Criticism of Tesco


Criticism of Tesco

This article concerns criticism of Tesco, a supermarket chain in the United Kingdom. Criticism has been directed at Tesco from various groups, both national organisations and individuals. One of the biggest criticisms it faces is the perceived threat it poses to small businesses due to the monopoly it imposes over products. There is also a belief that they use aggressive tactics to gain land and/or planning permission for building new stores. Other controversial areas concern the treatment of staff and customers, as well as their approach to foreign businesses.

Contents

Criticism of Tesco and related litigation

The Tesco supermarket chain is often 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.[citation needed] Accusations concerning the use of cheap and/or child labour in Bangladesh amongst other places,[1] have also arisen since 2000.

Tesco has been heavily criticised by the media in the UK and Ireland, among other places, over its comparatively more ruthless and harsh business tactics compared to its rivals, all of whom stand charged, like Tesco, of bullying farmers to lower their prices to unsustainable levels. Waitrose was the only major supermarket to come out of this accusation relatively unscathed. Other less prominent disputes have occurred in Thailand and Hungary.[citation needed]

Tesco has been accused of abandoning the UK Government's planned Eco-town at Hanley Grange in Cambridge.[2]

Tesco has been subject to several claims of apparently out-of-date food being 'back-labelled' to appear still to be within date,[3] poor café hygiene[4] and a staff member contracting legionnaires' disease in the Wrexham store.[5][6]

Tesco has been involved in the following cases in the areas of employment law, personal injury, intellectual property disputes and taxation, amongst others.

Cases in the UK

Corporate policy

The UK's Competition Commission inquiry

In 2006 the Office of Fair Trading (OFT) referred the UK grocery market to the Competition Commission for a new inquiry.[7] 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". However it found no actual basis for accusations that Tesco could use its land bank to control nearly half of national grocery retailing, or that suppliers' profits were being squeezed by the supermarket.

The company's 'land bank'

Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank",[8] pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities,[9] using cheap and/or child labour,[10][11] opposition to its move into the convenience sector[12] and breaching planning laws.[13]

Convenience stores

Tesco's 2004 Adminstore acquisition led to local and UK-wide protests.[14] Tesco's other store-openings and expansions are often 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.[15]

Exploitation allegations

In Autumn 2006, Tesco was caught up in two scandals over the treatment of workers in factories supplying it in Bangladesh. The first was a Channel 4 News investigation, which found child labour in four such factories.[16] The second was a report published by War on Want, which alleged that wages were as low as 5 pence per hour, with workers often working 80+ hour weeks.[17] In its defence, Tesco said that, "All suppliers to Tesco must demonstrate that they meet our ethical standards on worker welfare, which are closely monitored. Our suppliers comply with local labour laws, and workers at all Bangladeshi suppliers to Tesco are paid above the national minimum wage."[18] Campaigners have argued that the minimum wage in Bangladesh is too low, and that monitoring systems used by clothing retailers are ineffective.[19] Tesco apologised for selling anti Jewish literature to customers in Ireland. Sheikh Dr Shaheed Satardien, head of the Muslim Council of Ireland, said this was effectively "polluting the minds of impressionable young Islamic people with hate and anger towards the Jewish community."[20]

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.[21]

Supermarkets in general have been criticised for the way "Buy one, get one free" (BOGOF) offers contribute to the billions of pounds' worth of food waste thrown away in the UK each year.[22]

Kayser Bondor v Tesco Stores (Times, 25 January 1962) Tesco's first reported case, it won an injunction against a retailer to whom Tesco sold goods. Tesco required that the prices sold would not be lower than a certain minimum (resale price maintenance). Granting the injunction, Cross J held that no matter how much Kayser disliked the terms, it was not compelled to enter the contract. If it did it would have to abide by the terms, unless it could convince Parliament to legislate against the practice (see now, Competition Act 1998)

Tesco in Ireland was convicted of failing to properly display prices by the National Consumer Agency in July 2008.[23] An advertisement in 2011 for pork sausages resulted in complaints to the Advertising Standards Authority (ASA), for implying that the meat came from free range pigs. The complaints were upheld, with the ASA agreeing that the advertisement was misleading. Tesco said it was baffled because the farm shown supplied meat from pigs that were born outdoors and reared indoors.[24]

