The Scotsman. April 21st.

Theory suggests we're heading for a depression

ON 13 March 2003, the FTSE All-Share index hit 1,676.6, the IT-driven peaks of three years before a distant and frustrating memory. Just a few days ago this key benchmark broke through to more than 3,380, a rise of 100 per cent. True, this advance has not been without interruption, punctuated, in fact, by two particularly sharp corrections, in May last year and February this year, but these were as short-lived as that most spectacular of all "panics" in recent memory, that of October 1987. To an extent, market trends are the source rather than as the result of opinion, extending onwards until reality is suspended, at which point, like that cartoon Coyote suspended over the canyon pedalling furiously, a glance below triggers nemesis.

Although I am no chartist, the structure of a market often follows a distinct pattern, an initial sharp reaction followed by an equally robust change in direction, which persuades the majority that the original trend has been re-established and then a more sustained secondary pattern which, in turn, carries the conviction of permanence. In truth, there are two fundamental aspects of any market trend. One is the belief by the majority that "this time is different" and two, that it is not. In fact, the phrase "this time is different" is almost as depressing as Evelyn Waugh's dislike of "red or white?" or "shall we go straight in?" Personally, I suffer a serious nervous reaction to the news from my IT department that "we have upgraded your systems".

The trouble with cycles is that one is never very sure when they started and, as a result, they can only really be judged retrospectively. In 1923, Joseph Kitchen announced his discovery of a 41-month cycle, while the French economist Clement Juglar, who died in 1905, identified a seven to 11-year business evolution. Perhaps the most famous was the Kondratieff theory on wave cycle, "discovered" by the Russian Professor Nikolai Kondratieff and whose cycles are supposed to last anything between 45 to 60 years. Prof Kondratieff helped to develop the first post-revolutionary Soviet five-year plan. In his findings, he suggested that there were four distinct phases: beneficial inflation; stagflation; beneficial deflation and deflation. Unfortunately - for him - his work and conclusions were seen as a criticism of Joseph Stalin and he ended up dying in a gulag in 1938. Based on his theories, however, there was a period of beneficial inflation between 1949 to 1966, stagflation between 1966 and 1982, and beneficial deflation between 1982 and 2000.

We are now in that fourth stage, a deflation cycle which should lead to a depression. Prof Kondratieff was building on the premise promoted by Juglar, who suggested that growth periods usually ended in a spectacular collapse of the proverbial bubble, with the consequential need of a purging of the system to restore reason.

It seems to me that we are depressingly close to just such a climax, depressing, that is, for one who makes a living out of investment markets; as Butch Cassidy said to the Sundance Kid: "You know kid, for a gun fighter you're a helluva pessimist!" The human condition is prone to irrational enthusiasm, which can overwhelm anything from a playground to a lynch mob. Peering into the investment market pond today suggests that the entire piscatorial shoal is engaged in a cycle of mutual ingestation, which can only lead to an acute attack of indigestion. I am not saying there are no investment opportunities to be had but, when you have central bankers still obsessed by inflationary pressures which are as much as anything else a consequence of political initiatives or acts of the Almighty - high oil prices (Iraq and tax) - high food prices (hot weather) - and not from avaricious wage demands or spectacular speculative consumption binges, then there are problems on the horizon for us all, and especially for those who succumb to banks lending mortgages on an income multiple of six.

As Euripides said: "Whom the Gods would destroy, they first make mad."

Bryan Johnston is a director of Bell Lawrie in Edinburgh.

The Herald. 30 April
PAUL ROGERSON, City Editor

SNP says Tesco Law is not suited to Scottish society

SNP justice spokesman Kenny MacAskill has said the party will not seek to introduce so-called "Tesco Law" north of the border, should it take power at Holyrood.

He was commenting on the party's policies towards the legal profession, which are broadly outlined in its election manifesto.

South of the border, of course, external investors such as supermarkets and banks are being allowed to own and run law firms for the first time. Practices will also be able to float and appoint non-lawyer partners, and English barristers and solicitors will be able to form partnerships.

