TESCO: Two years to pay supplier

Taken from current issue of Big Issue North magazine. 

A farmers body has called for additional powers for the groceries watchdog as it investigates the relationship between the top supermarkets and their suppliers.The Tenant Farmers Association (TFA) spoke out after Christine Tacon, the Groceries Code Adjudicator (GCA), found that Tesco, already under investigation by the Serious Fraud Office, had acted unreasonably and broken the Groceries Supply Code of Practice (GSCOP) by delaying payments to suppliers – in some cases for more than two years. According to Tacon, Tesco had “intentionally delayed” paying money it owed. 

Disputed invoices 

She ordered Tesco to “support the prompt resolution of disputed invoices by providing a single point of contact for suppliers” and to provide “a detailed implementation plan” on how it will comply with her recommendations. 

But she was unable to fine Tesco as she only acquired this power in April 2015, after she began her investigation. 

Tesco has since indicated that it has made changes to improve its code of compliance and Tacon
has reported that “the overwhelming majority of the suppliers I spoke to during my investigation told me that their relationships with Tesco were more positive today compared to during the period under investigation”. 

Tacon said she would be asking the other major supermarkets to make “sure that similar practices do not exist in their companies”. 

Although TFA chief executive George Dunn welcomed the report he felt that it “scratched the surface of bad practice and underlines the need for the GCA to have further powers to investigate the true extent of retailer malpractice”. 

The government is reviewing the GCA’s powers later this year but Dunn said that “must be brought forward in light of the report into Tesco, who somewhat frustratingly have escaped being fined as it took too long for the GCA to be given powers to do so”. 

Dunn added: “Ofsted can investigate schools on their own initiative. The GCA should be given similar powers to investigate code compliance amongst retailers, who knowing they might be investigated at any time will have an incentive to ensure they are completely compliant at all times with the code.” 

Dunn also wants Tacon to have powers to look at the whole supply chain, including food processing companies that sit between farmers and supermarkets. 

Low prices 

Dunn said the TFA had “concerns about how Tesco secured its milk and the impact this has on grassroots dairy farmers”, adding: “Low supermarket prices could result in the loss of a large part of our food production base and in the long term we will all be losers”. 

A spokesperson for the Department for Business Innovation and Skills (BIS), said the department had “full confidence” in the GCA and had not seen the TFA’s proposal for Ofsted-like powers to be given to it. 

The spokesperson added: “The government is establishing a Small Business Commissioner to help small businesses handle disputes with larger companies over issues like late payment. The Commissioner will have the power to name businesses if appropriate and this will help bring about a cultural change in the way businesses deal with one another.”