Tesco and other supermarkets look set to escape a new investigation into allegations that millions have been paid by big suppliers to secure the best positions on the shelf.
Groceries Code Adjudicator Christine Tacon, who launched a probe into the alleged practices in June, said she had received “strong views” from large retailers and big suppliers in the food and drink industry claiming that such practices, unearthed in her previous Tesco investigation, were “no longer a big issue”.
Tacon also said that some evidence submitted to her consultation by suppliers had raised issues that were a matter of competition law, rather than GSCOP, which meant her hands were tied.
The Grocer revealed at the start of the consultation that the Competition & Markets Authority had refused to take part in the Adjudicator’s 12-week probe.
Tacon said this week that she would not be making a final decision about what action to take until February. However, it appears increasingly likely that she may tackle the issue with the launch of a new best practice ruling, rather than set in motion a change to statutory guidance, which could result in a fresh industry GCA investigation.
“This is potentially a very sensitive issue and I’ve had a range of views expressed from different retailers and suppliers,” Tacon said.
“I received some strong views from retailers and large suppliers, although I didn’t get the volume from small suppliers that I would have liked. The retailers and large suppliers came back with very detailed responses whereas a lot of the evidence from smaller suppliers was anecdotal. The general view is that this is no longer a big issue.”
After her investigation into Tesco last year, Tacon revealed she came across evidence that companies had been expected to fork out sums running into “tens of thousands” for positioning on shelf at the supermarket and that those who failed to come up with such large sums risked being delisted.
The probe attempted to unearth evidence of such practices at Tesco and other retailers, with Tacon having said paying for so-called “captain currency” was “commonplace” in the industry.
However, this week Tacon said there was also a widespread view in the industry that Tesco in particular had undergone a dramatic change in behaviour since its financial scandal and the subsequent new drive on transparency.
Tacon also revealed she would no longer require Tesco to report formally against the recommendations enforced on the retailers after her investigation, though she said she would still be “monitoring progress”.
“Tesco has improved dramatically,” she said. “I would have liked to have heard more from smaller suppliers as I am very keen to champion them. Some of the issues that were raised by suppliers were issues about competition law and not areas where the Code was being broken.”
The CMA ducked out of the probe, claiming it was “the GCA’s responsibility” to police the Code and that there was “no need for it to get involved”.
However, while the threat of a major clampdown on payments for positioning appears to have been lifted, Tacon warned she was close to launching an official investigation into alleged ‘Drop and Drive’ discrepancies. In June, The Grocer reported these could be costing suppliers “hundreds of millions a year” despite the matter being closed by the Adjudicator last year.
Fresh and chilled food suppliers in particular claimed they were experiencing widespread delays and (often unwarranted) deductions in payment over the issue - which can see suppliers financially penalised over perceived discrepancies in pallet loads delivered to distribution centres. Progress on an industry-wide solution has become “painfully slow”, according to one industry source.
Tacon said she had now re-established drop and drive as part of her top five priorities, coming under the broader subject of delayed payment.
“This is an issue which I want to make really clear is in my headlights,” she explained. “It’s no good retailers promising to do something about this issue, I want to see action. Otherwise, the collaborative phase will come to an end and I will go into investigation mode.”
The Adjudicator said she had received firm evidence that suppliers were being docked substantial sums over disputed orders.
Several retailers are believed to be involved in the drop and drive allegations, though Tacon said it was not an issue “across the board”.
“I have got evidence deductions are still being made, which is why I need to see action,” she added.
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