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OFT fines six firms £173m for tobacco plot

  • Saturday July 12, 2008

Six companies, including the supermarket chains Asda and Somerfield and tobacco firm Gallaher, have agreed to pay a combined penalty of £173m after admitting that they colluded to set the retail price of cigarettes.

The penalties are the result of a five-year investigation by the Office of Fair Trading, which concluded in April that two manufacturers and 11 retailers had worked together to set the prices of cigarettes and rolling tobacco. It emerged yesterday that Sainsbury’s brought the matter to the OFT’s attention and as a result has escaped fines.

The other three to reach a settlement under the deal announced last night are First Quench, which owns the Threshers off-licence chain, convenience store group One Stop Stores and TM Retail, which owns the newsagents Martin’s and McColl’s.

Investigation of the Co-op, Imperial Tobacco, Morrisons, Safeway, Shell and Tesco is continuing.

The OFT alleges that the manufacturers had instructed retailers to move the prices of their products in parallel. It also alleges that the retailers were sharing information on future pricing via the suppliers.

Gallaher and Imperial together account for nine out of every 10 cigarettes sold in the UK.

A Sainsbury’s spokesman said: “We are committed to acting responsibly and within the law, which is why when we identified practices on the part of a number of tobacco companies that we considered to be unlawful, we passed all relevant information to the OFT.”

Japan Tobacco, which now owns Gallaher, is paying the largest fine, £93m. The company said regard for local laws was of the “utmost importance”.

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