Supermarkets Fined For Tobacco Price Fixing

Mon, 14 Jul 2008
 
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Supermarkets have been ordered to pay a £173m fine for ripping off smokers in collusion with tobacco company Gallaher by the Office of Fair Trading (OFT).

Asda and Somerfield have admitted fixing the price of cigarettes and overcharging customers under a secret deal with Gallaher, whose brands include Benson and Hedges and Silk Cut, the OFT announced.

The fines follow a five-year investigation into price setting and the passing of sensitive information within Britain’s £15 billion-a-year tobacco industry between 2000 and 2003.

The OFT said that a total of £173.3 million in fines and costs had been agreed, a large proportion (£93m) of which will be paid by Gallaher.

However, it added that the size of the fines would be reduced to £132.3m if the companies, which had applied to the watchdog for leniency, continued to support the investigation.

The other retailers fined after admitting to colluding in the pricing scam include the owner of off-licence chain Threshers, and One Stop convenience stores .

Sainsburys, the first company to apply for leniency, escaped without a fine after it handed over all its papers identifying unlawful practices.

The OFT said the investigation into Co-Op, Imperial Tobacco, Morrisons, Safeway, Shell and Tesco was continuing.

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