Britain's consumer affairs watchdog has slapped a record 225 million pound ($349 million) fine on two tobacco firms and nine retailers accused of fixing prices on tobacco products between 2001 and 2003, according to Reuters. A tenth retailer, J Sainsbury, escaped a fine because it alerted the Office of Fair Trading (OFT) to the infringements, while the watchdog said it had insufficient evidence to pursue a case against Tesco. Imperial Tobacco said it had been hit with 112.3 million pounds of the fine and it would appeal the decision. Retailer Wm Morrison said it would also challenge the OFT's findings. The other tobacco manufacturer involved is Gallaher, while the eight other retailers are Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Shell, Somerfield and TM Retail. "This enforcement action will send out a strong message that such practices, which could in principle be applied to the sale of many different products, can result in substantial penalties for those who engage in them," said OFT Senior Director of Goods Simon Williams. The OFT said the fine was the largest total penalty it had ever imposed in a case under the Competition Act 1998. Imperial said the OFT's decision related to arrangements aimed at ensuring promotional discounts given to retailers were passed on to consumers in the form of lower 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," it said. Evolution analyst Chas Manso de Zuniga said an appeal might take two years and the maximum fine Imperial could have to pay was 10 percent of its UK turnover for the period in question, or 229 million pounds. That equates to 17 pence a share, while the current fine is worth 8.5 pence a share, he said, keeping his share price target at 2,400 pence and his "buy" rating. At 0950 GMT, Imperial shares were down 0.7 percent at 1,974 pence, underperforming a flat FTSE-100 index. Asda, One Stop Stores, Sainsbury's and Somerfield benefitted from discounts in their fines under the OFT's leniency programme, which provides co-operating parties with a reduction in penalties where they proactively volunteer information which assists the OFT's investigation. Gallaher, Asda, First Quench, One Stop Stores, Somerfield and TM Retail also received reductions because, after the OFT published its initial statement of objections in April 2008, they each admitted liability and agreed to a procedure that enabled parts of the case to be resolved more quickly.
