The groceries adjudicator has begun an investigation into supermarket giant Tesco over its profit over-statement last year, and allegations that the UK’s largest supermarket chain has breached the code of practice between retailers and their farmer suppliers.

On Thursday, the office of Groceries adjudicator Christine Tacon released a notice stating that the watchdog is investigating Tesco, as it “Holds a reasonable suspicion that the Code [of practice governing relationships in the supermarket supply chain] has been breached by Tesco plc by some of its practices associated with the profit over-statement announced by the company in September 2014.”

This is the first time the adjudicator has launched a formal investigation since the post was established in January 2013. Last week, the government pledged to give the supermarket adjudicator more powers, after coming in for criticism from farmers’ groups and the EFRA select committee.

Currently Ms Tacon’s office can only investigate alleged malpractice against direct suppliers of the UK’s ten largest retailers, though there have been widespread calls to widen this remit. She cannot currently fine retailers found to be in breach of the code, which business secretary Vince Cable recently suggested was the result of certain Tories blocking attempts to set a maximum penalty for the ombudsperson to wield. The new powers promised last week mean the adjudicator may be able to fine supermarkets up to 1 percent of their annual turnover, but these powers aren't yet available to her.

Even so, on Thursday, Ms Tacon’s office said that it has discussed the alleged instances of abusive practice with Tesco, and is now seeking further information from the supermarket’s direct suppliers before deciding what action to take.

The investigation, which is expected to last between six and nine months, will look into cases involving delayed payment of suppliers and payments for better positioning of goods over a period of almost two years, beginning in June 2013. The ombudsperson’s office said there is “Evidence that [the alleged cases of malpractice] were not isolated incidents, each involving a number of suppliers and significant sums of money.”

• The disputes over payments are understood to include:
• Short deliveries, including imposition of penalties
• Consumer complaints where the amounts were not agreed
• Invoicing discrepancies such as duplicate invoicing where two invoices were issued for the same product
• Deductions for unknown or un-agreed items
• Deductions for promotional fixed costs (gate fees) that were incorrect
• Deductions in relation to historic promotions which had not been agreed.

In a statement on Thursday, Christine Tacon said, “This is the first investigation I have launched and it is a significant step for the GCA. I have taken this decision after careful consideration of all the information submitted to me so far.

“I have applied the GCA published prioritisation principles to each of the practices under consideration and have evidence that they were not isolated incidents, each involving a number of suppliers and significant sums of money.”

The Serious Fraud Office and the Financial Reporting Council are already investigating Tesco after the supermarket over-stated its profits by £263m.

Further information on the investigtion, including information for supermarket suppliers wishing to contact the grocery adjudicator’s office can be found here. The ombudsperson’s notice can be read in full here.