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 supplies 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 relations 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.[25]

In September 2006 Tesco came to an agreement with Tyrrells Crisps to stop selling grey market supplies. Tyrrells was started 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.[26]

Labour relations

In May 2004, Tesco announced it was reducing sick pay in an attempt to reduce levels of unplanned absence, which led to concerns over employees continuing to work despite poor health (otherwise faced with a reduced income).[27]

American union leaders, aspiring to represent employees of Tesco's Fresh & Easy brand, have complained that a "stark contrast" exists between the way the supermarket chain treats its British workers and staff at its US business.[28]

Tesco Stores Ltd v Othman-Khalid (Unreported, 10 September 2001), Mr Othman-Khalid was dismissed from a Tesco petrol station. CCTV cameras had shown him serving himself, playing video games on shift and taking a pack of ten cigarettes that was damaged stock and meant to be returned to the manufacturer. At a disciplinary he lied saying that he had sold the cigarettes to a customer. He claimed that the dismissal was unfair (see unfair dismissal), and the tribunal agreed, because it said too much weight was given to the theft of the cigarettes over other factors of his job performance. The tribunal allowed the claim, but reduced his damages by 10% for contributory fault. But on appeal, Mr Underhill QC found for Tesco that dismissal for theft, however small, was within the "reasonable range of responses" of an employer, under s.98(4) of the Employment Rights Act 1996.

Amanda Hardy v Tesco Stores Plc [2006] EWHC 3091, Judge Seymour QC dismissed a claim by Mrs Hardy that she got a back injury while trying to life some heavy bottles from the conveyor belt at the checkout. It was found her evidence was unreliable.

Tesco Stores Ltd v Wilson (No.2) (aka, Abrahams v Wilson) (Unreported, 12 January 2000), Mr Wilson was an Afro-Caribbean rastafarian who worked for Barkland Cleaning Ltd, as a cleaner contracted to Tesco's site in Mereway, Northampton. Mr Abrahams, one of Tesco' security guards, was on duty in plain clothes. When Mr Wilson drove into the carpark, Mr Abrahams knocked on his window and told him to get out so he could search the car. When Mr Wilson refused, he said "you lot think you can get away with anything" and went and filed a report. Then Mr Wilson was dismissed. He claimed this was unfair, because it was discrimination under the Race Relations Act 1976. He won £5000 damages. Tesco appealed, but lost again. Judge Peter Clark held that "you lot" was certainly intended to refer to race, and that the whole defence of Tesco was meant to depict Mr Wilson as violent and dishonest. This justified an aggravated damages award.

Tesco Group of Companies (Holdings) v Hill [1977] I.R.L.R. 63, a checkout lady did not ring up 18 items worth £7 in one customer's purchase. Tesco started an investigation. She said she felt ill. Tesco called the police. They dismissed her. The Employment Appeal Tribunal held that the dismissal was unfair because she was given no opportunity to state her case when she was in a fit state.

Johnson v Tesco Stores [1976] I.R.L.R. 103, an old case under old law, the employment tribunal found Tesco to have unfairly dismissed Mr Johnson. He had wrongly stated on his application that he had a certain job between 1967 and 1973, when he had not. 18 months later Tesco found out, and they said this was the reason for dismissal. Under the Trade Union and Labour Relations Act 1974 Sch.1, para.6 , which refers to conduct during and not prior to employment, conduct prior to the start of the contract could not make the contract itself void. So Tesco was found to have dismissed Mr Johnson unfairly.