"MacClementi", a working party report on Scotland's legal services market commissioned by the Scottish Executive and published early last year, was widely viewed as a damp squib in respect of opening up the market to greater competition. This has split the profession, with some eminent lawyers in favour of the new freedoms and others hostile.

Asked if he would seek to legislate to allow any or all of the freedoms enshrined under the general term "Tesco Law", MacAskill responded: "Further investigation is needed. Tesco Law is to be avoided as it would not suit Scottish society. However, some opportunity for successful Scottish firms to compete globally is appropriate."

MacAskill did give a commitment to implement fully reforms scrapping self-regulation enshrined in the recently passed Legal Profession and Legal Aid (Scotland) Bill, including the creation of an independent Scottish Legal Complaints Commission to address complaints of poor service by lawyers.

Some consumers have expressed concern about his commitment to that cause, since he himself is a qualified solicitor and was a partner in an Edinburgh law firm until 2000.

Asked if the SNP was committed to the full implementation of the bill as recently passed by parliament, however, MacAskill answered with a simple "yes". He said he has no plans to alter any aspect of the reforms. The SNP is taking a cautious line on the vexed issue of Scotland's shockingly low threshold for small claims. It is now nine years since it was recommended that the limit be lifted to 1500 from 750, but nothing has been done.

Scottish consumer groups continue to despair that for people wanting compensation from a supplier of shoddy goods or services without the expense of hiring a lawyer, the effective maximum is 750 - less than the cost of a plasma TV. That limit has been frozen for 19 years, whereas in England and Wales the small claims ceiling is 5000 and has been since 1999.

According to consumer organisation Which?, some despairing Scots who can do so, choose to pursue their cases in the English courts. Julia Clarke, public affairs officer for Which? in Scotland, has described the Executive's failure to act as a "charter for cowboys".

Personal injury claims are to be excluded from increases in the small claims threshold if and when the Executive does act. That much is clear.

Opponents of higher limits, however, which include trade unions, allege that more radical action would deny legal redress to thousands of Scots by taking them out of the legal aid net.

Others make dark allegations of protectionism, stressing that a rise would enable more people to go to court without having to pay a solicitor. Asked if the SNP will be increasing the small claims limit and, if so, to what level and when, MacAskill responded: "A root-and-branch reform is needed for a system unfit for 21st century society.

"The protection of those pursuing personal injury claims must be assured.

However, a faster and more streamlined system must be available for minor consumer and other small claims."

The Guardian
Julia Finch. Monday April 30, 2007

Wanted: 100 Tesco shareholders to push for a better deal for suppliers


A small shareholder in Tesco is canvassing support to force the supermarket to adopt higher standards in its dealings with suppliers in low-wage countries.

Ben Birnberg, company secretary at aid charity War on Want, is attempting to track down 100 like-minded Tesco shareholders, who must have holdings currently valued at some 9,300 each, to back a resolution he hopes to put to the grocer's annual meeting at the end of June.

The resolution would oblige Tesco to appoint independent auditors to ensure that workers in its supplier factories are guaranteed "decent working conditions, a living wage, job security" and the right to join a trade union of their choice.

The issue prompted an exchange of letters in the Guardian last week. In the first, Mr Birnberg spelled out why he thought Tesco should make higher standards a priority. He pointed out that in its annual review last year the grocer boasted of its "market leading package of pay and benefits". The grocer also stated that it believed in "treating our partners as we like to be treated" and was keen "to uphold labour standards in the supply chain".

Tesco's director of legal affairs, Lucy Neville-Rolfe, then responded and said it would be easier for Tesco to stop sourcing from countries with economic and social problems that Tesco cannot fix but that trade was the right way to help lift developing countries out of poverty.

Mr Birnberg wrote back, insisting the issue "is not trade or no trade" but why Tesco would try to block a resolution designed to ensure higher standards if it "is genuine about its ethical pretensions".

