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The Groceries Code Adjudicator, advised by Fieldfisher, has completed her investigation into allegations that Tesco breached a legally binding code and has told the company to introduce significant changes.
Following a year-long investigation the Adjudicator, Christine Tacon, found that the retailer had acted unreasonably when delaying payments to suppliers, often for lengthy periods of time, and considered Tesco's breach of the Code to be serious due to the widespread and varying nature of the delays in payment.
Tacon was also concerned about the company's unilateral deductions of payments owed to suppliers for goods supplied. She has recommended stopping Tesco from making these deductions, as well as insisting the company corrects pricing errors within seven days of notification by a supplier. Tesco has also been told to improve its invoices by providing more transparency and clarity for suppliers, and to put its finance teams and buyers through training on the findings of the investigation.
Christine Tacon said: "The length of the delays, their widespread nature and the range of Tesco's unreasonable practices and behaviours towards suppliers concerned me. I was also troubled to see Tesco at times prioritising its own finances over treating suppliers fairly.
"My recommendations will deal with the weaknesses in Tesco's practices during the period under investigation.
"I am pleased that many suppliers have reported improvements in their relationship with Tesco to me since the period under investigation. Tesco have also kept me informed of changes they are making to address the issues. This is a demonstration of the impact my role is making. I believe that my recommendations will lead to significant improvements at Tesco and in the sector."
Matthew Lohn, Senior Partner, led the Fieldfisher team advising on the investigation, working closely with the GCA's team.
Christine Tacon launched the GCA's first investigation in February 2015, following Tesco's announcement on profit over-statement and the receipt of information from the retailer and the sector.
The Adjudicator's full report can be found here.