Criticism of Tesco

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[edit] Criticism of Tesco and related litigation

As with any large corporation, the Tesco supermaket 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 coporate 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.


[edit] The issues

[edit] Competition Commission inquiry

In 2006 the Office of Fair Trading (OFT) referred the UK grocery market to the Competition Commission for a new inquiry.[1] 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.

[edit] Convenience stores

Tesco's 2004 Adminstore acquisition led to local and UK-wide protests.[2] 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.[3]

[edit] 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.[4] 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.[5] 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."[6] Campaigners have argued that the minimum wage in Bangladesh is too low, and that monitoring systems used by clothing retailers are ineffective.[7]

[edit] Pricing/advertising

The group has been criticised for its tactics, including allegedly misleading consumers with "phoney" price cuts. For example, increasing and swiftly decreasing the price of a particular item back to its original value and advertising it as a 'price cut'.[8]

Supermarkets 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. [9] One might suggest the advertising of half price offers as a much better alternative, given the current global food shortage.

[edit] Packageing.

Tesco's Kick [10] energy drink was involved in a UK packaging design dispute during early 2007. Red Bull claimed Tesco's product's was too close to that of their own product. The attempted legal challenge was resolved after Tesco decided to settle out of court for a undisclosed sum.

[edit] 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.[11]

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' power of purchasing 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.[12]

[edit] 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 (faced with a reduced income otherwise).[13]

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 its British workers and staff at its US business.[14]

Tesco Stores Ltd v Othman-Khalid (Unreported, 10 September 2001), Mr Othman-Khalid was dismissed from a Tesco petrol station. CCTV camera 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, and the tribunal agreed, because it said too much weight was given to the little pinching 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, 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.

[edit] Planning infringements

In February 2006, a group of UK MPs produced a report highlighting the near monopoly powers of the big four supermarkets.[15] One problem discussed by the group was that of building without appropriate planning permission.[16] 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.[17]

[edit] Taxation laws

In February 2008 a six month investigation by The Guardian revealed that Tesco has developed a complex taxation structure involving offshore bank accounts in the tax haven of the Cayman Islands [18]!

[edit] 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.[19]

[edit] 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 (which is not illegal); allegations that the company illegally sold products after their use by date; falsification of temperature records; and the sale of partially cooked mince mixed with uncooked mince.[20]

[edit] Corporate identity cases

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 it using the word "points" for the fat and calorie content in its products was passing off Weight Watcher's name for its own scheme.

[edit] Cases in Thailand

In Thailand, Tesco has been criticized 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. [21]

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. [22]

In a branch of Tesco near the bridge over the river Kwai Tesco staff strip searched a young Thai girl twice claiming she was suspected of shoplifting.

[edit] Other U.K. cases

Sign at Tesco Extra Pool, Cornwall, advertising deserts instead of desserts.
Sign at Tesco Extra Pool, Cornwall, advertising deserts instead of desserts.

The stores' signage displays non-standard grammar. Each store advertises (among other items) "mens magazines" [sic] , "girls toys" [sic] , "kids books" [sic] and "womens shoes" [sic] . At checkouts, the phrase "Dont Forget Your Clubcard" [sic] can often be seen. The author Bill Bryson lambasts Tesco for apostrophe misuse in his book Troublesome Words, stating, "The mistake is inexcusable and those who make it are linguistic Neanderthals." In August 2006 Tesco released a television advertising campaign to persuade people to use fewer non-recyclable plastic carrier bags, which included the non-standard grammar "use less bags" (see grammar article). Also many Tesco stores will have a stationary aisle, rather than a stationery aisle.

[edit] Irish cases

Tesco received criticism for bureaucratic and inflexible parking systems in its Bloomfield store in Dublin, Ireland. [23]

[edit] References

  1. ^ OFT proposes to refer grocery market to Competition Commission. Retrieved on 2006-03-13.
  2. ^ Regulators continue to mull Adminstore acquisition. Retrieved on 2006-08-20.
  3. ^ Association of Convenience Stores. Retrieved on 2006-03-13.
  4. ^ Islam, Faisal (2006-10-10). Child labour making Tesco clothes. Channel 4 News. Retrieved on 2006-12-10.
  5. ^ Alam, Khorshed; M. Hearson (2006-12-08). Fashion Victims (pdf). War on Want. Retrieved on 2006-12-10.
  6. ^ Ramesh, Randeep. "An 80-hour week for 5p an hour: the real price of high-street fashion", The Guardian, 2006-12-08. Retrieved on 2006-12-10. 
  7. ^ Hearson, Martin (2006-07-05). Who pays for cheap clothes?. Labour Behind the Label. Retrieved on 2006-12-11.
  8. ^ "Revealed: the secret of Tesco’s ‘phoney’ price war", Sunday Times, September 19, 2004. 
  9. ^ "Get-one-free deals 'boost waste'", BBC News 24 April, 2008.
  10. ^ [[1]]
  11. ^ The code of practice and other competition issues - Conclusions. Retrieved on 2006-10-16.
  12. ^ Tesco backs down from fight over Tyrrells' crisps. Retrieved on 2006-09-17.
  13. ^ Sarah Ryle. "Tesco axes sick pay to reduce 'days off' cheats", The Guardian, May 16, 2004. 
  14. ^ "American unions bring Tesco fight to UK", Guardian. Retrieved on 2008-06-05. 
  15. ^ UK Parliament debates supermarkets. Hansard (March 23, 2006).
  16. ^ Susie Mesure. "Tesco 'riding roughshod' over planning rules, MPs are told", The Independent, December 8, 2005. 
  17. ^ "Tesco planning permission refused", BBC, September 13, 2006. 
  18. ^ Tesco's £1bn tax avoiding plan - move to the Cayman Islands
  19. ^ Bill Wilson. "Big Brother at the supermarket till?", BBC News, January 27, 2005. 
  20. ^ Brown, Audrey. "Out-of-date food in UK supermarkets" BBC News 2007-05-21
  21. ^ [[2]]
  22. ^ Phyakrut Newspaper หนุ่มอังกฤษดับเครื่องชนเทสโก้-โลตัส. Retrieved on 2006-03-13.
  23. ^ "The Irish Times" (subscription required), 2008-03-31. Retrieved on 2008-03-31. 

[edit] See also

[edit] External links