Corporate policy
The UK's Competition Commission monopoly inquiry
In 2006, the Office of Fair Trading (OFT) referred the UK grocery market to the Competition Commission for a new inquiry.[3] In January 2007, the Competition Commission, published its initial findings into the UK grocery market. It said that they were "concerned with whether Tesco or any other supermarket can get into such a strong position, either nationally or locally, that no other retailer can compete effectively". It, however, found no actual basis for accusations that Tesco could use its land bank to control nearly half of national grocery retailing, and that suppliers' profits were being squeezed by the supermarket.
Tesco's 2004 Adminstore acquisition led to local and UK-wide protests.[4] Tesco's other store openings and expansions are sometimes contested by campaign groups. When a company controls more than 25% of a business sector in the UK, it is usually blocked from buying other companies in that sector (but not from increasing its market share through organic growth). The Office of Fair Trading currently treats supermarkets and convenience stores as two distinct sectors—although this definition has been challenged by smaller retailers, including the Association of Convenience Stores.[5]
Planning infringements and corporate "land bank" conspiracy theory
In February 2006, a group of UK MPs produced a report highlighting the near monopoly powers of the big four supermarkets.[6] One problem discussed by the group was that of building without appropriate planning permission.[7] The discussion stemmed from the company's building of a store in Stockport that was 20% larger than the company actually had permission to build. In September 2006, subsequent (retrospective) planning permission was requested by Tesco but refused.[8]
Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 W.L.R. 759; [1995] 2 All E.R. 636, deals with the Town and Country Planning Act 1990, where Tesco wanted to build a superstore outside Oxford.
Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank",[9] pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities,[10]
Pricing and advertising
The group has been criticised for its tactics, including allegedly misleading consumers with "phoney" price cuts. For example, advertising huge savings, when in fact they are only lowering the price of less popular items and raising the price of more popular goods.[17]
In 2011, Tesco was fined £300,000 for misleading customers regarding the sale of strawberries. Trading Standards in Birmingham brought the case stating that £1.99 strawberries on sale in Sheldon, Birmingham, had not been for sale at £3.99 long enough. Tesco admitted misleading customers into believing that the strawberries on sale were genuinely "half price".[18]
Trading relations with suppliers
Tesco is also censured by those who think that it infringes upon the interests of farmers and smaller suppliers. The company responds by claiming that it follows industry-best practice and sources locally where it can to meet customer demand. In March 2005, the Office of Fair Trading published an audit of the workings of its code of practice on relationships between supermarkets and their suppliers. It reported that no official complaints had been received against Tesco or any of the other major supermarkets, but the supermarkets' critics, including Friends of the Earth, contested that suppliers were prevented from complaining by fear of losing business, and called for more rigorous supervision of the supermarkets. A further report by the Office of Fair Trading in August 2005 concluded that the aims of the Code of Practice were being met.[19]
In September 2006, Tesco came to an agreement with Tyrrells Crisps to stop selling grey market supplies. Tyrrells was founded by potato farmer Will Chase after big supermarkets' purchasing-power almost put his farm out of business. He started Tyrrells to gain greater margin by selling directly, and only sold through delicatessens and Waitrose supermarket. After Tesco bought supplies from the grey market, Chase sought legal advice but Tesco backed down.[20]
Tesco has been subject to several claims of apparently out-of-date food being 'back-labelled' to appear still to be within date,
Labour relations
American union leaders, representing employees of Tesco's Fresh & Easy brand, have complained that a "stark contrast" exists between the way the supermarket chain treats their British workers and staff at their US business.[25]
The trade union Usdaw relies upon a "partnership" model with large employers such as with Tesco, where there exists "privileged access" to the management of both organisations. This arrangement coupled with its actions has been met with criticism, such as where the union seemingly presents itself as being concerned more with maintaining its positive, comfortable position and easy membership supply than that of fair representation of its members,[26] earning the union the pejorative backronym of Useless Seven Days A Week amongst workers and trade unionists.[26][27]
Customer privacy laws
In January 2005, Tesco faced criticism for their testing of RFID tags used to collect information on product movement in pilot stores. Critics label the tags "Spy Chips" and allege that they are to be used to collect information on customers' shopping habits.[28]
The UK's Competition Commission monopoly inquiry
In 2006, the Office of Fair Trading (OFT) referred the UK grocery market to the Competition Commission for a new inquiry.[3] In January 2007, the Competition Commission, published its initial findings into the UK grocery market. It said that they were "concerned with whether Tesco or any other supermarket can get into such a strong position, either nationally or locally, that no other retailer can compete effectively". It, however, found no actual basis for accusations that Tesco could use its land bank to control nearly half of national grocery retailing, and that suppliers' profits were being squeezed by the supermarket.
