Save our Sheringham - Say NO to Tesco

Tuesday, November 07, 2006

Tesco face fines in Hungary

The Tesco strategy of getting suppliers to take all the risks and bear all the costs is being challenged in Hungary. British supermarket chain Tesco could face a fine of billions of forints, the daily Magyar Hírlap reported last Monday. The results of a Competition Office probe into whether Tesco-Globál Áruházak has been abusing its market-leading position are expected to be made public this month. The company may be found to have violated the new trade law, which prohibits firms from abusing their dominant position to the disadvantage of suppliers. The ban applies in particular to traders forcing suppliers to use their own services or those of a third party. If the Competition Office establishes Tesco’s liability, it could act as a precedent in Hungary. Suppliers have raised numerous grievances against the chain. “We have to take on all sale risks. That means if goods aren’t sold, every single item has to be taken back. At the same time Tesco arbitrarily removes goods from offer without even informing us. In addition, suppliers have to bear all costs, including those that are the fault of Tesco,” a supplier from southern Hungary who wanted to remain anonymous told The Budapest Times.
The company is a notorious repeat offender. In the middle of October, Tesco had to pay out HUF 10 million (EUR 38,400) for violating consumer protection rules. The company was found to have charged prices on shelves, not displayed some prices and not listed various items on receipts. In June, Tesco had to pay a fine of HUF 100 million (EUR 384.000) for misleading customers. The company was also fined for similar offences in 2003 and 2004.