UK Supermarket Watchdog Finds ‘Shocking’ Supplier Payment Tactics

A U.K. watchdog for the supermarket industry has found what she described as “shocking tactics” among the industry’s supplier payments practices, reports said Monday (March 13).

Top grocery chains including Tesco and Morrisons are squeezing their suppliers in ways other than late invoice payments, groceries code adjudicator Christine Tacon found. She discussed her findings at a recent forum, during which she highlighted on case in which a supplier was pressured to purchase a table at a charity ball for £25,000 (about $30,000 U.S. dollars [USD]) or risk having its products withdrawn from store shelves.

“I had a supplier who was charged £45 [$55 USD] after someone complained about finding a teabag ‘inside’ an egg, which was ridiculous,” she said. “I had a supplier expected to pay £25,000 for a table at a charity ball. They come under pressure, like being told, ‘Well, if you don’t buy a table, your name will be on a list of people to the chief executive that are not supporting our charity.’ They are also told they can meet buyers if they buy tickets for golf or fishing days.”

The remarks follow previous findings from regulators of wrongdoings among top supermarket companies with regards to their supplier management practices. In 2009 they developed the groceries supply code of practice and in 2013 created the position of groceries code adjudicator to oversee grocery chain practices with their suppliers.

But Moore Stephens research, highlighted in Monday’s reports, recently found that supermarkets deploy these “predatory practices” that have driven 150 suppliers out of business in the last year alone, nearly triple the number of suppliers that went out of business in 2011.

“The supermarkets are genuinely not paying for goods they are selling,” Tacon stated. “If 20 suppliers are losing £15 million [$18.3 million USD], then what’s the cost to the industry?”

The adjudicator has targeted practices like supermarket chains charging suppliers should consumers complain about a product, reports said, or requiring lump sums from suppliers for stocking their products.