Before contacting the Guardian, Mr Birnberg had written to Tesco to ask if the directors would demonstrate their commitment to ethical sourcing by backing his resolution and circulating it to investors.

Tesco's company secretary, Jonathan Lloyd, refused, claiming it was "not valid under the relevant rules". Mr Birnberg said the company could not be compelled to circulate a resolution, but the directors could have done so of their own volition.

Now, however, he is attempting to use force. Under section 376 of the Companies Act a shareholder can move a resolution if they hold at least 5% of the share capital or have the support of at least 100 other shareholders who each hold an average of shares with a paid-up value of 100 (This reflects the shares' nominal value as stated on the share certificate). At Friday's share price that would mean each of them having to hold about 9,300 worth of shares .

A spokesman for Tesco said: "If these suppliers weren't supplying to the export market they would have to supply to the domestic market, and then the conditions would be much worse."

A recent War on Want report on workers in Bangladesh producing clothes for stores like Tesco, Primark and Asda found evidence that the mainly female workforce was being paid as little as 5p an hour and working up to 80 hours a week.

Last week a report by Action Aid found further evidence of workers at overseas suppliers to UK supermarkets being paid poverty wages to work in appalling conditions. The report also focused on the women working in Bangladesh, cashew nut processors in India and banana workers in Costa Rica.

AFX - 12.28pm. Tuesday 1st May


LONDON (Thomson Financial) - Tesco PLC faces disruption after drivers at its distribution depot at Livingston in Scotland voted to strike in a dispute relating to the supermarket giant's plans to re-draw terms and conditions when they relocate their distribution depot to a site only 500 yards away from the existing one.

The Transport and General Workers Union (T&G) today confirmed the ballot result but said no dates for action have been set whilst talks with Tesco continue.

In a high turnout ballot, in which over 92 pct of the drivers took part, 95.5 pct voted in favour of strike action. In a second question on taking industrial action short of a full strike, 94.7 per cent were in favour.

This vote shows how strongly drivers feel about the situation, said Tony Trench, T&G's regional industrial organiser and spokesman for the drivers.

In a statement, the T&G said it began talks with Tesco through Acas yesterday in an attempt to find a resolution. Negotiations will continue into next week and the union will not name any dates for strikes or any other form of industrial action while they are in process.

The T&G drivers recently received backing from the Scottish TUC, and the union at a national level is preparing a campaign across the distribution depots.

Scotsman

MPs support Tesco drivers in strike row

TESCO delivery drivers in the midst of a strike ballot have won the support of a group of MPs.

Workers are furious at new terms the supermarket plans to impose, which they claim amount to major pay cuts.

Livingston MP Jim Devine has tabled an early day motion at Westminster on the situation faced by workers at Tesco's huge West Lothian base. It has been supported by five other Labour MPs including Linlithgow and East Falkirk's Michael Connarty and East Lothian's Anne Moffat.

The motion reads: "We express deep concern that drivers at the Tesco depot in Livingston have been threatened with dismissal unless they sign up to new terms proposed by the company. We urge Tesco to come back to open meaningful negotiations."

The real problem will come if the strike spreads to all depots across the UK.

The Independent. 04 May 2007.

Watchdog investigates Tesco telecoms complaints. By Nic Fildes


Ofcom is investigating Tesco's telecoms division after customers complained that the supermarket had switched their telecoms services without consent and had then refused to cancel the orders.

Ofcom noted that over recent months there was a significant increase in the number of customers cancelling requests to switch to Tesco Telecoms. After receiving complaints from consumers, it will investigate whether the supermarket has been mis-selling its service by switching customers against their wishes.

Ofcom will also investigate customer complaints that Tesco refused to cancel orders on request, meaning the customer was forced to contact their existing telecoms supplier to stop the order. Customers that choose to switch telecoms supplier have a 10-day "cooling off" period in which they can cancel orders primarily to stop mis-selling. Tesco blamed the problems on a billing system and denied it had deliberately mis-sold.

