Supermarket giant Tesco has been found guilty of breaching the Groceries Supply Code by intentionally delaying payments to suppliers, according to the Groceries Code Adjudicator (GCA).
In a long-awaited report on Unfair Trading Practices (UTPs) in Tesco, published yesterday, the GCA “found that Tesco knowingly delayed paying money to suppliers in order to improve its own financial position" - a finding that came as no surprise for MEP Alyn Smith, who acted as Shadow Rapporteur for the European Parliament's report on UTPs in the food supply chain.
"UTPs have been strangling our farmers, from retrospective deductions to the threat of de-listing, and the power dynamic between suppliers and retailers is weighted heavily in favour of the latter.
"I'm pleased that the GCA has finally recognised the seriousness of the situation regarding breaches of the Groceries Supply Code, but the lack of significant consequences for Tesco – specifically the absence of a financial penalty for unfair practices which have cost suppliers real money – underlines what I have been saying for some time, that the UK Government has been far too slow in giving the GCA real teeth that will make retailers think twice about abusing their relationship with their suppliers.
"As it is, the fact that a fine cannot be levied as the Government did not give the GCA powers to do so until last year is disappointing. Mere recommendations provide no guarantees to farmers that further abuses will not occur in future.
"Some of the findings of the report are disgraceful: some Tesco buyers took advantage of outstanding payments to use as leverage with suppliers for other items of negotiation; there was a lack of interest in correcting administrative errors promptly; payments were deducted without proper discussion with suppliers; and respectful relations with suppliers were sacrificed to a cult of margin maximisation to meet arbitrary quarterly targets.
"There is plenty of evidence of a problematic culture in the food supply chain which recommendations on their own may not necessarily solve.
"It's time for the GCA to be given real resources and powers to tackle unfair food supply chain practices; otherwise it should be shut down."