The Groceries Code Adjudicator (GCA) could use new powers to impose a fine on retailer Tesco, after it established a “reasonable suspicion” that the UK retailer had broken regulations.
In December 2012, the adjudicator was granted the power to levy fines on supermarkets that it found in breach of the groceries code.
Now, Tesco – amid accusations that the supermarket was involved in pressurising suppliers to drive down costs, and following inaccurate reporting of its own financial performance – is being investigated by current GCA Christine Tacon.
Tacon said: “I have reasonable suspicion that Tesco breached the code in two areas. One is reasonable payments and second is payments for better positions on-shelf outside promotions.
“I can legally require suppliers to give me the information I want for an investigation. I have a legal duty to protect their anonymity. And in this case there is very much safety in numbers and I frequently hear about the same issues from every sector in groceries from toilet rolls, to apples, to wine.
But Tacon has admitted that she is unsure whether she has the ability to reprimand Tesco, as the offences under investigation occured before GCA assumed the new powers.
“My sanctions are to issue legally binding recommendations on their processes and how they should behave in future. I can require them to name and shame – take out adverts in terms of what they have done. At this point I don’t have financial penalties because that part of my powers [had] not yet come into legislation.”
A spokesperson for Tesco added: “We have taken action to strengthen compliance and, as we have announced, we are changing the way we work with suppliers. We will continue to co-operate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback.”
GCA’s investigation is expected to last for up to nine months.
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