British business watchdog investigates tobacco pricing

LONDON, April 25, 2008 (AFP) – British competition authorities alleged on Friday that two cigarette companies and eleven retailers had engaged in “unlawful practices” relating to retail tobacco prices. The Office of Fair Trading (OFT) began probing tobacco pricing in March 2003 but had not revealed the investigation until Friday.

“The OFT has issued a statement of objections alleging that certain tobacco manufacturers and retailers have engaged in unlawful practices in relation to retail prices for tobacco products in the UK,” it said in a release.

“The statement of objections sets out the OFT’s proposed findings against tobacco manufacturers Imperial Tobacco and Gallaher, and eleven retailers — Asda, the Co-operative Group, First Quench, Morrisons, Safeway, Sainsbury, Shell, Somerfield, T&S Stores, Tesco and TM Retail.”

The alleged practices included arrangements between each manufacturer and each retailer that “restricted the ability of these retailers to determine 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 OFT said. Those allegations relate to a period between 2000 and 2003.