Tesco ‘should pay fine for code abuses’

By Alice Foster contact

- Last updated on GMT

Nearly 90% of readers believe Tesco should be fined, according to FoodManufacture.co.uk survey
Nearly 90% of readers believe Tesco should be fined, according to FoodManufacture.co.uk survey

Related tags: Tesco, Fine

Tesco should be made to pay a fine in the wake of a damning report by the Groceries Code Adjudicator (GCA), according to readers of this website.

Nearly 90% of readers said Tesco should be fined, while 77% of readers believed that Tesco should also recompense suppliers, found a survey by FoodManufacture.co.uk.

GCA Christine Tacon was unable to impose a fine in this case, but censured Tesco for mistreating its suppliers and breaching the Groceries Supply Code of Practice (GSCP).

FoodManufacture.co.uk reader Lawrence Lynn, who works in the food manufacturing industry, said he believed the mistreatment of suppliers had been going on for more than 30 years. 

‘Tesco’s draconian attitude’

View from reader

“Apologies are too little, too late and piddling little fines will have no impact.

  • Lawrence Lynn, from 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 chain?” ​he asked.

“Apologies are too little, too late and piddling 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.”

The GCA found that Tesco had made unilateral deductions from suppliers’ bills, acted unreasonably and delayed payments, in some cases deliberately to improve profit margins.

Accounting scandal

Tacon’s investigation started after Tesco admitted overstating its half­-year profits in an accounting scandal, which is still being investigated by the Serious Fraud Office (SFO).

Shore Capital analysts Clive Black and Darren Shirley said any fines imposed by the courts would be paid to the public authority, not directly to suppliers. However, civil actions cannot be ruled out.

The GCA did not ‎have the power to sanction Tesco and so, much to the chagrin of some suppliers we sense, no fines were capable of being levied,”​ Black and Shirley said.

“Clearly, any judicial proceedings arising from the SFO investigation could involve sanctions, including a fine upon the company, albeit none of the directors present at the company today were in-situ when the matters under investigation were occurring.”

Poll: ‘What should happen next?’

  • 77% – Tesco should pay a fine and compensate suppliers
  • 12% – Tesco should be made to pay a punitive fine
  • 10% – Nothing: Tesco has admitted its mistake – it’s time to move on
  • 2% – Don’t know

Apologised for malpractice

In response to the GCA findings, Tesco boss Dave Lewis has apologised for historic malpractice but stressed that the retailer has changed its ways. 

However, only 10% of surveyed readers said no action should be taken against Tesco because the retailer had admitted its mistake.

FoodManufacture.co.uk reader Timothy Martin, who posted on this website, called on other shoppers to consider joining his family’s boycott of Tesco.  

“They have demonstrated their total contempt for their suppliers, many of whom have had serious financial difficulty as a result,” ​Martin said.

Meanwhile, Facebook user Adrian Matthews posted the Food Manufacture Group’s page: How irresponsible of them ... Empty core values.”

Claire Fry added: And a mere slap on the wrist, no financial penalty. I won’t pay next time I go in. Or maybe it would be easier just to shop locally and bypass them completely? Greed is everywhere.”

Tesco has yet to respond to a request for comment. 

View from union

The Farmers’ Union of Wales (FUW) said the union was extremely disappointed that Tacon was only given the power to fine retailers in 2015, which meant she could not impose a fine in this case.

FUW milk and dairy produce committee chairman Rhydian Owen said: “The FUW repeatedly called for the government to activate the adjudicator’s power to fine in order to bring retailers exhibiting unfair practises to account.

“It is therefore infuriating that such powers were not allocated in time to see those breaches by Tesco properly penalised.” 

Related topics: Supply Chain

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