UK watchdog to probe Tesco's supplier practices | Fin24
 
  • Still falling

    Annual consumer price inflation has dipped to its lowest level in 9 years.

  • Sabotage at Eskom

    President Cyril Ramaphosa says sabotage contributed to power cuts earlier in the week.

  • Digital Banking

    TymeBank says it will be switching gears in a bid to triple its size by the end of 2020.

Loading...

UK watchdog to probe Tesco's supplier practices

Feb 05 2015 18:15

London - Britain's grocery industry watchdog opened an investigation on Thursday into Tesco's relations with its suppliers, dealing a further blow to the battered reputation of the country's biggest supermarket.

The Groceries Code Adjudicator (GCA) Christine Tacon, set to be given the power to fine retailers up to one percent of their annual UK turnover, said she had formed "a reasonable suspicion" that Tesco had breached the industry's code of practice.

She said there was evidence that breaches "were not isolated incidents, each involving a number of suppliers and significant sums of money".

She will examine the existence and extent of practices which resulted in delayed payments to suppliers. The inquiry will also look into payments made by suppliers to secure more prominent places on shelves for goods.

The investigation comes on top of those by Britain's Serious Fraud Office and the Financial Reporting Council in the wake of Tesco's £263m profit over-statement. The firm is also facing possible investor lawsuits in the United States.

Dave Lewis, who became Tesco CEO last September, has announced plans to cut costs and sell assets to tackle the crisis he inherited at Britain's biggest retailer. Tesco had UK sales of £48bn in 2013-14.

Tacon said she took the decision to launch an investigation after considering information submitted to her relating to Tesco's accounting irregularities.

"This is the first investigation I have launched and it is a significant step for the GCA," she said.

Having discussed the practices with Tesco, Tacon now needs more information from suppliers to determine what further action to take. She called for evidence to be submitted by April 3.

"We will continue to cooperate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback," Tesco said.

Under Lewis, Tesco has acted to strengthen compliance and is changing the way it works with suppliers.

Shares in Tesco, which last year hit a 14-year low after four profit warnings, slipped 0.8% to 228 pence by 09:15 GMT.

The GCA probe will cover the conduct of Tesco from June 2013, when the watchdog was created, to February 2015, and was expected to take six to nine months.

Last week the government set out plans to give the GCA powers to impose fines before the May 7 general election.

tesco  |  retail  |  investigations
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.
 

Company Snapshot

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote

Loading...