Office Of Fair Trade: 6 Cos Fined In Tobacco Probe

LONDON -(Dow Jones)- The UK's Office of Fair Trading said Friday that it has reached early resolution agreements with six companies in which they have admitted engaging in unlawful practices in relation to retail prices for tobacco products in the U.K., and have agreed to pay individual penalties which come to a combined maximum of GBP173.3 million before discounts.

The companies are Asda, First Quench, Gallaher, One Stop Stores (formerly named T&S Stores), Somerfield, and TM Retail.

Friday's agreements result from a process following the OFT's Statement of Objections issued in April 2008. This set out the OFT's proposed findings that two tobacco manufacturers and eleven retailers had variously engaged in one or more unlawful practices in relation to the retail prices of a number of tobacco products in breach of the Competition Act 1998.

The OFT has now concluded early resolution agreements with these six parties, each of which has admitted liability in respect of all of the infringements alleged against it, and each of these parties will receive a significant reduction in the financial penalty that might have otherwise been imposed on condition that it continues to provide full co-operation with the OFT.

A number of the six parties had previously applied to the OFT for leniency, and the total penalties the parties have agreed to pay if all leniency and early resolution discounts are given is GBP132.3 million, rather than the pre-discount penalties total of GBP173.3 million. A further company, Sainsbury's, was the first to apply to the OFT for leniency and will receive complete immunity from financial penalty if it continues to co-operate fully.

The investigation against The Co-operative Group, Imperial Tobacco, Morrisons, Safeway, Shell and Tesco is continuing. These parties have an opportunity to make representations to the OFT on its proposed findings.

The OFT will consider these carefully, along with the evidence in the case as a whole, before reaching any final decision as to whether the law has been breached.

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