Dec. 12 (Bloomberg) -- Imperial Tobacco Group Plc won a U.K. lawsuit overturning 112.3 million ($175.7 million) pounds in fines over an alleged price-fixing cartel for cigarettes with Wal-Mart Stores Inc.’s Asda unit and nine other retailers.
The decision today by the Competition Appeal Tribunal in London was a set-back for the Office of Fair Trading, Britain’s antitrust regulator that was forced to abandon some key claims in the case after expert witnesses weakened its evidence halfway through a trial last month. The appeal was filed by Imperial, Asda and four other companies that were fined about 163 million pounds.
“The OFT’s case was deeply flawed, as it was based on a misinterpretation of the law and a misunderstanding of the facts,” Imperial’s lawyer, Euan Burrows of Ashurst LLP, said in a statement. The company “had always rejected the allegation that it had acted anti-competitively.”
The seven-year-old case alleges two manufacturers and 10 retailers fixed prices on cigarettes, hand-rolled tobacco, pipe tobacco and cigars from 2001 to 2003, resulting in fines last year totaling 225 million pounds. J Sainsbury Plc, the U.K.’s third-largest supermarket chain, was a whistleblower in the investigation and provided evidence of the agreements to the OFT. Half of the companies didn’t appeal.
After the OFT’s evidence was called into question during the trial, the court was asked to scrap the case or exercise a rarely used power to set aside the watchdog’s findings and conduct a fresh investigation. The tribunal chose not to use that power.
Imperial, based in Bristol, England, argued that expert witnesses had “destroyed” the OFT’s primary claim -- that consumers had been harmed by the disputed pricing agreements.
Kasia Reardon, an OFT spokeswoman, said the agency was disappointed in the ruling and would comment further after considering the judgment.
The other manufacturer in the case is Japan Tobacco Inc.’s Gallaher unit, which didn’t appeal. Other retailers involved include Co-operative Group Ltd. and William Morrison Supermarkets Plc.
The tobacco trial got under way eight months after the same tribunal slashed the OFT’s penalties in separate probes of price fixing in the U.K. construction and recruitment industries, and more than a year after the OFT’s first criminal antitrust trial against four current and former British Airways Plc executives collapsed due to problems with e-mail evidence.
Tesco Plc, Britain’s largest supermarket chain, last month appealed a 10.4 million-pound fine in a separate OFT probe of alleged price fixing in the dairy industry. The fines in that case were reduced twice to a total 49.5 million pounds because the OFT had insufficient evidence.
--Editors: Christopher Scinta, Peter Chapman
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