OFT will pursue First Quench over tobacco price fixing

30 April, 2010

First Quench has been fined almost £2.5 million by the Office of Fair Trading for its part in a tobacco price-fixing scandal.

The OFT ruled that Gallaher, Imperial Tobacco and 10 retailers broke the law, and imposed fines totalling £225 million.

First Quench went into administration six months ago, but the OFT said it would pursue a claim as any other creditor. In practice, this means little, if any, of its fine will be paid.

The Co-op was fined £14.2 million and Asda £14.1 million.

The biggest penalties were reserved for the suppliers, with Imperial fined £112.3 million and Gallaher £50.4 million.

Other retailers involved were Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury’s, Shell, Somerfield and TM Retail. All the offences were committed between 2001 and 2003. There was insufficient evidence to make a case against Tesco.

The OFT found each manufacturer had a series of individual arrangements with the retailers which linked the retail price of a tobacco brand to that of a competing manufacturer’s brand, breaching the Competition Act 1998.

Simon Williams, the OFT’s senior director of goods, said: “Practices such as these – which restrict the ability of retailers to set their resale prices for competing brands independently – are unlawful. They can lead to reduced competition and ultimately, disadvantage consumers.”?He added that this enforcement would send out a strong message that such practices can result in substantial penalties.

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