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Supermarkets fined for fixing tobacco prices
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· Business
International:
· U.K.
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Source:http://www.thisismoney.co.uk/,2010-04-14
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Ten retailers and two tobacco manufacturers have been hit with fines totalling £225m by the competition watchdog, after unlawful practices in the pricing of cigarettes, cigars and rolling tobacco. The fine is the largest ever imposed by the Office of Fair Trading.
Imperial Tobacco and Gallaher struck 'price matching,' agreements with retailers so the prices of their tobacco products were linked to those made by rivals.
The OFT have stated that the breaches in tobacco selling took place between 2001 and 2003.
Many supermarkets were caught up in the case, including Asda, Co-op, Morrisons, One Stop Stores, the now defunct Safeway, Somerfield and Sainsbury – the latter being given 'complete immunity,' from a fine, as they were the company who alerted the OFT.
Morrisons was landed with a total fine of nearly £20m, made up of an £8.6m fine for the Morrisons brand and another £10.9m for Safeway, which the company acquired in 2004.
Asda, one of the six firms which applied for leniency from the OFT in 2008, was fined £14.1m whilst the Co-operative Group was handed a £14.2m penalty.
However, market leader Tesco had the allegations against them withdrawn due to lack of evidence.
Other retailers involved in the investigation were First Quench, which are in currently in administration, Shell, and TM Retail, owner of the McColls and Martins chains.
Simon Williams, the OFT's 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.'
Imperial Tobacco, whose brands include Lambert and Butler, received the biggest fine - £112.3m. Gallaher, which was bought by Japan Tobacco in 2007 and makes Silk Cut cigarettes, was fined £50.3m.
The Imperial Tobacco Company denied 'categorically,' that its pricing practices were anti-competitive and impacted consumers. They are planning to appeal and a spokesman said: 'The purpose of these arrangements was to encourage our brands to be priced competitively.
'Promotional discounts given to retailers were passed on to consumers in the form of lower retail prices.
'Far from being anti-competitive, these arrangements were pro-competitive and to the benefit of consumers. Retailers remained free to set their own prices.'
The watchdog said the agreements over price links between rival brands 'restricted the ability of the retailers to determine their selling prices independently. |
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