A Tesco spokesperson said: "We very much regret that some customers have experienced difficulties in trying to cancel their transfer, but of course we would never knowingly miss-sell any product. The problems were down to a change in billing systems which led to delays and a breakdown in communications with... customers. These issues are now largely resolved."

The investigation could take months and Tesco could face a hefty fine if it is found to have mis-sold products. The maximum fine is 10 per cent of the unit's revenue. Ofcom is also investigating the Post Office over alleged mis-selling of its phone services.

Evening Standard. 4 May 2007. Jonathan Prynn

Tesco faces phone line sale probe


Tesco is being investigated over claims that it mis-sold fixed-line phone contracts.
Industry regulator Ofcom said it will examine whether the supermarket's offshoot Tesco Telecoms had broken its code of practice.

It follows complaints that the company signed up customers without their full consent and failed to cancel orders when customers requested it, as it is legally obliged to do.

In some cases people complained they were forced to contact their existing supplier to prevent the transfer of service to Tesco Telecoms.

A Tesco spokesman said: 'We would never knowingly missell any product.

'The problems were down to a change in billing systems which led to delays and a breakdown in communications with customers.'

Tesco Telecoms could face a fine of up to 10% of its revenue if it is found to have mis-sold products.

Scotsman

MPs support Tesco drivers in strike row

TESCO delivery drivers in the midst of a strike ballot have won the support of a group of MPs.

Workers are furious at new terms the supermarket plans to impose, which they claim amount to major pay cuts.

Livingston MP Jim Devine has tabled an early day motion at Westminster on the situation faced by workers at Tesco's huge West Lothian base. It has been supported by five other Labour MPs including Linlithgow and East Falkirk's Michael Connarty and East Lothian's Anne Moffat.

The motion reads: "We express deep concern that drivers at the Tesco depot in Livingston have been threatened with dismissal unless they sign up to new terms proposed by the company. We urge Tesco to come back to open meaningful negotiations."

Evening Standard - 8 May 2007 - Jonathan Prynn

Rogue fuel costs Tesco 8m


Tesco has paid out 8m to motorists who bought contaminated fuel earlier this year, it emerged today.
The supermarket giant said it had acted quickly to reimburse about 18,000 victims, mostly in the South-East.
Drivers' cars developed faults after filling up at Tesco and Morrisons forecourts across the region about two months ago.
Many said their vehicles started 'kangaroo jumping' or ground to a halt shortly after taking on the petrol. Most of the affected motors suffered damaged sensors, which are used to regulate emissions, with repair bills ranging from 200 to 1,000.

The fuel was found to have been contaminated by high levels of silicon and the rogue batch was traced to a storage depot in the Thurrock area of Essex.
Tesco apologised after tests showed it had sold the contaminated fuel. A spokesman yesterday said the 'vast majority' of compensation claims had now been settled.
Morrisons also said it had dealt with 94 % of claims, but refused to say how much it had paid out in compensation or the number of drivers receiving payouts.

Investigations are still ongoing as to how the fuel became contaminated although the storage company is not thought to be held responsible.

From The Times - May 9, 2007 - Sarah Butler

New clampdown will make it tougher for Tesco in Thailand


Tesco may face renewed difficulties in Thailand after the countrys military-installed Government endorsed a new law intended to curb the expansion of foreign retailers.
The new legislation, which needs further approvals before it comes into force, would create a central body, to be called the Retail and Wholesale Supervision Committee, to regulate retail businesses nationwide.
That body would take its lead from provincial governments, which would assess and approve or reject plans for any new supermarkets in their area.
Oranuj Osathananda, the Deputy Commerce Minister, said: The new law approved today will decentralise authority to provincial regulators and allow greater hearing of public opinion.
If retailers go against the verdict of provincial authorities or violate the law in any other way, they would face up to three years in jail or fines of three million baht (46,000).
The Government is also taking tougher measures to enforce city zoning laws in order to slow the expansion of foreign retailers.

