Stores face tobacco price-fix probe

Tobacco giants Imperial Tobacco and Gallaher were named alongside chains including supermarkets Tesco, Sainsbury's and Asda in a "statement of objections" issued by the Office of Fair Trading.

The consumer affairs watchdog has accused the groups of anti-competitive pricing, alleging that firms co-ordinated to link the price of some brands to rival products and separately that some of those named arranged to swap information on future pricing.

The probe is the latest sign of the OFT's increasing clampdown on anti-trust activity, coming just a week after it announced a major inquiry into price-fixing in the construction industry.

The OFT said that the tobacco manufacturers and retailers struck deals that "restricted the ability of each of these retailers to determine its selling prices independently" in a period spanning 2000 to 2003.

It added that Gallaher, Imperial Tobacco, Asda, Sainsbury's, Shell, Somerfield and Tesco were involved in the "indirect exchange" of proposed future retail prices between competitors in the years 2001 to 2003. First Quench, Morrisons and the Co-operative Group are also among those named in the inquiry, which has been ongoing since 2003.

John Fingleton, chief executive of the OFT, said: "If we find evidence of anti-competitive activity, we are prepared to use the appropriate powers to punish the companies. If proven, the alleged practices would amount to a serious breach of the law."

Tesco said in a statement: "The OFT's investigation appears to centre on major tobacco companies. We do not believe that Tesco has acted in a way that has harmed consumers and we will make this clear to the OFT when we see the details of their allegations."

Imperial Tobacco said: "Imperial Tobacco rejects any suggestion that it has acted in any way contrary to the interests of consumers."

Gallaher, which is owned by Japan Tobacco, was not immediately available for comment.