Tesco faces probe over suppliers practice

Facing more investigation
Facing more investigation

Supermarket giant Tesco is facing an official investigation into practices including any delays in payments to suppliers.

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

She took the decision after considering information submitted to her about practices associated with the profit over-statement announced by Tesco last year.

The company said in September 2014 that it had overstated profits by £250 million, which led to the Financial Conduct Authority launching a probe.

Tesco said it had already changed the way it works with suppliers.

After talks with Tesco Ms Tacon said she needs 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, the first to be held, is expected to take up to nine months and the adjudicator has called for evidence to be submitted by the beginning of April.

It will cover the conduct of Tesco going back to June 2013, when the GCA was created and will focus on payment delays and payments for better positioning of goods unless in relation to promotions.

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 the imposition of penalties, consumer complaints, invoicing discrepancies, and deductions for unknown or un-agreed items.