Tesco’s ‘scandalous situation’ provokes anger

By Alice Foster contact

- Last updated on GMT

The Groceries Code Adjudicator was praised for her “fearless” investigation
The Groceries Code Adjudicator was praised for her “fearless” investigation

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Tesco’s mistreatment of suppliers has been slammed as a “scandalous situation” after the publication of findings by the Groceries Code Adjudicator (GCA).

A large number of people took to Twitter this morning (January 26) to voice their anger and frustration that Tesco had treated its suppliers unfairly and yet escaped a fine.

Some Twitter users vowed to boycott Tesco, while others said the retailer should be forced to compensate suppliers affected. See the Tweets below.

The investigation by the Groceries Code Adjudicator Christine Tacon has been applauded for revealing that Tesco, in some cases, deliberately delayed paying its suppliers.

‘Improve own financial position’

“I found that Tesco knowingly delayed paying money to suppliers in order to improve its own financial position,”​ Tacon said in her report published today (January 26).

View from government

“Christine Tacon has done a thorough and fearless investigation into a scandalous situation.” 

  •  Anna Soubry, business minister

Tacon was also alarmed by two other key issues – the length of payment delays and Tesco’s unilateral deductions from supplier payments.

Business minister Anna Soubry said: “Christine Tacon has done a thorough and fearless investigation into a scandalous situation. Tesco say they have changed their practices and I very much hope they have.”

Tacon only received the power to fine retailers in 2015, which meant she was unable to impose fines in this case. Cantor Fitzgerald retail analyst Mike Dennis said: “My view on that is the horse has bolted there.”

Good news for SMEs

Meanwhile, IGF​ Invoice Finance md Tracy Ewen welcomed the GCA ruling as good news for small and medium-sized enterprises (SMEs) who did not have the power to confront Tesco in the past.   

For many in the supply chain, Tesco’s payment terms have been unsustainable due to delays in payments and unexpected changes in contract terms,”​ Ewen said.

“The GCA stepping in to censure Tesco over its behaviour is a step forward in helping small businesses tackle the constant stream of unfair payment terms coming from large corporations.”

The National Farmers Union president Meurig Raymond said: “I welcome Christine Tacon’s report signalling the fundamental change needed in Tesco’s handling of its direct suppliers.

‘Actions speak louder than words’

​Tesco has committed to act on these findings, but we’ve been here before; actions speaker louder than words.  ​ 

“It is disturbing to read that Tesco has undermined the trust it had with its suppliers through widespread delays to payments in breach of the Groceries Supply Code of Practice.

To read more about the ruling click here​ and to watch an apology by Tesco boss Dave Lewis click here​.

What do you think should happen next? Take part our poll below the tweets at the bottom of this article. 

Survey

What should happen next?

  • Tesco should be made to pay a punitive fine

    11%
  • Tesco should pay a fine and compensate suppliers

    76%
  • Nothing: Tesco has admitted its mistake – it’s time to move on

    11%
  • Don’t know

    2%

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2 comments

Why is anybody so surprised?

Posted by Lawrence Lynn,

This has been going on for 30+ years to my knowledge working in the Food Manufacturing industry. What about all the companies scaled or run down, and out of business, and what about the many hundreds made redundant by Tesco's draconian attitude to the supply change. Apologies are too little too late and piddlying little fines will have no impact. Let us all hope that HMRC and the Financial authorities throw the book at them and all the Tesco directors involved are prosecuted for fraud.

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Mr

Posted by Timothy martin,

My family will now cease using tesco
I would ask other shoppers to reconsider their continued support to such a greedy and utterly selfish company. They have demonstrated their total contempt for their suppliers, many of them have had serious financial difficulty as a result

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