Saturday, 17 April 2010

Tobacco retailers hit with £225 million fine

Morning Star
by Louise Nousratpour

The competition watchdog has fined 10 retailers and two tobacco manufacturers £225 million for "unlawful practices" in pricing of cigarettes, cigars and rolling tobacco.

The fine - the largest total ever imposed by the Office of Fair Trading (OFT) - came after Imperial Tobacco and Gallaher struck "price-matching" arrangements with retailers in which the prices of their tobacco products were linked to those made by rivals.

The watchdog said that the agreements over price fixing between rival brands were "unlawful" because "they can lead to reduced competition and ultimately disadvantage consumers."

Left Economic Advisory Panel co-ordinator Andrew Fisher welcomed the OFT fines, which he said exposed "the lies in the rhetoric of big business. Far from the mythical free-market economy, big business seeks a monopolised stranglehold over consumers."

Mr Fisher added: "The value of the OFT has also been highlighted and it's no surprise that the favourite party of big business - the Tories - is calling for a 'bonfire of the quangos.' Both consumers and government revenues would be worse off without the OFT."

The retailers caught up in the case were Asda, the Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury's, Shell, Somerfield and TM Retail - the owner of the McColls and Martins chains.

Safeway has since been bought by Morrisons, the Co-operative has acquired Somerfield and First Quench, which owned off-licence Threshers, went into administration last year.

Imperial Tobacco, whose tobacco brands include Lambert & Butler, received the biggest fine - £112.3m - but denied "categorically" that its pricing practices were anti-competitive or affected consumers.

The group plans to appeal.

1 comment:

Andrew said...

And now Virgin and Cathy Pacific are under investigation by OFT: http://news.bbc.co.uk/1/hi/business/8637389.stm