Tesco and Asda probed in price war inquiry

by Joe Lepper, Brand Republic 20-Aug-07, 09:10

LONDON - The reputations of the UK's two largest supermarket brands, Tesco and Asda, are under pressure amid allegations that they demanded suppliers reduce prices to help them engage in a price war over the summer.

The Competition Commission has ordered Tesco and Asda to disclose correspondence focusing on a five-week period during June and July between themselves and suppliers.

This includes millions of emails, with media reports suggesting that Asda alone is set to hand over more than 11m emails.

The regulatory body is specifically investigating allegations that both chains acted "aggressively" in demanding price cuts from suppliers during a £520m price war over the summer.

It is alleged that a number of emails used threatening language and demanded suppliers hand over retrospective rebates -- the practice whereby suppliers hand over payments to retailers in arrears or face being dropped from their list.

A Tesco spokesman said: "It is extraordinary to see the Competition Commission putting these prejudicial allegations into the media in this way. The allegation that threatening and aggressive emails have been sent, has not been mentioned to us, despite numerous conversations with the Competition Commission on this matter.

"We are confident that once the Commission has searched through the millions of e-mails involved, they will find that our relationships with suppliers are professional, that we comply with the industry code of conduct and the steps we take to lower prices bring huge benefits to consumers in this country."

This latest move by the Competition Commission is part of a long -running investigation into allegations of abuse of power by the four largest supermarket chains, Asda, Tesco, J Sainsbury and Morrisons.

Comments

Henrietta Lilley - 20/08/2007

About time somebody took this issue in hand. It is an absolute disgrace that supermarket chains can hold suppliers over a barrel in this way or force them out of business. The answer is simple, if supermarkets want to cut costs, they should cut down on their packaging.