Watchdog to probe cigarette prices

Tuesday, 16 December 2003 6:07 AM

Competition watchdog the Office of Fair Trading (OFT) is to investigate alleged price fixing between manufacturers and retailers in the cigarette trade.

The OFT said there were reasonable grounds to assume there had been a breach of the Competition Act.

The watchdog in August wrote to three manufacturers asking for data.

Imperial Tobacco, Gallaher, and British American Tobacco - the three tobacco firms under scrutiny - said they were fully cooperating with the review.

The OFT is to conduct a separate inquiry into the supply of Imperial's Rizla cigarette papers following complaints from Swan matches.

The UK cigarette market is dominated by Imperial, which owns Lambert & Butler and Embassy brands, and Gallaher, owner of Benson & Hedges and Silk Cut. Together they control 80 per cent of the market. BAT controls just over five percent.

Shares in Imperial and Gallaher were hit by the news. At close, Imperial was down 2.9 per cent at 10.56 pounds and Gallaher down 2.8 per cent at 582-1/2 pence.

The average price of a packet of cigarettes across the UK is £4.65, according to the Tobacco Manufacturers Association.

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