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Shell and 11 other companies fined total of $348.8 million for price fixing

MarketWatch: OFT fines U.K. tobacco manufacturers, retailers

By Sarah Turner April 16, 2010, 2:15 a.m. EDT

LONDON (MarketWatch) — The Office of Fair Trading said Friday that two tobacco manufacturers and ten retailers engaged in unlawful practices in relation to retail prices for tobacco products in the U.K., and has imposed fines totalling 225 million pounds ($348.8 million). The tobacco manufacturers involved are Imperial Tobacco and Gallaher, and the retailers are Wal-Mart Stores’ Asda unit, The Co-operative Group, First Quench, Morrisons, One Stop Stores, Safeway, Sainsbury’s, Shell, Somerfield and TM Retail. The 225 million pound fine represents the largest total fine imposed by the OFT to date in a case under the Competition Act 1998.

BBC News: ‘Unlawful’ tobacco pricing leads to £225m fine by OFT

Retailers and manufacturers colluded to set prices, the OFT found

The Office of Fair Trading (OFT) has fined two tobacco companies and nine retailers a total of £225m for “unlawful” tobacco pricing.

The firms were found to have colluded on prices between 2001 and 2003.

The OFT said that there was an understanding that the price of some brands would be linked to rival brands in order to limit competition.

It is the largest combined fine handed out by the OFT for anti-competitive practices.

Retailers the Co-operative and Asda received the heftiest individual fines at more than £14m each.

However, Morrisons was landed with a total fine of nearly £20m – made up of £8.6m for its own business and another £10.9m for that of Safeway, which Morrisons subsequently bought in 2004.

The other companies involved in the pricing practices were manufacturers Imperial Tobacco and Gallaher, and retailers First Quench, One Stop Stores, Safeway, Sainsbury’s, Shell, Somerfield and TM Retail.

The OFT said it had dropped an investigation into whether Tesco had also colluded with the two manufacturers, due to “insufficient evidence”.

The OFT first began to investigate tobacco prices in April 2008, and six companies admitted unlawful practices – Asda, Somerfield, First Quench, TM Retail, One Stop Stores and tobacco firm Gallaher.

However, the OFT offered to be lenient with those firms, so long as they co-operated fully with the enquiry.

According to the OFT, Asda, One Stop Stores and Somerfield have been granted discounts on their fines.

Sainsbury’s escaped receiving any fine at all, because it had been the first to alert the OFT to the pricing practices and thus received “complete immunity” from the fines.

Imperial Tobacco owns brands such as Embassy, John Player Special and Lambert & Butler while Gallaher’s best-selling products include Benson & Hedges and Silk Cut.

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