OFT makes cigarette price allegation

The Office of Fair Trading has accused tobacco companies and supermarkets of “co-ordinating prices”. The OFT names 11 retailers, including Asda, Sainsbury’s, Tesco, and tobacco companies Imperial Tobacco and Gallaher.

The Office of Fair Trading (OFT) has accused tobacco companies and supermarkets of “co-ordinating prices”. The OFT names 11 retailers, including Asda, Sainsbury’s, Tesco, and tobacco companies Imperial Tobacco and Gallaher.

It alleges that they have been engaged in unlawful practices linked to retail prices for tobacco, including retailers and tobacco groups arranging to swap information on future pricing. A separate allegation is that there was an understanding that the price of some brands would be linked to rival brands.

The OFT says “understandings” between cigarette companies and retailers from 2000 to 2003 limited the retailers’ ability “to determine its selling price independently”. In the case of Gallaher, Imperial Tobacco, Asda, Sainsbury’s, Shell, Somerfield and Tesco, there was an indirect exchange of proposed future retail prices between competitors, allegedly between 2001 and 2003.

The retailers named in the statement of objections are Asda, the Co-operative Group, First Quench, Morrisons, Safeway, Sainsbury’s, Shell, Somerfield, T&S Stores, Tesco and TM Retail.

An OFT spokeswoman says that the allegations are not about price fixing, but “retail price co-ordination, which is also illegal”.

Gallaher brands include Benson & Hedges and Silk Cut, while Imperial Tobacco’s portfolio includes Lambert & Butler, Embassy and Regal.