Criticism of Tesco

Criticism has been directed at Tesco from various groups, including national organisations, trade bodies, individuals, consumer groups and watchdogs, particularly since the early 2000s.

Criticism of Tesco and related litigation

As with any large corporation, the Tesco supermarket chain is involved in litigation, usually from claims of personal injury from customers, claims of unfair dismissal from staff, and other commercial matters. Two notable cases were '' Ward v Tesco Stores Ltd'', which set a precedent in so-called 'trip and slip' injury claims against retailers, and '' Tesco Supermarkets Ltd v Nattrass'', which reached the House of Lords and became a leading case regarding the corporate liability of businesses for failures of their store managers (in a case of misleading advertising). Criticism of Tesco includes disapproval of the effects supermarket chains can have on farmers, suppliers and smaller competitors; along with claims of generally poor labour relations with its staff concerning sick leave regulations. Accusations concerning using cheap and/or child labour in Bangladesh amongst other places, have also arisen since the millennium.

Cases in the UK

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.
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. 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.

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. One problem discussed by the group was that of building without appropriate planning permission. 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.

''Tesco Stores Ltd v Secretary of State for the Environment'' 9951 W.L.R. 759; 9952 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", pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities, using cheap and/or child labour, opposition to its move into the convenience sector and breaching planning laws.

In April 2011, longstanding opposition to a Tesco Express store in Cheltenham Road, Stokes Croft, Bristol, evolved into a violent clash between opponents and police. The recently opened storefront was heavily damaged and the police reported the seizure of petrol bombs. Opponents such as No Tesco in Stokes Croft, have suggested that the store would damage small shops and harm the character of the area.

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.

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".

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.

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.

Tesco has been subject to several claims of apparently out-of-date food being 'back-labelled' to appear still to be within date, and poor café hygiene

Tesco denied squeezing its suppliers in December 2013 after retail analyst Cantor Fitzgerald accused Tesco of practices that risked breaching the Groceries Supply Code of Practice and criticised its trading relationships. Similar accusations were also made in April 2005 despite its record £2,000,000,000 profit.

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.

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.

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. The case was ultimately settled, with The Guardian issuing an apology.

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.

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.

The FRC decided to investigate auditor PwC for allegedly maliciously messing about with Tesco's accounts. on 22 December 2014.

The Serious Fraud Office (SFO) launched a criminal investigation into alleged accounting irregularities. 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. The UK accountancy regulator, the Financial Reporting Council, was also reported to be monitoring Tesco. Tesco's auditor PwC declined to comment. It found that they were overstated by £118m in the first half of this year, by £70m in the 2013-2014 financial year and by £75m before that.

Warwick Business School's Prof Crawford Spence said: "Now that Tesco are being investigated for fraud by the SFO, the Financial Reporting Council have yet greater reason to start an investigation into the auditors' role with regard to these irregularities".

The accountancy firm Deloitte had launched investigation into Tesco's misreported profits a week earlier.

Tesco had suspended eight executives pending further enquiries by 18 October 2013, including the UK corporate boss Chris Bush, while an investigation into the scandal takes place. The firm is also withholding payments worth £2,000,000 to its former chief executive Philip Clarke and chief financial officer Laurie McIlwee.

Service levels

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.

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. The contamination may have gone on since summer 2012 according to a leaked document. 2013-02-09 independent.co.uk 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.

As a result, Tesco's market capitalization dropped on Wednesday 16 January 2013.

Tesco, the Co-operative Group and Aldi also decided to cancel contracts with ABP Food Group because of the adulteration.

In a public letter later that day, 11 firms, including Tesco and Asda, said they shared shoppers' "anger and outrage". Whitbread vowed to remedy the unacceptable situation on 26 February. The Food Standards Agency's (FSA) chief executive, Catherine Brown also said "it is unlikely we will ever know" how many unwittingly ate horse meat.

Food hygiene allegations

On 22 May 2007, the BBC
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