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London - Two tobacco manufacturers and nine retailers have been fined a total of £225m for "unlawful practices" in the pricing of tobacco products, the Office of Fair Trading said here on Friday.
The fine, equivalent to €256m or $346m, is the largest-ever total imposed by the OFT, and relates to the pricing of cigarettes, cigars and rolling tobacco.
"The OFT has found that two tobacco manufacturers and 10 retailers engaged in unlawful practices in relation to retail prices for tobacco products in the UK, and has imposed fines totalling £225m," the OFT said in a statement.
"The tobacco manufacturers involved are Imperial Tobacco and Gallaher, and the retailers are Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores, Safeway, Sainsbury's, Shell, Somerfield and TM Retail."
Imperial Tobacco Group and Gallaher Group were slapped with fines of £112.3m and £50.4m respectively.
The rest of the fine is shouldered by nine retailers, apart from supermarket group Sainsbury, which was granted immunity for blowing the whistle and alerting the OFT to the infringements.
The OFT said that the fine came after Imperial Tobacco and Gallaher had struck "price matching" arrangements with retailers, in which the prices of tobacco products were linked to those of rivals. The watchdog added that the breaches took place between 2001 and 2003.
"Practices such as these, which restrict the ability of retailers to set their resale prices for competing brands independently, are unlawful," said Simon Williams, the OFT's senior director of goods.
"They can lead to reduced competition and ultimately disadvantage consumers."
In response, Imperial Tobacco, which produces Lambert & Butler cigarettes, said in a statement that it was "disappointed" with the OFT decision - and added that it planned to appeal.
"Imperial Tobacco takes compliance with competition law very seriously and continues to reject any suggestion that it acted in breach of the Competition Act or in any way contrary to the interests of consumers."
It added: "The purpose of these arrangements was to encourage our brands to be priced competitively and that the 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."
- AFP
