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OFT’s hefty fines for tobacco price fixing

OFT’s hefty fines for tobacco price fixing

By Jonathan Sibun
Last Updated: 11:40pm BST 11/07/2008

Cigarette maker Gallaher and retailers including Asda and Somerfield have been fined over £173m following a price-fixing investigation by the Office of Fair Trading.

A large proportion – £93m – will be paid by Gallaher, whose brands include Benson & Hedge and Silk Cut.

The fines follow a five-year investigation into price setting and the passing of sensitive information in the UK tobacco industry between 2000 and 2003.

The OFT said 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.

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The size of Gallaher’s fine, disclosed by its owner, Japan Tobacco, is based on the company benefiting from the leniency reduction.

The other retailers fined were First Quench, One Stop Stores and TM Retail. Sainsbury’s, the first company to apply for leniency, has escaped without a fine.

The OFT – which expects to close its case early next year – said the investigation into Co-Op, Imperial Tobacco, Morrisons, Safeway, Shell and Tesco was continuing.

Asda said: “Everyone at Asda is very sorry about what happened… though we can’t turn back the clock there are lessons to be learned and we will learn them.”

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