Planning infringements

In February 2006, a group of UK MPs produced a report highlighting the near-monopolistic powers of the big four supermarkets.[29] One problem discussed by the group was that of building without appropriate planning permission.[30] 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 sought by Tesco but refused.[31]

Privacy

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.[32]

Facebook and Tesco

During 2007, A group of Tesco employees were investigated for criticising the firm's human resources policy and its 'rude' customers on the Facebook blog site.[33]

Financial affairs

Taxation laws

On 5 April 2008 it was reported that Tesco was suing 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.[34] The Guardian claimed that this arrangement would enable Tesco to avoid an estimated £1 billion tax on profits from the property sales, and also to avoid paying any tax on continuing operation of the stores, as the rate of corporation tax in the Cayman Islands is zero.[citation needed]

Bribery

Tesco Stores Ltd v Pook[2003] EWHC 823; [2004] I.R.L.R. 618, Mr Pook was a senior employee who got a computer company called Delta to pay his own company a "consultancy fee" (i.e. a bribe) to make sure Delta did not lose a supply contract with Tesco. Mr Pook was already serving 3 years jail for theft, and this action was for Tesco to get back that bribe money. It succeeded, because it was held that Mr Pook was in breach of trust through his conflict of interest. Moreover there was an implied term that Mr Pook would not be allowed to exercise his rights under the company ESOP, until he had paid all he owed.

Service levels

Home delivery services

In 2007 Tesco received criticism for failing to deliver groceries via online shopping to a university campus in Sussex, offering no refund or apology. This sparked a local backlash from many customers who had had similar dissatisfying experiences with Tesco's online delivery service.[35]

Queuing times

In December 2006 The Grocer magazine published a study which named Tesco as having the slowest checkouts of the six major supermarkets. Somerfield had the shortest queues with an average wait of 4 min 23 seconds. In order of least time spent at the checkout, the other major supermarkets were Waitrose, Sainsbury's, Asda, Morrisons.[36]

Health and safety issues

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 sold 'back-labelled' products after their use-by date; falsification of temperature records; and the sale of partially cooked mince mixed with uncooked mince.[37]

A staff member contracted legionnaires' disease in the Wrexham store.[5]

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.[38][39][40] 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.[41]

Tesco's Kick drink

On 16 April 2007, BBC Northern Ireland's current affairs programme Newsline reported that the head of Newtownbreda High School in Belfast wanted its local Tesco store to stop selling the Kick energy drink, which was thought to be responsible for caffeine-induced misbehaviour in the classroom. The school had gone so far as to ban children from bringing the drink on to its grounds. In other schools it was also connected with caffeine addiction problems and insomnia in young male pupils.[42] A school in Worthing, Sussex banned both Kick and Red Bull over the same problem.[43]

Tesco rejected the schools' claims saying "... a normal serving contains no more caffeine than a cup of coffee. There is currently no legislation which would allow us or any other retailer to ban the sale of this or any other energy drink to children."[citation needed]

Alcohol

Tesco's Dorset stores have been particularly censured for selling excessively discounted alcohol products as a loss leader.[44] Tesco has now initiated a crackdown on alcohol sales to youngsters.[45]

Personal injury claims

Tesco Stores Ltd v Pollard [2006] EWCA Civ 393, a 13 month old child fell ill when it ate some washing powder from a product that had a faulty child resistant cap. It was bought from Tesco, but manufactured by another company. When bringing proceedings against Tesco and the manufacturer, Tesco joined the mother for negligence in not properly looking after the child. The Court of Appeal found Tesco and the manufacturer alone liable under the Consumer Protection Act 1987.

W (A Child) v Tesco Stores Ltd[2005] C.L.Y. 3097, in the St Albans County Court, a 10 year-old girl won £1600 worth of damages for a nasty injury to her ear five years before. She had slipped in the supermarket.

Tesco Stores Ltd v Harrow LBC [2003] EWHC 2919, in the Harrow store, a customer found a piece of wire in a bap. The local council was found to be entitled to fine Tesco under the Food Safety Act 1990 (section s.8.).

Collins v Tesco Stores Ltd[2003] EWCA Civ 1308, the Court of Appeal (Pill LJ giving the lead judgment) agreed that Mrs Jan Collins' claim for some £24,000 for a workplace injury was statute barred. Because she had not brought the claim within 3 years of knowing the injury to be significant she was too late.

Sutton v Tesco Stores Plc (Unreported, 30 July 2002) Mrs Sutton, who was a nurse and was pregnant, slipped on a squashed tomato at the store. She won £7500 in general damages for her anxiety about the baby (who was born prematurely) and painful injury to her wrist.

