EMBATTLED retailer Tesco is facing an official investigation into its treatment of suppliers after an industry watchdog said there was “reasonable suspicion” the chain had breached the groceries supply code of practice.
Supermarket ombudsman Christine Tacon launched the probe after considering information about Tesco’s practices associated with last year’s £263 million profit over-statement.
Tacon has held talks with the supermarket giant, which is led by chief executive Dave Lewis, and is now seeking more information from suppliers and others to determine what action to take. The investigation, which is the first of its kind, is expected to take up to nine months.
The role of the groceries code adjudicator (GCA) was set up in 2013 to regulate the relationship between the ten largest retailers and their suppliers.
“This is the first investigation I have launched and it is a significant step for the GCA,” Tacon said.
“I have taken this decision after careful consideration of all the information submitted to me so far. I have applied the GCA published prioritisation principles to each of the practices under consideration and have evidence that they were not isolated incidents, each involving a number of suppliers and significant sums of money.”
A Tesco spokesman said: “We have worked closely with the office of the adjudicator since its creation to put in place strong compliance processes.
“Following our announcement last September regarding commercial income, we have worked with her to identify any relevant issues. An internal review we carried out and shared with the GCA identified some areas of concern. We have taken action to strengthen compliance and, as we have announced, we are changing the way we work with suppliers.”
He added: “We will continue to co-operate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback.”
Business Secretary Vince Cable said the probe’s launch “shows we have created a regulator that has real teeth”.