Stories have been swirling for a while, but now Tesco has admitted that it is likely that it breached its industry’s code of practice in dealing with its suppliers.
The admission was made in the small print of its latest annual report which notes there is likely to have been a “number of instances” where it contravened the Groceries Supply Code of Practice.
The Groceries Code Adjudicator (GCA) announced last February that it was investigating the retailer over its treatment of suppliers, including allegations of delayed payments and cash demands for prominent displays of products.
While the GCA cannot levy fines, it can name and shame companies which do not respect the code.
The Serious Fraud Office is also undertaking a probe into Tesco’s massaging of figures. The scandal resulted in a £326m hole in company profits and arose from the way in which Tesco booked payments from suppliers.
When the news broke, the new chief, Dave Lewis, started an internal review into the supply chain. It then told the GCA there were “some areas of concern”.
But with the publication of the annual report it seems to be the first time Tesco has formally stated that it may have breached the code.
The company says: “Regrettably, we have concluded that there have been a number of instances of probable breaches of the Code which fall short of the high standards we expect to uphold in our dealings with our suppliers.”
It added: “We are taking effective action to prevent this arising again. We are fundamentally changing the way we work with our suppliers to deliver a more sustainable and collaborative business model for everyone in the supply chain. In addition, we are significantly up-weighting our Code compliance programme.”
In the last 12 months, the retailer said it had had 18 complaints related to the code. It resolved 17 through discussions with suppliers, and is still in talks with the last complainant.
