deliver a more sustainable and collaborative business model for everyone in the supply chain.”

The grocer said it would also begin a comprehensive programme for new starter training as well as annual refresher courses. It will also implement ‘deep dive’ audits throughout the year and introduce bi-annual compliance declarations and disciplinary action where necessary.

Adjudicator investigation

GCA Christine Tacon began investigating Tesco in February over its supplier relationships, with the process expecting to take up to nine months. Tacon is looking into Tesco’s profits and alleged delays in payments to suppliers.

Tesco said 18 code-related complaints were raised by suppliers this year, and that all but one complaint has been resolved.

“We have continued our positive engagement with the GCA, Christine Tacon, and her office,” said Tesco. “Specifically, we are in ongoing dialogue with the GCA around the probable breaches of the Code we have identified and our proposed remedial actions.”

But Tacon’s powers as GCA are limited to recommendations and to name and shame those who have breached the code.

But the GCA’s powers are being extended so that in the future it will be able to fine retailers up to 1% of UK revenue, such powers were not in place when Tesco’s over-statement was announced and the provisions are not retrospective.