The Office of Fair Trading (OFT) has fined two tobacco manufacturers and ten retailers £225 million for entering into agreements which infringe the Chapter I prohibition of the Competition Act 1998. The OFT found that Gallaher and Imperial Tobacco entered into illegal agreements with ten retailers under which the retail price of a tobacco brand was linked to that of a competing manufacturer’s brand. The result was that the retailers could not determine the price of tobacco products independently, which amounted to a breach of competition law. Imperial Tobacco received the largest fine of £112 million. Gallaher, the other tobacco manufacturer, and retailers Asda, First Quench, One Stop Stores, Somerfield and TM Retail all received ‘early resolution discounts’ for admitting liability. Sainsbury’s received full immunity from fines for alerting the OFT to the infringements in the first place. The OFT dropped its allegations against Tesco for lack of evidence.

The Companies involved in the investigation

Tobacco manufacturers: Imperial Tobacco and Gallaher

Retailers: Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury’s, Shell, Somerfield and TM Retail.