Talking Tesco: UK Competition Commission

Why are we publishing these comments?

Tesco has been reading with interest the third party comments on the Groceries Market Investigation that the Competition Commission has been publishing on its website. Our formal submissions have addressed many of the issues raised by these comments, particularly those of some of the professional lobbying organisations. However, a number of submissions on the Competition Commission’s website contain more specific comments about Tesco which we have not covered in our formal submissions.

Some of these specific comments are inaccurate and misleading, and we are providing a series of short notes in order to put the record straight. In the interests of transparency we are today publishing the first such series of notes.

ActionAid

Imports have for a very long time played a role in the grocery market, partly to satisfy customer needs for products unavailable in the UK (such as spices and mangos), and partly to provide the best quality products at the best price. Ethical trading is an integral part of the way we do business. Our aim is to enable our buyers, technical managers and ethical trading team to work with our suppliers to uphold labour standards in our supply chain wherever they are. We are a founding corporate member of the Ethical Trading Initiative (ETI) and use the ETI Base Code as the standard for our Ethical Trading Policy. The ETI Base Code requires that employment is freely chosen; freedom of association and the right to collective bargaining are respected; working conditions are safe and hygienic; child labour shall not be used; living wages are paid; working hours are not excessive; no discrimination is practised; regular employment is provided; and no harsh or inhumane treatment is allowed. We were also instrumental in the establishment of the ‘Supplier Ethical Data Exchange’ (SEDEX). Sedex encourages businesses to share data on ethical trading practices, allows inspection of resources to be better organised and so avoids unnecessary costs for suppliers.

ActionAid state that they have received a complaint from a South African fruit farmer. The farmer suggests that Tesco uses de-listing as a negotiating tactic, by claiming that we could buy apples from another supermarket cheaper than the farmer’s prices.

Firstly either ActionAid has misquoted the farmer, or there is a misunderstanding since we do not buy apples from other supermarkets as he seems to suggest. It is difficult for us to investigate such a claim without the full details. We suggest ActionAid makes more details available to us, at which point we would be happy to investigate the circumstances.

It may help for us to describe how we buy apples from South Africa. We negotiate the price for apples on a weekly basis. That negotiation takes place between one of our buyers and a UK importer. The UK importer will then speak to a South African exporter who speaks to a South African packer, who then speaks to the farmer. We do not negotiate with the farmer and therefore suggestions that we used delisting as a negotiating tactic with a particular farmer cannot arise, as we do not have direct negotiations with him at all. Although we do not negotiate price with farmers we do travel to farms regularly (including those in South Africa) to meet farmers. The vast majority enjoy a good relationship with us and their intermediaries. These meetings give farmers the opportunity to talk to us about any concerns they may have.

ActionAid also raised concerns about the introduction of wheeled trolleys for banana deliveries. They suggest that we required suppliers to pay for the new trolleys.

Wheeled trolleys were introduced over the past two years. They were introduced to reduce wastage from damaged bananas and to make the process of getting the bananas in to stores more efficient. These units were paid for by Tesco and are owned by Tesco, and we consulted our suppliers on the trolleys’ design and functionality. Suppliers are charged a small fee for rental of the trolleys. We accept that suppliers’ transport costs will have changed as a result of the trolley: however, the price paid for bananas is renegotiated regularly and transport cost changes are a component of this price. Wheeled trolleys are an example of the many improvements along the whole supply chain that change the way it works to improve the quality and help deliver better prices to consumers.