Cig firms fined over pricing

Posted on 16 Apr 2010 by The Manufacturer

The Office for Fair Trading has fined 12 cigarette manufacturers and retailers a total of £225m for fixing prices.

The group includes manufacturers Imperial Tobacco and Gallaher and retailers Asda, the Co-operative, Somerfield and Shell.

The offences relate to deals between the manufacturers and retailers between 2001 and 2003 that were made to ensure products were priced relatively to rival brands.

Imperial Tobacco – brands of which include Golden Virginia rolling tobacco and Embassy cigarettes – has been fined £112m for its misdemeanours while Gallaher – maker of Benson & Hedges – has been fined £50m. The latter’s fine is less because it admitted its involvement when allegations were made two years ago.

Morrisons will have to pay over £20m – £8.6m which it has been fined itself and a £10.9m fine levied upon Safeway which Morrisons bought in 2004. Similarly, the Co-operative has to pay £18m made up of its own £14m fine and a £4m fine given to Somerfields which it now owns. Asda has been fined £14m.

Imperial Tobacco claims it has done nothing untoward and that “Far from being anti-competitive, these arrangements were… to the benefit of consumers.” It says it will appeal.