Another day, another piece of bad news for Tesco. Today Christine Tacon, the Groceries Code Adjudicator, has announced she has launched a formal investigation into the supermarket’s treatment of suppliers - specifically claims that Tesco delayed payments to suppliers and took money in return for giving products more prominent positions on shelves.
It’s another headache for the supermarket which is working to mend its relationship with suppliers, and is already under investigation by the Serious Fraud Office for its £263m overstatement of profits, which first emerged last September.
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This will be the first investigation for Tacon since the role was created in 2013. The adjudicator has faced criticism for not acting despite widespread acknowledgment that supplier mistreatment is common practice. The Government is planning to bolster her impact by granting her the ability to mete out financial penalties.
‘This is a historic day for the groceries code adjudicator and shows we have created a regulator that has real teeth,’ the business secretary, Vince Cable, said today. But Tacon won’t be able to bare those teeth at Tesco. Her current remit allows her to issue ‘legally binding recommendations’ and to name and shame, but plans to let the adjudicator fine supermarkets have not yet passed through parliament and cannot be applied retrospectively.
It’s hard to envy the scale of Tacon’s task. She’s working part-time and leading a team of just five others to take on a complex and widespread practice, some of the victims of which are often afraid to speak out for fear of losing future business. This one investigation alone is expected to take up to nine months.
Supplier controversies are not a new phenomenon and are by no means an issue confined to Tesco. In the last few months alone we’ve seen headlines alleging malpractice at Premier Foods, the food manufacturer 2 Sisters and confectionery maker Mars, among others. Could it be that suppliers are finally gaining the confidence to speak up?