Imperial Tobacco Levied by the Office of Fair Trading
Imperial Tobacco was among the largest risers on the stock market after about a £100 million fine for predicated illicit pricing was overthrown. The Office of Fair Trading (OFT) blamed the cigarette producer – which owns such popular brands as Davidoff, Gauloises, West and Lambert & Butler, of limiting competition and levied a £112.3m penalty. In its turn the Competition Appeal Tribunal (CAT) has canceled the decision and also ruled in favor of Asda, the Co-op, Morrisons and Shell in similar cases.
Cigarette retailers and producers were levied with a record £225m after the OFT’s approval of illicit pricing, urging the agreements over price links between competitive brands limited the power of these retailers to detect their selling prices off-line. The allegations connected to particular promotional agreements between Imperial and several retailers between 2000 and 2003. The hearing by CAT, was the first one since the OFT’s investigation started more than eight years ago that we could have its allegations independently examined. According to this independent investigation it became evident that the case the OFT was looking to establish had no any ground in fact, law or economics. A representative for OFT declared: “We have supposed that this ought to have been evident to the OFT well before now and that we must not have been prompted into facing great legal costs and management time protecting ourselves in these conditions. We are very disappointed and we will be considering the judgment.”
Imperial, which also produces Golden Virginia rolling tobacco and Rizla cigarette papers, was the second largest raiser in the FTSE 100 index – higher by 12p or 0.5% at 2,363p – after the decision, with defensive stocks sought-after. The competitors British American Tobacco – which produces famous Dunhill and Lucky Strike brands, was up 1.5p at 3,000p. Michael Hewson, a market expert at CMC Markets, said: “Protective positions are popular again with smoking products, utilities and health care stocks bursting higher. GlaxoSmithKline is the main gainer, leaving behind BAT and Imperial Tobacco.”
According to estimates, the levies imposed on the construction industry following the OFT’s largest investigation were reduced by 89% thus causing difficulties to the watchdog committee. CAT stated that those fines were rather redundant and dropped them from a total of £41.8m for six companies to £4.4m.
By Clark Moore, Staff Writer Copyright © 2011 Hot-Cigs.com All rights reserved.