Appeal against tobacco price fixing fines

Four companies have noted that they will appeal to the Office of Fair Trading against a price fixing finding that resulted in a total fine of £225m.

The OFT ruled this week that the two biggest cigarette manufacturers in the UK had unfairly arranged with retail chains and supermarkets to set prices for tobacco.

Imperial Tobacco manufacturer of the brands of Lambert & Butler, John Player, and Embassy, immediately appealed the finding along with supermarket chain Morrisons.  Imperial received the largest fine totalling £112.3m while Morison’s received a fine of £19.5m.

Also fined was the Co-op with a £17.9 and Shell with a fine of £3.3.  The Co-op indicated they also may appeal.

Imps and Morrisons appealed the challenge a few hours after the OFT ruling was published by the Stock Exchange.  The appeal is the second this month in regards to price fixing, with 25 construction companies set to appeal at the Competition Appeal Tribunal (CAT) later this summer.

Morrisons stated that the ruling lacked a proper foundation and was not within the guidelines of the law, while Imperial said the ruling was also wrong and that any pricing moves were competitive in an attempt to fight its rival Gallaher in the marketplace.

Leader of the OFT investigation, Simon Williams, stated that these types of practices which set the resale prices for brands are not lawful and can lead to hurting the customers and reducing overall competition.  Williams also said that the ruling sends out a message that there are penalties for any company that participates in price fixing.