The Office of Fair Trading has handed out fines totalling £225m to tobacco giants Imperial Tobacco and Gallaher, as well as nine retailers, for “unlawful practices” in price-setting.
The fines – the biggest-ever dished out by the competition watchdog – relate to infringements that took place between 2001 and 2003.
The OFT said Imperial and Gallaher – now owned by Japan Tobacco International – struck arrangements with retailers linking the prices of their brands to those of rivals.
Imperial was handed the biggest fine, totalling £112.3m. The Lambert & Butler maker has strenuously denied any anti-competitive dealings and said it would appeal.
Gallaher was hit with a £50.4m fine, while Morrisons was the retailer hit hardest. It received a £8.6m fine, as well as a £10.9m penalty dished out to Safeway.
Morrisons has already stated its intention to take the verdict to the Competition Appeals Tribunal.
"At all times Morrisons set its retail prices for tobacco products independently and endeavoured to get the very best deal for its customers," the supermarket said in a statement.
"It is therefore disappointing that the OFT has claimed that legitimate arrangements between Morrisons and its suppliers, aimed at reducing the price paid by Morrisons customers, are unlawful."
The Co-operative Group was fined £14.2m and is also liable for the £4m fine given to Somerfield. Asda was given a hefty fine of £14.1m.
Others punished were Shell for £3.4m; TM Retail – now Martin McColl – £2.7m; First Quench, which went into administration last October, £2.5m; and Tesco-owned One Stop, fined £1.3m.
The OFT said Sainsbury’s escaped a fine because it had been the first to alert the watchdog to the pricing practices.
It dropped its investigation into whether Tesco had colluded with the manufacturers due to “insufficient evidence”.
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