Groceries Code Adjudicator Christine Tacon said this week she would not hesitate to force suppliers to give evidence against Tesco, even though she admitted her new fining powers had come too late to be used against the supermarket giant.

This week it was revealed Tacon had launched her first investigation since her appointment two years ago, having found evidence suggesting Tesco had been delaying payments due to suppliers and deducting huge sums, sometimes without even telling them.

The moves come just days after MPs put in motion an agreement to new regulations allowing the Adjudicator to fine retailers up to 1% of turnover, with Tacon having campaigned for more than a year that without the ability to hit retailers in the pocket she had effectively become toothless. Tesco will not be liable for fines, however, because the alleged breaches pre-date the powers.

Tacon decided to step in after being informed by Tesco CEO Dave Lewis of the findings of the Deloitte investigation, which revealed several practices believed to be in breach of the Groceries Supply Code of Practice (GSCOP).

The list of allegations includes consumer complaints where the fines were not agreed, invoicing discrepancies where two invoices were issued for the same product, deductions for unknown or un-agreed items, and “gate fees” for promotional fixed costs that were incorrect, as well as deductions in relation to historic promotions that had not been agreed.

“I’ve even heard of deductions where there has simply been no explanation at all,” Tacon told The Grocer. “With my announcement comes a call for evidence,” she added. This gives me legal powers to get the information I need and I can require information legally from suppliers. I have a duty to get the evidence but I also have a duty to protect suppliers and I can assure them they will be protected in coming forward.”

However, Tacon admitted that fear of reprisals from retailers has been a massive factor in why she has been unable to launch any action until now against supermarkets. “They are worried about retaliation, that is the main reason,” she said.

Tacon strongly denies having not done enough to tackle supplier concerns. “When I first came in I said I would give all retailers a chance to get it right. But if I heard any more evidence I would take action.

“This is now what has happened and it’s being done with the full co-operation of Tesco and because of evidence that Deloitte has uncovered after I originally asked them to extend their investigation to look for any possible breaches of the Code.”

Tacon has not ruled out the investigation being widened to focus on other retailers, if new evidence emerges, raising the prospect that other retailers could face fines while Tesco escapes unpunished. The adjudicator’s investigation, which comes with a Serious Fraud office probe into Tesco still live, has been criticised as too little too late in some quarters, while a supermarket source countered that the situation was a “bloody scandal,” accusing the adjudicator of being “utterly pointless and tokenistic.”

David Sables, chief executive of Sentinel Management Consultants, said Tacon had “put down a marker” to retailers but said it would do nothing to remove the “culture of fear” preventing suppliers from coming forward.

“This is an atypical investigation and it’s not the way the Adjudicator was envisaged to work. Christine Tacon is investigating because of the evidence that has come from the Deloitte investigation. It’s not come from suppliers because suppliers are too scared to come forward because they know that despite the rules on protecting their anonymity, Tesco buyers will be able to work out who it is that has complained.”

“I think today’s development will mean that retailers - and it’s not just Tesco - will behave more responsibly, but it’s not going to solve that fundamental problem. “As for Tesco I don’t think they are going to see this as a big problem.”

Shore Capital analyst Clive Black added: “This feels very much like self-justification by an organisation that has talked much but not actually done anything of note in practical terms.

“Powers were not in place when Tesco’s over-statement was announced and the provisions are not retrospective. Hence, we would be surprised to see a material fine for the supermarket chain.”

A Tesco spokesman said: “We have worked closely with the office of the Adjudicator since its creation to put in place strong compliance processes. Following our announcement last September regarding commercial income, we have worked with her to identify any relevant GSCOP issues.

“An internal review we carried out and shared with the GCA identified some areas of concern. 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 cooperate fully with the GCA as she carries out her investigation and welcome the opportunity for our suppliers to provide direct feedback.”

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