OFT issues £225m worth of fines for cigarette price-fixing

The Office of Fair Trading has slapped a record £225m fine on two tobacco firms and nine retailers for fixing prices of tobacco products between 2001 and 2003

Imperial Tobacco, owner of brands including Davidoff, Embassy and Superkings, received a  £112.3m fine, and says it will consider appealing the decision.

The other tobacco manufacturer involved is Gallaher, owner of brands including Benson and Hedges and Silk Cut and the nine retailers are Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Shell, Somerfield and TM Retail.

“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,” says OFT Senior Director of Goods Simon Williams.

The OFT said the fine was the largest total penalty it had ever imposed in a case under the Competition Act 1998.

Asda, One Stop Stores, Sainsbury’s and Somerfield benefited from discounts in their fines under the OFT’s leniency programme, which provides co-operating parties with a reduction in penalties where they proactively volunteer information which assists the OFT’s investigation.

Gallaher, Asda, First Quench, One Stop Stores, Somerfield and TM Retail also received reductions because, after the OFT published its initial statement of objections in April 2008, they each admitted liability and agreed to a procedure that enabled parts of the case to be resolved more quickly.

A tenth retailer, J Sainsbury, escaped a fine because it alerted the OFT of the infringements, while the watchdog said it had insufficient evidence to pursue a case against Tesco.

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