UK tobacco firms and retailers accused of price fixing

Tobacco companies and retailers, including all big four supermarket chains, were accused by the consumer affairs watchdog yesterday of fixing prices on cigarettes between 2000 and 2003.

The Office of Fair Trading (OFT) said it had named two tobacco manufacturers - Imperial Tobacco and Japan Tobacco-owned Gallaher - and 11 retailers in a so-called statement of objections (SO), which was not published.

Companies found guilty can be fined up to 10 per cent of relevant turnover. The OFT said it should not be assumed that the parties named in the SO have broken the law.

Imperial Tobacco said: "We take compliance with competition law very seriously and reject any suggestion that we have acted in any way contrary to the interests of consumers".

The retailers named are Wal-Mart-owned Asda, Co-operative Group, First Quench, Morrisons, Safeway, Sainsbury, Shell, Somerfield, T&S Stores, Tesco and TM Retail.

A Tesco spokesman said: "We do not believe that Tesco has acted in a way that has harmed consumers and we will make this clear to the OFT when we see the details of their allegations".

Asda said: "As the contents of the SO are confidential we won't be making any further comment".

The OFT said it made two allegations, including that there were arrangements between "each manufacturer and each retailer that restricted the ability of each of these retailers to determine its selling prices independently, by linking the retail price of a manufacturer's brand to the retail price of a competing brand of another manufacturer".

The second was more specific, alleging "in the case of Gallaher, Imperial Tobacco, Asda, Sainsbury, Shell, Somerfield and Tesco, the indirect exchange of proposed future retail prices between competitors".

OFT chief executive officer John Fingleton said: "If proven, the alleged practices would amount to a serious breach of the law. If we find evidence of anti-competitive activity, we are prepared to use the appropriate powers to punish the companies involved". The investigation began in 2003.

The allegations come two days after the OFT was forced to apologise to supermarket Morrisons and pay £100,000 to settle a defamation action over an incorrect accusation in another antitrust probe.

Last week the OFT said it had issued an SO against the construction industry, alleging 112 companies building schools and hospitals and other public buildings had formed cartels to boost contract prices by millions of pounds.

In that case, the OFT said, over two thirds of the companies named have admitted involvement, hoping to lessen any fine.

The OFT's statement on its tobacco inquiry did not mention any company confessing its guilt, although a spokeswoman said if there were one or more whistleblowers then the names would be contained in the SO, which are never made public.