Tesco has had a difficult time in Thailand since a military coup late last year, which led to restrictions on expansion plans in one of the chains most successful overseas markets.
The company was forced to temporarily halt the expansion of its chain of small convenience stores and only recently reactivated the programme.
The Commerce Ministry has claimed that more than 100,000 small shops have been forced to shut over the past decade due to rapid expansion of large retail chains.
A Tesco spokesman said: We are still waiting to see the details, but there appears to be no mention of Thai consumers and we would ask the Government to consider how this law will benefit them.
This is just the first step in the process and we will continue to work with the Government to explain the benefits that modern retail brings to Thai consumers and suppliers. He said that such issues were bound to occur occasionally for a business that was operating in a number of different markets around the world.
The important thing is that we have a strong business in Thailand which is popular with our customers, the spokesman said.

The proposed law will be sent next to the nations top legal experts before being submitted once again to the military-appointed parliament for final endorsement.

BANGKOK (XFN-ASIA) - Thailand's military-installed government endorsed a new retail law aimed at reining in the expansion of major foreign retail companies after an outcry by local shop owners. Under the new law, local governments would assess and approve any proposed new branches of supermarket chains in their province. A new central body -- the Retail and Wholesale Supervision Committee chaired by the commerce minister -- would also be set up to regulate the retail business nationwide. The retail measure was initially rejected by the cabinet, which complained that the central committee would have too much authority to regulate retailers, but the cabinet gave a revised version its approval.

'Instead of having only one central regulator, the new law approved today will decentralize authority to provincial regulators and allow greater hearing of public opinion,' said deputy commerce minister Oranuj Osathananda.

Supermarket chains, mostly foreign-owned groups like British company Tesco Plc and France's Carrefour SA, have been locked in a row with the government and small stores, which complain the big retailers are driving them out of business. More than 100,000 small shops have shut over the last decade due to rapid expansion of the chains, the commerce ministry has said. If the retail majors go against the verdict of provincial authorities or violate the law in any other way, they would face up to three years in jail or fines of 3 mln baht under the bill.

The law will now be sent to the nation's top legal experts before being submitted once again to the junta-appointed parliament for final endorsement. In the meantime, the government will toughen its enforcement of existing zoning laws to slow the expansion of foreign retailers, a spokesman said. 'It will take some time before the retail law takes effect,' deputy government spokeswoman Netpreeya Chumchaiyo told reporters. 'To immediately reduce impacts from rapid expansion of foreign retailers, the cabinet agreed to tighten the existing city zoning rules to regulate retail business first.'

Tesco Union Calls for Strike Ballot to Support Scottish Drivers - By Lenka Ponikelska


May 22 (Bloomberg) -- Tesco Plc union members are calling for a ballot on strike action in support of Scottish drivers of the supermarket company.

The Transport and General Workers branch of the Unite union says it will call a ballot of drivers at Tesco's U.K. distribution depots in support of 150 drivers at a Scottish depot who already plan to strike from May 24 to 26 over changes to pay and working conditions.

``Tesco is wrong to say the dispute is just about how people are paid. It is about losses of between 3,000 pounds ($5,915) and 6,000 pounds a year which are at issue along with losing the protection of their union,'' Ron Webb, T&G section of Unite national secretary for transport, said in an e-mailed statement.

The T&G section of Unite, which represents 5,000 workers at Tesco's main distribution depots, have not set a date for a ballot.

