OFT fines tobacco manufacturers, retailers £225m

16th Apr 2010 07:20

The Office of Fair Trading has fined two tobacco manufacturers and ten retailers £225m in total after a seven-year investigation into price fixing.The watchdog said it found that the firms engaged in unlawful practices in relation to retail prices for tobacco products in the UK. Each manufacturer had a series of individual arrangements with each retailer whereby the retail price of a tobacco brand was linked to that of a competing manufacturer's brand in different periods between 2001 and 2003, according to the OFT.The tobacco manufacturers involved are Imperial Tobacco, which was slapped with a £112.3m fine, and Gallaher, as well as the retailers Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury's, Shell, Somerfield and TM Retail.Asda, One Stop Stores, Sainsbury's and Somerfield had their fines reduced under the OFT's leniency programme, which provides co-operating parties with a discount in fines where they proactively volunteer information which assists the investigation, while Sainsbury's received complete immunity because it had alerted the watchdog to the infringements and was the first to apply for leniency.Simon Williams, OFT Senior Director of Goods, said: 'Practices such as these, which restrict the ability of retailers to set their resale prices for competing brands independently, are unlawful. They can lead to reduced competition and ultimately disadvantage consumers.''This enforcement action will send out a strong message that such practices, which could in principle be applied to the sale of many different products, can result in substantial penalties for those who engage in them.'Imperial Tobacco has announced it will appeal the decision adding that it 'continues to reject any suggestion that it acted in breach of the Competition Act or in any way contrary to the interests of its consumers.'Supermarket chain Morrisons said it considers the OFT's stance to be 'illogical and without foundation.''Morrisons fully expects that when this case is considered with proper judicial scrutiny by the Competition Appeal Tribunal, the OFT's findings will be overturned,' it added.