OFT fines two tobacco manufacturers and ten retailers for inflating the prices

OFTThe Office of Fair Trading (OFT) fined ten supermarkets and two tobacco manufacturers by a record £225 million today. OFT took this decision after finding that these companies were involved in after unlawful practices in the pricing of cigarettes, cigars and rolling tobacco. This was reported the largest fine ever imposed by the regulator. The tobacco manufacturers, who were fined by OFT, are Imperial Tobacco and Gallaher.

The Office of Fair Trading said today that Imperial Tobacco and Gallaher were found guilty of making price matching agreements with retailers between 2001 and 2003. The manufacturers signed these agreements so that the prices of their tobacco products were linked to those made by rivals, said OFT. A total of £162.6 million fine was imposed on these two manufacturers.

"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.

The Office of Fair Trading imposed the biggest fine of £112.3 million on Imperial Tobacco, which owns the brands like Lambert and Butler. The other manufacturer Gallaher was fined £50.3 million by the regulator.

The retailers, who were fined by the OFT over this issue, include Asda, Co-operative, Morrisons, One Stop Stores, the now defunct Safeway, Somerfield and Sainsbury. First Quench, Shell and TM Retail are the other retailers who were fined by OFT.

Morrisons and Asda were fined by £19.5 million and £14.1 million respectively, while the Co-operative Group was fined by £14.2 million by OFT.