Tesco earlier said in an e-mailed statement that it will ``do everything in our power to ensure that the actions of a minority of staff will not disrupt the service we provide and cause inconvenience to our customers.''

not looking good

The Observer - Sunday May 27, 2007 - Oliver Morgan

Tesco braced for drivers' strike


Tesco may face empty shelves and widespread supply disruption as its distribution drivers prepare for a national strike ballot this week. The move by Unite, the merged Transport and General Workers and Amicus unions, follows a walkout over pay and recognition at a Tesco depot at Livingston in Scotland last week. There was a 126 to six vote in favour of strike action at Livingston on a 90 per cent turnout. The T&G claimed last week's action, from Thursday to Saturday, meant only 25 per cent of normal truckloads left the depot, although Tesco said operations ran normally. The union says that unless Tesco changes its stance on new contractual conditions and the derecognition of Unite at the new depot it will announce a nationwide ballot of some 5,000 drivers across five other depots on Wednesday. Ron Webb, the T&G/Unite national secretary for transport, said: 'We will inform the company of our intention this week unless they make a U-turn.' Unite's grievances relate to contract changes accompanying a move to a new Livingston depot which introduced new shift patterns, meaning losses to some drivers of up to 6,000 in overtime and other payments. Tesco has confirmed it has a single union agreement with Usdaw, the shop workers' union, at the site.

BBC - Saturday, 26 May 2007

Tesco has apologised for a mistake over corn-fed chickens


Tesco has apologised for selling chicken labelled as corn-fed which had not eaten enough maize to meet minimum requirements. The supermarket called it a "completely unacceptable" mistake, caused by a farmer accidentally giving his birds the wrong feed. The apology comes after tests were carried out on chicken sold by six supermarkets and department stores. Tesco also confirmed that no affected chickens remained on sale. The tests were organised by the Times newspaper, which reported that the Department for Environment, Food and Rural Affairs (Defra) Central Science Laboratory in York had found the Tesco chicken "was not in keeping with EU regulations". All the other chicken samples tested were found to justify being sold as corn-fed. Defra's website states that the term "corn-fed" means the feed formula given during the larger part of the chicken's fattening period must contain at least 50% maize. A Tesco spokesman said: "The integrity of our food is our greatest concern at Tesco. "We conducted an immediate investigation and we have already determined that for a short time the farmer concerned inadvertently fed standard free-range feed - which does contain corn - to his chickens instead of the free-range feed that contains sufficient corn to satisfy Defra standards. "While this only happened for a short period of time, it is completely unacceptable to us and to our customers.

"We apologise for what appears to be a case of human error at a supplier that services different retailers."

Tom McGhie, Financial Mail - 27 May 2007

Strike may empty Tesco shelves


Leaders of Unite, the country's largest union, plan to ballot members next week in a dispute over changes in contracts for their members at Tesco's depot in Livingston, West Lothian. Livingston's Labour MP, Jim Devine, called for a one-day boycott of Tesco for threatening to sack drivers who refused to sign new contracts. The drivers, who earn up to 25,000 a year, walked out on Thursday and were due to return to work today. The union said the new contracts would mean workers losing between 3,000 and 6,000 a year and the derecognition of the union. The changes are being implemented during the move of the depot 500 yards down the road.

According to union organisers, only 25% of the normal consignments of groceries and supplies were leaving the Livingston depot as the strike started to bite. It also said that the prospect of a national ballot was very real. Ron Webb, the union's national secretary for transport, who was on the picket line at Livingston last week, said: 'As things stand, we'll be starting a national ballot of our members across the other distribution sites. 'Tesco is being hit by the Livingston strike and is in denial about what it is all about. We will start the national ballot unless the company commits to meaningful talks.'

Tesco denied that any drivers were losing their jobs and instead claimed that jobs were being created. It said that 450 of the 600 workers had accepted the deal. Distribution director Laurie McIlwee said that there would be no change to the contractual pay of any driver who moved from the old contract to the new one.




TESCO'S latest womenswear collection has come under fire for being too expensive and unfashionable, writes Teena Lyons. A report from analyst firm Piper Jaffray said that Tesco's prices were 48% more expensive than Asda's and 56% dearer than Primark's. It also said that the range was 'unable to fully interpret and exploit key fashion trends'. Tesco's Terry Green disputed the claims and said: 'We are looking at the more aspirational market.'

Hey, e t, any danger of you posting a positive story about this company?