Tesco's 2004 Adminstore acquisition led to local and UK-wide protests.[4] Tesco's other store openings and expansions are sometimes contested by campaign groups. When a company controls more than 25% of a business sector in the UK, it is usually blocked from buying other companies in that sector (but not from increasing its market share through organic growth). The Office of Fair Trading currently treats supermarkets and convenience stores as two distinct sectors—although this definition has been challenged by smaller retailers, including the Association of Convenience Stores.[5]
Planning infringements and corporate "land bank" conspiracy theory
In February 2006, a group of UK MPs produced a report highlighting the near monopoly powers of the big four supermarkets.[6] One problem discussed by the group was that of building without appropriate planning permission.[7] The discussion stemmed from the company's building of a store in Stockport that was 20% larger than the company actually had permission to build. In September 2006, subsequent (retrospective) planning permission was requested by Tesco but refused.[8]
Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 W.L.R. 759; [1995] 2 All E.R. 636, deals with the Town and Country Planning Act 1990, where Tesco wanted to build a superstore outside Oxford.
Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank",[9] pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities,[10]
Pricing and advertising
The group has been criticised for its tactics, including allegedly misleading consumers with "phoney" price cuts. For example, advertising huge savings, when in fact they are only lowering the price of less popular items and raising the price of more popular goods.[17]
In 2011, Tesco was fined £300,000 for misleading customers regarding the sale of strawberries. Trading Standards in Birmingham brought the case stating that £1.99 strawberries on sale in Sheldon, Birmingham, had not been for sale at £3.99 long enough. Tesco admitted misleading customers into believing that the strawberries on sale were genuinely "half price".[18]
Trading relations with suppliers
Tesco is also censured by those who think that it infringes upon the interests of farmers and smaller suppliers. The company responds by claiming that it follows industry-best practice and sources locally where it can to meet customer demand. In March 2005, the Office of Fair Trading published an audit of the workings of its code of practice on relationships between supermarkets and their suppliers. It reported that no official complaints had been received against Tesco or any of the other major supermarkets, but the supermarkets' critics, including Friends of the Earth, contested that suppliers were prevented from complaining by fear of losing business, and called for more rigorous supervision of the supermarkets. A further report by the Office of Fair Trading in August 2005 concluded that the aims of the Code of Practice were being met.[19]
In September 2006, Tesco came to an agreement with Tyrrells Crisps to stop selling grey market supplies. Tyrrells was founded by potato farmer Will Chase after big supermarkets' purchasing-power almost put his farm out of business. He started Tyrrells to gain greater margin by selling directly, and only sold through delicatessens and Waitrose supermarket. After Tesco bought supplies from the grey market, Chase sought legal advice but Tesco backed down.[20]
Tesco has been subject to several claims of apparently out-of-date food being 'back-labelled' to appear still to be within date,[21]
Labour relations
American union leaders, representing employees of Tesco's Fresh & Easy brand, have complained that a "stark contrast" exists between the way the supermarket chain treats their British workers and staff at their US business.[25]
The trade union Usdaw relies upon a "partnership" model with large employers such as with Tesco, where there exists "privileged access" to the management of both organisations. This arrangement coupled with its actions has been met with criticism, such as where the union seemingly presents itself as being concerned more with maintaining its positive, comfortable position and easy membership supply than that of fair representation of its members,[26] earning the union the pejorative backronym of Useless Seven Days A Week amongst workers and trade unionists.[26][27]
Customer privacy laws
In January 2005, Tesco faced criticism for their testing of RFID tags used to collect information on product movement in pilot stores. Critics label the tags "Spy Chips" and allege that they are to be used to collect information on customers' shopping habits.[28]
Financial affairs
Taxation laws
In 2008 Tesco sued The Guardian for libel and malicious falsehood over the newspaper's claims that Tesco has developed a complex taxation structure involving offshore bank accounts in the tax haven of the Cayman Islands.[29] The case was ultimately settled, with The Guardian issuing an apology.[30]
SFO investigation into relations with the auditor PwC
In August, Tesco's financial management had announced that the firm's half-year dividend would be cut by 75% and full-year profits would be in the region of £2.4bn to £2.5bn, less than its previous revenue estimate of £2.8bn, and already £0.5bn down on last year's £3.3bn reported corporate profits.[31]
The Serious Fraud Office launched a formal criminal probe into the auditing and accounting practices in mid 2014 and the Financial Reporting Council in December 2014.
