UK Firms Responding to Competition Enquiry

Source from:  tr.itsmyiq.com Apr 28, 2008 04/29/2008

The UK's two dominant tobacco manufacturers along with prominent supermarkets and other major tobacco retailers on Friday received a Statement of Objections (SO) from the Office of Fair Trading following its investigation into the retail pricing of tobacco products. The Imperial Tobacco Group, one of the manufacturers under investigation, said in a statement that it would review the SO in detail and provide its response to the OFT in due course. 'The OFT has emphasised that it will not be in a position to decide if there has been an infringement of competition law until it has received responses from all the recipients of the SO,' the statement said. 'Imperial Tobacco takes compliance with competition law very seriously and rejects any suggestion that it has acted in any way contrary to the interests of consumers. 'The OFT's investigation began in 2003, and relates to a period from March 2000 to mid 2003. Imperial Tobacco has co-operated fully with the OFT throughout.' Japan Tobacco Inc confirmed that its subsidiary in the UK, Gallaher, the other tobacco manufacturer under investigation, had received a copy of the SO. 'The statement of objections addresses the possibility of anti-competitive behavior with respect to retail prices for tobacco products in the UK market prior to JT's acquisition of Gallaher,' it said. 'In August 2003, the OFT notified Gallaher of an inquiry into vertical agreements between manufacturers and retailers in the UK cigarette, tobacco and tobacco-related markets. Since that time Gallaher has been fully co-operating with the OFT regarding the inquiry. 'The JT Group is reviewing the statement of objections, and will be responding to the OFT as required.' According to a report by Simon Bowers for The Guardian, the OFT's concerns center on allegations about the sharing of details of future prices between the tobacco firms via various retailers acting as middlemen. The OFT alleged also that it had evidence to show that retailers and manufacturers had put in place arrangements linking the retail price of brands made by one tobacco group to the price of the closest competitor brand made by the rival group. The Guardian report said that the firms targeted could face fines of up to 10 per cent of their UK turnover if the allegations against them were proven. Enditem