UK - OFT has found Imperial Tobacco and Gallaher and some retailers engaged in unlawful practices..

April 20, 2010 - The Office of Fair Trading (OFT) has found that two tobacco manufacturers and ten retailers engaged in unlawful practices in relation to retail prices for tobacco products in the United Kingdom (UK), and has imposed fines totalling £225m.

The OFT's mission is to make markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive.

The tobacco manufacturers involved are Imperial Tobacco and Gallaher, and the retailers are Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury's, Shell, Somerfield and TM Retail.

The OFT has concluded that each manufacturer had a series of individual arrangements with each retailer whereby the retail price of a tobacco brand was linked to that of a competing manufacturer's brand. These arrangements restricted the ability of these retailers to determine their selling prices independently and breached the Competition Act 1998.

The infringements span different periods between 2001 and 2003 for different parties, and related variously to the markets for UK duty paid cigarettes, hand rolling tobacco, pipe tobacco, and cigars and cigarillos. The current value of these markets is estimated at around £13 billion. (Japan Tobacco did not acquire Gallaher Group until April 18, 2007).

Reference: OFT imposes £225m fine against certain tobacco manufacturers and retailers over retail pricing practices, Office of Fair Trading Press Release, 4/16/2010.