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TescoGate will be major test for Groceries Code warns government chief

Published:  07 November, 2014

The head of the government's business select committee has written to the Groceries Code Adjudicator about how Tesco practices may have infringed the "spirit" of the Code and what action is being taken.

The head of the government's business select committee has written to the Groceries Code Adjudicator about how Tesco practices may have infringed the "spirit" of the Code and what action is being taken.

Tesco has been under intense scrutiny since it misstated its profits to the tune of £263 million, and how it deals with suppliers has been a major area of focus. Yesterday, it was reported that business secretary Vince Cable has also written to the Adjudicator raising concerns about how the supermarket deals with its suppliers.

Since the retailer's global head of beers, wines and spirits Dan Jago was suspended last month, how deals were conducted in this category have moved into the spotlight.

Adrian BaileyBusiness committee chair Adrian Bailey MP has written to the Groceries Code AdjudicatorThe move follows a letter from Business Secretary Vince Cable to the Adjudicator, which intensifies pressure on Tesco following its accounting irregularities.

Speaking exclusively to Harpers.co.uk earlier today, Adrian Bailey MP, chairman of the government's business, innovation and skills select committee, said while he was not proposing any formal investigation on the committee's part yet, he was keen to gather views on how the code is working in relation to the Tesco accounting scandal.

In a letter dated November 5 to Christine Tacon, Groceries Code Adjudicator, he asks for her views on three topics:

  • Whether there is any evidence of Tesco practices not complying with the Groceries Code;
  • Whether she has had any representations from suppliers about their contractual relations with Tesco and
  • Whether concerns have been raised about the impact on suppliers of contacting the regulator.

It also asks for clarity on what aspects of the Tesco investigation fall under the auspices of the Groceries Code Adjudicator in relation to the alleged unfair practices.

"On the face of it, there have been practices which, if not contravening the letter of the code certainly seemed to have contravened its spirit," Bailey told Harpers.co.uk.

He highlighted an area of concern over the Groceries Code and the "powers of the adjudicator". "If issues are raised about how the code is being used or not used, and the powers of the adjudicator, then we would need to look at that again."

"There's only so much you can do through legislation and regulation. This is a cultural issue - the way big multiples deal with their suppliers."

He said that if current regulations were not "doing enough" the committee could look at that as part of a bigger inquiry.

"We will wait to see the response and see which way we want to go," he said.

But, he added, "we are running out of time before the next general election, so it may become a legacy issue, but we will continue to monitor it," he said.

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