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UK retailers fined £225 million after price-fixing investigation

The Office of Fair Trading (OFT) has this week issued fines totalling £225 million to a range of retailers including William Morrison and Shell. It is alleged that the various retailers companies in the UK came to agreements with tobacco manufacturers Imperial Tobacco and Gallaher which saw the price of the manufactures products linked to the price of the competitors across the UK.

In simple terms, when competitors reduced their prices, the price of similar products from Imperial Tobacco and Gallaher would fall and when the price of these products increased, the price of competitor products would increase, ensuring they were competitive in the marketplace. Retailers named in the investigation include Asda, Somerfield, Safeway and Sainsbury's to name but a few. There were other groups potentially under investigation but due to the fact limited evidence of wrongdoing was unearthed in some cases, a number of prosecutions were not pursued.

It is unclear exactly what the price-fixing program has cost UK consumers and ultimately there is no easy way to gauge the impact upon the consumer marketplace. However, the level of fines introduced by the OFT should be sufficient to make other companies in the UK think twice before entering into any similar illegal agreements in the future.

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