Response to OFT

Tesco PLC
22 March 2005


                   TESCO RESPONSE TO OFT SUPPLIER CODE AUDIT

Tesco today welcomed the fact that the Office of Fair Trading (OFT) had found no
breaches of the Supplier Code at Tesco.

As the OFT published the results of its independent audit of the Supplier Code
of Practice, Tesco announced that it will be appointing a Code Compliance
Officer and has invited its UK suppliers to provide anonymous feedback on
working with Tesco.

Welcoming the OFT's findings, Chief Executive, Sir Terry Leahy said:

'We are pleased that the audit found no single instance of a breach of the Code
at Tesco. Our compliance with both the spirit and letter of the Code encourages
strong supplier relationships. That is not to say problems do not arise - they
do, but our close relationships with suppliers mean that these are aired and
usually resolved by constructive discussion.

'The OFT agrees that consumers benefit from vigorous competition for supplies on
both quality and price and there is nothing to suggest that the market is not
working well for consumers.

'We agree with the OFT that suppliers should not be apprehensive about
complaining to us. As the audit shows, suppliers do take up issues with us
regularly and to support this process we will be appointing a Code Compliance
Officer to hear formal supplier complaints, confidentially if requested.

'We also want to know what suppliers think of Tesco and how they find working
with us. To achieve this we have launched the biggest supplier survey of its
kind, sending out questionnaires to our UK suppliers. The results will help us
understand what is good and where we can improve.'

'The OFT has an ongoing responsibility to consider competitive conditions under
the Enterprise Act 2002 and we note their request for information in this
context.'

                                      ENDS


For further information please contact Jonathan Church in the Tesco Press Office
on 01992 644645. Out of hours please contact the duty press officer by
telephoning 01992 644733 and selecting option 2 from the voicemail menu.

Notes for Editors:

1. The new Code Compliance Officer will be a senior, fair minded and objective 
   individual who will hear formal supplier complaints and, where required, 
   attempt to resolve the issues.

2. The supplier questionnaires were based on the successful Tesco staff 
   Viewpoint process whereby all staff provide anonymous feedback on working at 
   Tesco. The data is then used to produce action plans for managers.

3. Tesco has more than 3000 UK suppliers. The following are just some examples 
   of how good relationships have brought benefits to suppliers, customers and 
   Tesco:

Hedon Salads, salad supplier

Hedon Salads was set up in 1993. Two years ago they began working with Tesco on
a project to extend the growing season for cucumbers from nine months a year to
all year round, including by installing a Combined Heat and Power (CHP) system.
The number of cucumbers harvested doubled in the first year, enabling cucumbers
from Yorkshire to replace imported Spanish cucumbers. The project is now
completing its second full winter season with strong year-on-year growth.

Glenrath, egg supplier

Glenrath won their first contract to supply Tesco in 1983, supplying eggs for a
small number of our Scottish stores. Over time their contracts with Tesco have
grown, and they now supply eggs for stores throughout Scotland and Northern
England. Twenty years of organic growth with Tesco has enabled Glenrath to build
a £25m turnover, producing over 1.2m eggs per day. Over the last decade Glenrath
have invested £17m into new, state of the art technology and facilities and have
grown to become Scotland's largest independent egg producer and packer.

Long Clawson Dairy, cheese supplier

Farmer's co-operative Long Clawson Dairy has worked closely with Tesco to
develop varieties of quality cheese, including Blue Stilton, Cotsworld, and an
Organic range. Since 2001 their business with Tesco has grown from £7.6m to
£11.4m, and has now reached around 40% of their turnover. Building their
business with Tesco enabled Long Clawson to invest £7m in new plant and
equipment during 2004. Long Clawson are not content with building their UK
presence. They recently joined Tesco at a Food and Drink Showcase at the British
Embassy in Prague.




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