#20600370 Entry 7

Retailers in tobacco price probe

http://news.bbc.co.uk/1/hi/business/7367126.stm

It has been estimated by Office of Fair Trading ( OFT) that have been engaged in unlawful practices for retail prices for tobacco.
OFT charges eleven companies to in swapping information for future pricing.

Since 2000 and 2003 the understanding between tobacco firms and retailers limited the retailers' ability to estimate their price independently. There was an illegal indirect proposal of future retail prices between competitors as well. Retail price coordination is illegal and has some restriction by law- says the OFT who has been building up the case for five years secretly. The OFT says that if the evidence for such illegal action, the named tobacco companies would be fined up to ten million turnover. "If we find evidence of anti-competitive activity, we are prepared to use the appropriate powers to punish the companies involved and to deter other businesses from taking part in such behaviour," says OFT chief executive John Fingleton.

Meanwhile, tobacco companies and retailers deny any kind of activity that harms the interest of consumers. "takes compliance with competition law very seriously and rejects any suggestion that it has acted in any way contrary to the interests of consumers," said Imperial Tobacco.

My own reflection: This is such an ethical issue. In the case the OFT really finds the evidence of illegal action, the reputation of companies will get spoiled and they would loose their consumers' trust. I think that would harm the companies more than any 10% fine.

Reference: http://news.bbc.co.uk/2/hi/business/7366348.stm