Taxation laws
In 2008 Tesco sued The Guardian for libel and malicious falsehood over the newspaper's claims that Tesco has developed a complex taxation structure involving offshore bank accounts in the tax haven of the Cayman Islands.[29] The case was ultimately settled, with The Guardian issuing an apology.[30]
SFO investigation into relations with the auditor PwC
In August, Tesco's financial management had announced that the firm's half-year dividend would be cut by 75% and full-year profits would be in the region of £2.4bn to £2.5bn, less than its previous revenue estimate of £2.8bn, and already £0.5bn down on last year's £3.3bn reported corporate profits.[31]
The Serious Fraud Office launched a formal criminal probe into the auditing and accounting practices in mid 2014 and the Financial Reporting Council in December 2014. The US brokers JP Morgan claimed that the fiscal 'hole' in Tesco's accounts could be even worse than expected.[31] The FRC decided to investigate auditor PwC for allegedly maliciously messing about with Tesco's accounts. on 22 December 2014.[32]
The Serious Fraud Office (SFO) launched a criminal investigation into alleged accounting irregularities.[33][34] Tesco said it had been "co-operating fully" with the SFO, who took matter out of the hands of the Financial Conduct Authority, the City's business regulator.
Service levels
Tesco has been criticised for charging higher prices for the same products at its Express stores.[35][36][37]
In July 2020, Tesco axed contract cleaners in its Express and Metro stores, making its store staff doing the cleaning duties instead. The change was implemented during the COVID-19 pandemic, where higher hygiene standards were expected.[38][39][40][41]
Clubcard
In January 2018, Tesco announced that all Clubcard points offers where points could be doubled or quadrupled would end. No notice was given to customers and Tesco faced a huge backlash. It then delayed the change to June 2018.[47]
Tesco has been criticised for selling customers' preferences and spending habits.[48][49][50][51]
Tesco has been criticised for changing access to all its special offers to Clubcard customers only.[52][53]
Product quality issues
February 2013 horse meat scandal
In 2013, DNA tests revealed that horse meat was present in some meat products sold in Findus and ABP Food Group ready meals.
On 7 February 2013, it was revealed by the Food Standards Agency that the Findus beef lasagne range in the UK, France and Sweden and the shepherd's pie and moussaka ranges in France contained horse meat without proper declaration or official scrutiny.[61][62] The contamination may have gone on since summer 2012 according to a leaked document.[63] Ready packed meal firm Findus
February 2013 horse meat scandal
In 2013, DNA tests revealed that horse meat was present in some meat products sold in Findus and ABP Food Group ready meals.
On 7 February 2013, it was revealed by the Food Standards Agency that the Findus beef lasagne range in the UK, France and Sweden and the shepherd's pie and moussaka ranges in France contained horse meat without proper declaration or official scrutiny.[61][62] The contamination may have gone on since summer 2012 according to a leaked document.[63] Ready packed meal firm Findus, Compass Group was the world's biggest catering firm at the time, and Whitbread, which was Britain's biggest hotel group, were indicted for illegally selling concealed horse meat in food products.
