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Tesco 'deliberately delayed payments to grocery suppliers'

By John Mulgrew

Published 27/01/2016

Tesco in breach of the industry code
Tesco in breach of the industry code

Supermarket giant Tesco "seriously" breached an industry code by "knowingly" delaying payments to suppliers, an investigation has found.

Tesco, which has around 55 stores here, was found to have "intentionally delayed" paying suppliers.

And according to one Northern Ireland supplier, who wished to remain anonymous, the retailer's lack of response regarding problems can often be "detrimental" to business.

"In the past few months Tesco have started to pay invoices within two weeks, very prompt, and as a smaller supplier that has been a great help for us. But any queries and mistakes take much longer to fix, and can be detrimental," the supplier said.

"With such a large organisation it's hard to actually talk to someone in their accounts, with inquiries always being forwarded to India, where calls are left unanswered and many man hours are required to track down a decision-maker who can correct payments that are wrong."

The outcome of the Groceries Code Adjudicator (GCA) has been welcomed by Ian Marshall, president of the Ulster Farmers' Union (UFU).

He said it highlights "the problems the UFU and others have been highlighting for some time about the unfair squeeze retailers place on suppliers".

"The result of that pressure, as we see from this report, is that prices and suppliers' margins are forced down," he said.

He said he hoped Tesco would live up to assurances that suppliers would be treated more fairly.

"Every business has to make a profit, we recognise that. But power and dominance in the food sector comes with responsibilities, and the GCA report has made that clear. I believe this will act as a warning to Tesco and other retailers that they can no longer exploit suppliers and not expect to be challenged."

GCA Christine Tacon made a series of recommendations to stop the practices, saying the retailer should be more transparent in its dealings with suppliers.

No financial penalty was imposed because this power was only given to the Adjudicator after she launched her investigation.

Her 84-page report said Tesco had breached the legally binding code aimed at protecting groceries suppliers.

And with trading conditions "challenging" in the agri-food sector, "prompt payment and cash flow is in many cases as important as profitability", according to Northern Ireland Food and Drink Association (NIFDA) executive director, Michael Bell.

"NIFDA lobbied hard for the creation of the Groceries Code Adjudicator and it is reassuring to see the code being implemented and creating a fairer balance between suppliers and supermarkets. The positive behavioural change being driven by the GSCOP will benefit everyone in the supply chain."

Belfast Telegraph

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