Harvey v Tesco Plc [2002] 6 Q.R. 11, Mrs Harvey at age 73 slipped on the floor in Tesco and fell, injuring her hand. She had to have a plaster cast, and because of swelling her wedding ring needed to be cut off. She received £4000 in damages.

K (A Child) v Tesco Stores Ltd [2000] C.L.Y. 1670, in the Uxbridge Crown Court a seven-year-old won £500 damages for minor injuries at the Tesco store. An automatic door had failed to open and the child got bruising for a week, and felt quite ill the next day with a bad bump to the head.

Jacob v Tesco Stores Plc (Unreported, 19 November 1998), the Court of Appeal (Henry LJ and Clarke J) held that Mrs Jacob, a Tesco employee, was entitled to damages after a heavy fall probably from a water puddle in the store. Mrs Jacob had hurried to answer a colleague's query, and stepped in a water puddle. She quickly told someone that they should get a cleaner, hurried on 25 paces and fell. Tesco argued that the judge had not applied the leading case, Ward v Tesco Stores Ltd [1976] 1 W.L.R. 810 properly, which uses the res ipsa loquitur doctrine (i.e. if it was not the puddle, how else could it have happened). Tesco argued that there was no way the puddle could have made her slip 25 paces later, but their argument was dismissed because they could not come up with a better explanation.

Peach v Tesco Stores Plc [1998] C.L.Y. 1665, Mrs Peach, 65, slipped on a mangetout (a pea pod) in the store and really hurt her hip badly. She had to have surgery. She was recovered after 3 months but she developed deep vein thrombosis. She got £10,000 in compensation. Watford (A Minor) v Tesco Stores Ltd[1998] C.L.Y. 1672, in the Uxbridge County Court, a little boy, aged 2 at the time of the accident, won £3850 after he slipped on some crisps. He fractured bones in his leg, and it took him three months before he was fully recovered.

Kitching v Tesco Stores [1995] C.L.Y. 1731, Miss Kitching was a checkout lady, aged 22. She injured her wrist badly when she tried to stop some soft drinks falling on her. She won £5500 for this injury in the course of employment, because experienced, possibly permanently, pain up her arm and she was hindered in her hobbies of swimming and writing to pen-pals.

Corporate identity cases

Nomenclature, domain names and terminology

Tesco Stores Ltd v Elogicom Ltd 2006 EWHC 403, Tesco won a passing off action against misuse of its Internet domain name.

Weight Watchers UK Ltd v Tesco Stores Ltd 2003 EWHC 1109, Tesco fended off an action from Weight Watchers, that in using the word "points" for the fat and calorie content in its products was passing off Weight Watcher's name for its own scheme.

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 had actually bought the supermarket. Tesco admitted they were in control of Wixley Properties Ltd.

Overseas cases

Cases in Ireland

Tesco Ireland is the largest food retailer in Ireland, with over 13,500 employees. As of 2004 Tesco Ireland has come in for increased criticism for apparently high prices in its Irish stores, although in its favour this seems to be because comparisons are with the British Tesco stores rather than other Irish retailers – and thus, officially speaking, like goods are not being compared with like. However, there have been general criticisms of the similar pricing between Irish supermarkets, and economic reports noting the high prices in Ireland generally. Research from Forfas,[46] concluded that only a five per cent difference in the cost of goods between North and South was justifiable. The findings highlighted retailers' larger margins in the South vis-a-vis their operations in the North, and the Minister for Enterprise queried why the price differential in many identical goods was substantially in excess of 5%.[47]

Speaking to business leaders in Belfast, Tesco PLC's CEO argued that higher prices in Northern Ireland were due to higher energy costs and the cost of transporting goods from Great Britain. This does not explain the large disparities in pricing when goods are moved by truck between the Derry (UK) branches and Letterkenny (Ireland) branches – a distance of 21 miles – for example.

