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Grocery regulator to monitor Tesco over fees for online suppliers

Tesco has been asked to send a monthly report to the adjudicator, which oversees the relationships between supermarkets and suppliers, to ensure that it is in agreement with the code

The UK’s supermarket regulator is reportedly keeping a close eye on Tesco since it imposed a fulfilment fee for online suppliers that is similar to Amazon, according to the Times.

The Grocery Code Adjudicator has been monitoring the supermarket chain and put in place “assurance” processes after it stated last year that it would start charging suppliers extra to sell online.

Tesco stated that it first introduced a fee as its own fulfilment costs had increased as it expanded its online operations and served more customers.

The fees for larger suppliers start at 12p per item for branded items and 5p for own brands, while Tesco’s smallest suppliers with contracts worth £250,000 or less are free from the levy.

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The fees also apply to online orders fulfilled on behalf of retail and catering customers made through Booker, the grocery store’s wholesale division.

The supermarket faced criticism as suppliers and brands expressed concern that the fee associated with handling returns, picking and delivering products, and processing orders could force many of them out of business.

Since then, Tesco has reportedly sent a monthly report to the adjudicator, which oversees the relationships between supermarkets and suppliers, to ensure that it is in agreement with the code, preventing penalties for suppliers who refuse to pay the optional fee.

In order to make sure that any alterations made to store distribution, product delistings, promotion cancellations, or new product development are not being made in retaliation against a supplier who has refused to pay, it has been compelled to give the adjudicator all relevant information.

Groceries Code Adjudicator Mark White told the Times: “Tesco has confirmed that the fulfilment fee is voluntary with no repercussions for refusing to pay. From my assurance process I don’t believe that suppliers have faced repercussions, but I encourage suppliers to contact me if they have any concerns.”

Retail Sector has contacted Tesco for comment.

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