The Tesco accounting scandal took a turn for the worse after the new supermarket watchdog said it would investigate the retailer’s treatment of its suppliers.
In its very first formal investigation since 2013, the Groceries Code Adjudicator (GCA) announced it had “reasonable suspicion” that the retailer had violated the UK industry’s code of practice. The code comprises a number of measures relating to payment of suppliers
The investigation will focus on allegations that Tesco had made delayed payments to suppliers and asked for payments from businesses in order to provide better product positioning in Tesco stores.
The GCA said the investigation was launched to deal with information “relating to practices associated with the profit over-statement announced by the retailer.”
Phil Orford, CEO of the Forum of Private Business, which represents Tesco suppliers, said, “This is yet another example of the supply chain abuse that threatens to break the backbone of the British economy – small businesses.”
The GCA currently does not have the authority to fine erring companies, but it can do a “name and shame” of businesses that are found to be in violation of the code and consequently issue recommendations to all guilty parties.
Christine Tacon, the adjudicator, noted the launch of the watchdog’s very first investigation was a “significant step” and said, “I have taken this decision after careful consideration of all the information.”
Founded in 1919, Tesco is a UK-based multinational grocery and merchandise retailer headquartered in Cheshunt, Hertfordshire, England, United Kingdom.” Formerly a UK-focused retailer, it is currently the world’s third largest retailer in terms of profits and second-largest retailer in terms of revenues. Tesco has stores scattered in 12 countries across Europe and Asia, and is the grocery market leader in the UK (with approximately 30 percent market share), the Republic of Ireland, Malaysia, Thailand, and Hungary.
Tesco has been at the forefront of other criticisms in the past, such as involving price fixing (back in 2007 with five big supermarkets – Safeway, Tesco, Asda, Morrisons and Sainsburys – and a few dairy companies); corporate tax structure; expansion to certain areas; horse meat found in burgers; ties to slavery in Thailand; and mothballing of new stores (due to the company’s financial crisis in 2014).