Tesco fine serves as warning to food industry

On 19 April 2021, Tesco Stores Limited was fined £7.56 million at Birmingham Magistrates’ Court after pleading guilty to 22 out-of-date food offences which occurred at three of its stores in 2016 and 2017. The level of fine is unparalleled in food safety prosecutions and represents one of the highest safety regulatory fines in recent memory.

Out-of-date food offences were capped at £5,000 per offence in the Magistrates’ Court until 2015.  The judge’s starting point in this case was an eye-catching £10,000,000 for one offence; a dramatic increase of 200,000 percent in just six years. By comparison, during the same period, Tesco’s UK turnover has remained broadly static at around £50 billion. Had the defendant been a ‘large’ organisation (with a turnover of £50 million and over), rather than a ‘very large’ organisation (with a turnover very greatly exceeding £50 million and over), the starting point in the relevant sentencing guideline would have been over ten times lower at £90,000 (for medium culpability, harm category 2 – see below).

Also illustrative of the high level of fine is that in September 2020, Tesco was fined £160,000 in a separate case at Reading Magistrates’ Court for offences which the judge in the Birmingham case described as “similar”. Other recent fines for these offences received by major supermarkets, while of limited assistance due to the bespoke approach to each case required by the sentencing guideline, include the Co-op being fined £40,000 in October 2020 and Waitrose being fined £33,350 in May 2019.

There are several points of interest in relation to this case and the high level of fine imposed, which are discussed below.

Tesco didn’t listen

In the ‘Sentencing Outline’ prepared by the judge, Tesco was described as having scored an own goal having been “given a chance to review its procedures and put its house in order” in 2015.  Tesco invited the local authority to re-inspect a store where out-of-date food had been identified when issues remained. This is a surprisingly common feature in food safety cases and businesses are urged to be careful when inviting a regulator back to re-visit, advising them not to do so prematurely.

The judge stated that “this prosecution alleges that Tesco played ‘Russian Roulette’ with customers’ safety”. The connotations of the analogy are interesting as the prosecution alleged Category 2 harm in this case – ie, not the highest risk of harm (Category 1) – and the judge stated that the local authority “conceded that someone wasn’t likely to die as a result of eating these food items if they were cooked properly”. There were also many food safety systems in place and the prosecution and defence agreed that culpability was in the ‘medium’ category, ie, the second lowest of the four available categories.

Failure to admit wrong-doing contributed to sentence

In relation to “factors increasing seriousness [of the offence]”, the judge agreed with the local authority that it had been made to jump every conceivable hurdle by the defendant. He stated that the defendant “tried to avoid being prosecuted and avoided pleading guilty at the earliest opportunity for the 2016 offences”. Tesco was described as “only pleading guilty because they have run out of options”. The judge also took a dim view of the defendant’s expert evidence, describing it as “cavalier” and an “affront to common sense”.  He found that Tesco’s decision not to discard the expert’s opinions and “simply come to court to face the music by apologising and taking responsibility” also increased the seriousness of the offence.

While every case will turn on its facts and corporate accountability and contrition is an important consideration, there is a fine line between a perception that a company has tried to avoid being prosecuted and pleading guilty, and appropriately exercising its available legal rights and protections. Indeed, the judge noted that the High Court (involved in one of Tesco’s legal challenges to the offences) stated that the point raised was “of considerable potential importance”. The current levels of fines in regulatory cases mean that it is understandable that companies will want to be reassured that they are indeed guilty of the offences. At first glance the question of guilt may appear obvious, but offences committed by corporate defendants involving due diligence defences are particularly complex. It could lead to injustice if defendants were to become overly cautious and enter guilty pleas prematurely. Careful consideration will remain critical in assessing which legal points should be run in each individual case.

Mitigating circumstances mean fine could have been higher

The high level of fine should also be viewed in the context of the available mitigation and guilty plea. For example, the judge stated that Tesco had no previous convictions (the September 2020 fine was in relation to offences post-dating these offences), the offences were committed at three stores out of 2,900 operated by Tesco, and remedial steps were taken to reinforce training and resolve the problems. A fine in the absence of such mitigation would have been 10 percent higher. A fine post-trial would have been 30 percent higher still.

Finally, the judge called for the sentencing guidelines to change in relation to very large organisations. He stated that the “Sentencing Council desperately needs to introduce another table into their sentencing tables. They need to give guidance on multi-billion-pound companies”. The relevant sentencing guideline has been in place since February 2016 and, despite an impact assessment being carried out in 2019, more granular detail in relation to VLO (very large organisations) sentencing has not been forthcoming.

At this stage it is unknown whether Tesco will appeal the sentence. An appeal to the Crown Court would be by way of a re-hearing of the sentencing exercise and could be pursed within 21 days of the date of sentence. This decision will be watched with interest.

The court’s stated intention was to send a warning to food businesses across the country – the fine level in this case will surely cause concern at board level in the food sector and well beyond, including all companies with regulatory compliance obligations, such as health, safety and environmental responsibilities. Very large organisations will pay particular attention.