Food hygiene allegations
On 22 May 2007, the BBC's Whistleblower programme showed undercover footage detailing breaches of food hygiene rules in a branch of Tesco. The Whistleblower reporter applied for a job following a tip-off from a former employee. Breaches included the sale of products after their sell-by date; allegations that the company illegally and sold 'back-labelled' products after their use by date; falsification of temperature records; and the sale of partially cooked mince mixed with uncooked mince.[75]
In addition to this the Food Safety Authority of Ireland, has on a number of occasions ordered the recall of Tesco branded products, including a case of glass contamination.[76][77][78] Environmental Health Officers served a closure order on Tesco's store in Prussia Street, Dublin, the day after they inspected it, for a number of breaches of Food Hygiene Regulations.[79]
Alleged health and safety issues
Secret sale of Brian Fords discount stores
In June 2008, it was revealed that Tesco had bought independent supermarket Brian Fords discount stores (with one store in Barnstaple, Devon, UK) five years previously, without notifying the public. Tesco submitted planning applications for a new supermarket early in 2008 under Brian Fords' name. The plans included a Brian Fords sign and North Devon Council were said to be unaware of the Tesco takeover. It was later revealed that a separate property company, Wixley Properties Ltd (which had zero employees and zero turnover) had actually bought the supermarket. Tesco said they were in control of Wixley Properties Ltd.[80]
Fake farms
In March 2016, Tesco came under fire for branding products with fictional farms names.[81] Later in the year the National Farmers Union lodged a complaint with Trading Standards over the matter.[82]
Secret sale of Brian Fords discount stores
In June 2008, it was revealed that Tesco had bought independent supermarket Brian Fords discount stores (with one store in Barnstaple, Devon, UK) five years previously, without notifying the public. Tesco submitted planning applications for a new supermarket early in 2008 under Brian Fords' name. The plans included a Brian Fords sign and North Devon Council were said to be unaware of the Tesco takeover. It was later revealed that a separate property company, Wixley Properties Ltd (which had zero employees and zero turnover) had actually bought the supermarket. Tesco said they were in control of Wixley Properties Ltd.[80]
Fake farms
In March 2016, Tesco came under fire for branding products with fictional farms names.[81] Later in the year the National Farmers Union lodged a complaint with Trading Standards over the matter.[82]
Xenophobia
Romanians
On 21 November 2020, a member of the Romanian diaspora in the United Kingdom pointed out that in one of Tesco's stores in London, there was a warning for shoplifters written in the Romanian language that said "notice for store thieves, you will be legally prosecuted if caught stealing". The Romanian women posted this on Facebook and called it "blatantly racist and xenophobic". She requested the removal of the poster, a petition that was joined by the Romanian Ministry of Foreign Affairs (MAE), which expressed its "surprise and disagreement against the strongly discriminating message". The news went viral and were later published in Romanian media. According to the Office for National Statistics, the Romanians in the United Kingdom then formed a community of about 427,000, making them the fourth largest foreign group in the country at the time.[83][84]
Romanians
On 21 November 2020, a member of the Romanian diaspora in the United Kingdom pointed out that in one of Tesco's stores in London, there was a warning for shoplifters written in the Romanian language that said "notice for store thieves, you will be legally prosecuted if caught stealing". The Romanian women posted this on Facebook and called it "blatantly racist and xenophobic". She requested the removal of the poster, a petition that was joined by the Romanian Ministry of Foreign Affairs (MAE), which expressed its "surprise and disagreement against the strongly discriminating message". The news went viral and were later published in Romanian media. According to the Office for National Statistics, the Romanians in the United Kingdom then formed a community of about 427,000, making them the fourth largest foreign group in the country at the time.[83][84]
Other
In June 2022, Tesco's adverts for one of its plant-based food ranges was banned for being misleading about their environmental benefit.[85][86]
In April 2023, the High Court ruled that Tesco was taking unfair advantage of competitor Lidl's discounter reputation with its Clubcard Prices logo design.[87][88] In March 2024, Tesco lost an appeal it had infringed Lidl's trademark with its Clubcard Prices logo.[89][90][91]
