TSCDY Tesco PLC (PK)

By Saabira Chaudhuri 

LONDON-- Tesco PLC unreasonably delayed payments to suppliers and must "make significant changes," a U.K. regulator said on Tuesday following a year-long investigation into the supermarket chain's payments practices.

The Groceries Code Adjudicator Christine Tacon said Tesco "seriously breached" the Groceries Supply Code of Practice, aimed at protecting suppliers.

Ms. Tacon said Tesco "had acted unreasonably when delaying payments to suppliers, often for lengthy periods of time."

Tesco said it accepts the findings of Tuesday's report, adding that it "will continue to work collaboratively with suppliers to further build trust."

The GCA said it is requiring Tesco to stop making unilateral deductions from money owed for goods supplied, allowing suppliers to challenge a proposed deduction.

Tesco will also have to correct pricing errors within seven days of notification by a supplier and improve its invoicing practices. The company has four weeks to outline how it will implement the recommendations.

"The absolute focus on operating margin had damaging consequences for the business and our relationship with suppliers. This has now been fundamentally changed," said Tesco Chief Executive Dave Lewis in a statement. "We are sorry," he added, characterizing previous practices as "both unsustainable and harmful to our suppliers."

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

January 26, 2016 05:58 ET (10:58 GMT)

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