Imperial Disappointed Over OFT Decision

Source from:  Tobacco Reporter 04/19/2010

The Imperial Tobacco Group has expressed disappointment at the UK Office of Fair Trading's decision to impose a fine of £112.3 million on the company for allegedly restricting competition. "Imperial Tobacco takes compliance with competition law very seriously and continues to reject any suggestion that it acted in breach of the Competition Act or in any way contrary to the interests of consumers," Imperial said in a note posted on its website. "Imperial Tobacco will review the decision once it is received from the OFT later today with a view to appealing it to the Competition Appeal Tribunal." "The OFT's decision relates to certain promotional arrangements that Imperial Tobacco had entered into with multiple retailers prior to August 2003. Imperial Tobacco categorically denies that these promotional arrangements had the purpose or effect of restricting competition." "The purpose of these arrangements was to encourage our brands to be priced competitively and that the promotional discounts given to retailers were passed on to consumers in the form of lower retail prices. Far from being anti-competitive, these arrangements were pro-competitive and to the benefit of consumers. Retailers remained free to set their own prices." In addition, Imperial said it was pleased but not surprised that the OFT had been unable to substantiate two of its earlier allegations as set out in the Statement of Objections issued in April 2008. In particular, the OFT no longer alleged that Imperial was involved in arrangements that had the effect of restricting retailers' abilities to determine their retail prices independently; or that the company was engaged in the indirect exchange of proposed future retail prices with other market participants. Imperial said it had rejected both these allegations, and that the OFT had today confirmed they had been dropped. "The OFT's investigation began in 2003, and relates to a period from 1 March 2000 to 15 August 2003," it added. "Imperial Tobacco has co-operated fully with the OFT throughout its seven year investigation." Enditem