Radio Sandwell News

Tesco investigated by new regulator

2015-02-05 11:12:03

Tesco

Tesco is to face another investigation into its relations with suppliers, amid concerns that it breached the Groceries Supply Code of Practice.

The Groceries Code Adjudicator (GCA) joins the Serious Fraud Office and the Financial Reporting Council in investigating the supermarket chain.

The adjudicator, Christine Tacon, said she had "reasonable suspicion" that the code had been breached.

However, the GCA will not be able to fine Tesco for past offences.

The GCA will look into Tesco's profits and delays in payments to suppliers.

The investigation is expected to take up to nine months.

In a statement, Business Secretary Vince Cable said: "Last week I secured the final agreement in government to proceed with legislation to enable the regulator to impose hefty fines for those supermarkets found guilty of mistreating suppliers."

These penalties on large retailers could total up to 1% of their annual UK turnover.

But Ms Tacon told the BBC that despite this legislation she could not fine Tesco, as any offences she was looking at would have been committed before she was given the power to do so.

Mr Cable said: "This is an historic day for the groceries code adjudicator and shows we have created a regulator that has real teeth.

I have also agreed an increase of almost 40% in the adjudicator's funding for the coming year, so that it can carry out more of its important work.

Now that a formal investigation has been launched, I would encourage anyone with any evidence of wrongdoing to come forward and to be confident of being able to do so confidentially, as their anonymity will be protected by law."

Ms Tacon said: "This is the first investigation I have launched and it is a significant step for the GCA.

"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."

Tesco

Analysis: Kamal Ahmed, business editor

One frustration Christine Tacon will be feeling this morning is over her inability to fine Tesco - or any other supermarket for that matter - if she finds that supplier regulations have been breached in the past.

As Panorama revealed last month, she first applied for powers to fine supermarkets up to 1% of UK revenues in December 2013. In Tesco's case, that would mean a figure well north of £400m.

There was then a delay of over a year before the government finally acted to grant those powers last month - two weeks after the BBC revealed the delay.

Vince Cable blamed inertia in the Treasury for the snail's pace approach.

Ms Tacon cannot use her fining powers retrospectively, so is left with "legally binding recommendations" and naming and shaming in her arsenal of sanctions against Tesco if wrongdoing is found.

Ms Tacon has called for evidence to be submitted by 3 April.

Tesco

A Tesco spokesperson said: "We have worked closely with the office of the adjudicator since its creation to put in place strong compliance processes.

"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."

Tesco

Source: bbc.co.uk

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