HOWZAT

The OFT's allegations against the supermarkets and tobacco companies come only 48 hours after it was forced to pay £100,000 plus costs to settle a defamation case from Wm Morrison, the supermarket group, over mistakes in a press release about alleged milk price-fixing.

The cigarette announcement is the latest front the OFT has opened up in its campaign against anti-cartel activity.

It has already fined British Airways more than £100 million over fixing the level of fuel surcharges with its rival Virgin Atlantic, it has taken on the supermarkets over alleged fixing of milk prices and is waging war on 112 construction companies that it accuses of cover-pricing.

Yesterday the OFT was granted permission to pursue a case against the UK's high street banks over overdraft charges.

The focus of the OFT's tobacco investigation, which began in 2003, appears to centre on the tobacco groups that among them dominate the British cigarette market.

Imperial Tobacco said that it had been co-operating with the OFT throughout its investigation.

"Imperial Tobacco takes compliance with competition law very seriously and rejects any suggestion that it has acted in any way contrary to the interests of consumers," a spokesman for the cigarette maker said.

The OFT’s investigation began in 2003, and relates to a period from March 2000 to mid-2003.

Imperial Tobacco has co-operated fully with the OFT throughout.

The tobacco groups and retailers have a month to respond to the charges.

If any companies are found guilty of a breach of the law they could be fined up to 10 per cent of relevant turnover, although the penalty could be reduced if they help with the investigation.

Cigarettes are generally sold for similar prices and generate a particularly slim profit margin for both wholesalers and retailers.

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