A report by the independent retailers group RGDATA contained allegations that Tesco overcharged customers. The report shows that customers in six Tesco stores were overcharged by an average of 3% on some items.[48]

In July 2008 Tesco Ireland was convicted of failing to display prices properly by the National Consumer Agency.[23]

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.[38][39][40] 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.[41] Most food is imported from Britain, where the BBC's Whistleblower programme showed undercover footage showing the sale of products after their sell-by date; allegations that the company illegally sold 'back-labelled' products after their use by date; falsification of temperature records; and the sale of partially-cooked mince mixed with uncooked mince.[49]

The British-owned supermarket refused to stock any of the one million postcards which are aimed at closing the controversial plant at Sellafield in Cumbria. Dunnes Stores and Superquinn, along with other retailers across the country, did sell the postcards.[50]

The Advertising Standards Authority in January 2009 found that Tesco advertising was misleading.[51]

Tesco tried to hide its policy from Irish people of buying directly from UK suppliers. An internal document said that a key objective was ensuring its policy of taking deliveries directly from UK suppliers went unnoticed and remained "invisible to the Irish customer". At the same time the president of the Irish Farmers' Association said there was deep anger about Tesco's decision to displace local produce with imports and that it "will inevitably lead to thousands of job losses and will put Irish producers of local, fresh produce out of business."[52]

Tesco used “Change for Good” as advertising, which is trademarked by Unicef for charity usage but is not trademarked for commercial or retail use, which prompted the agency to say "it is the first time in Unicef’s history that a commercial entity has purposely set out to capitalise on one of our campaigns and subsequently damage an income stream which several of our programmes for children are dependent on”. They went on to call on the public “who have children’s welfare at heart, to consider carefully who they support when making consumer choices”.[53][54]

Large supermarket chains were accused by Fine Gael of putting up to 100,000 Irish jobs at risk by forcing suppliers to pay €160 million a year in “hello money”.[55]

The company was accused of sharp practice in December 2009 by forcing motorists to pay a carbon tax six hours before it became law.[56]

The company was the subject of claims in February 2010 that it demands up to €500,000 per supplier for stocking goods. [57] The leader of the Labour Party described the practice as "outrageous extortion" and was “like the kind of thing you expect to see in The Sopranos."[58]

Britain’s Advertising Standards Authority said a leaflet produced by Tesco Ireland Ltd, was ‘‘irresponsible’’ and breached clauses in the advertising code on substantiation and weight control in May 2010.[59]

Tesco pleaded guilty and was fined, after sending unsolicited marketing emails to a number of customers and for having a problem with the email "opt-out" option.[60]

In early 2011, Tesco warned Irish publishers that it will ban their books from the shelves of the supermarket if they do not play by its rules. The bestseller which sparked the controversy, on the revelation about Sean FitzPatrick's golf meeting with Taoiseach Brian Cowen, was published in secret and distributed directly to Easons and selected bookstores - but not to Tesco or other supermarkets. The secret last-minute delivery was organised to avoid any legal complications that might have prevented publication. Tesco said "If we find evidence of this happening (again), the offending publisher will have all their titles removed from sale and returned." One publisher pointed out that Tesco sometimes implements exclusive deals itself.[61]

Tesco increased the prices of some well-known products significantly just weeks into 2011 before reducing them as part of a 1,000-product price promotion launched in March 2011.[62][63]

Cases in China

In September 2011 a Greenpeace report revealed that supermarkets in China, including Tesco, were selling vegetables that contained illegal pesticides or at levels exceeding the legal limit. 16 vegetable and fruit samples were taken from Tescos in Beijing and Guangzhou. Among them, 11 were found containing pesticide residues. One leafy vegetable sample turned up two kinds of pesticides, methamidophos and monocrotophos, the use of which have been prohibited in China since the beginning of year 2007.[64]

Cases in Thailand

In Thailand, Tesco has been criticised for aggressively pursuing critics of the company. Writer and former MP Jit Siratranont is facing up to two years in jail and a £16.4m libel damages claim for saying that Tesco was expanding aggressively at the expense of small local retailers. Tesco served him with writs for criminal defamation and civil libel.[65]

In Thailand another controversy arose when the Royal Thai Police alleged that Thai soldiers operating as Tesco security intimidated a rural boy into poisoning chocolates as revenge for having their contracts revoked by the company.[66]

See also

References

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