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ASH Daily News

16 December 2003


HEADLINES

Price-fixing probe into UK tobacco companies
Smoking is increasingly unpopular
Bulgaria to try again to sell tobacco firm


FULL TEXT

Price-fixing probe into UK tobacco companies


Britain's big cigarette manufacturers and leading retailers are facing an Office of Fair Trading investigation into allegations of price- fixing in the tobacco industry.

The competition body said yesterday it had launched a formal investigation and written to tobacco manufacturers and retailers for more information over a suspected competition breach relating to distribution.

Although a preliminary investigation had been triggered by a complaint against Imperial Tobacco, the OFT widened its probe to include Gallaher and Rothmans UK, British American Tobacco's local subsidiary.

The OFT would not identify the retailers involved, but it is understood to have contacted most of the largest supermarket, newsagent and forecourt retailers. BP confirmed it had been asked to supply some data, which had been done.

The watchdog said: "We have launched an investigation into price-fixing within the tobacco industry and have reasonable grounds to suspect a competition breach and have launched a formal investigation."

Imperial Tobacco, Gallaher and BAT each confirmed they had received a request for information by the OFT. All said they were co-operating with inquiries.

Imperial Tobacco said it and other companies had received a request for information from the OFT concerning certain aspects of the UK tobacco supply chain. BAT said it was "comfortable with the legality of its business practices".

Gallaher and Imperial Tobacco share about 80 per cent of the UK market, while Rothmans makes up about 6 per cent. The OFT has begun to clamp down on companies found to have flouted competition law, handing out a record £22.5m fine earlier this year to Argos and Littlewoods for fixing the prices of toys and games.

The OFT is believed to be collecting information about agreements between manufacturers and retailers rather than between manufacturers. The tobacco companies involved maintain that running a vertical pricing agreement would be very difficult given that only about 20 per cent of the cost of a cigarette is actually revenue, even less at the premium end of the market.

They stress there is quite a large variety in prices between premium cigarette brands and value brands, providing a wide choice. "There is not much leeway to do anything manipulative with it," one said.

The OFT said there was no time limit for the investigation, which was separate from an earlier probe involving Imperial Tobacco into the supply of Rizla rolling papers.

Financial Times, 16/12/03.
Also reported in The Times, Telegraph, Independent, Daily Mail, Guardian, The Express.



Smoking 'falling out of favour'

Three quarters of people believe smoking is less socially acceptable than a year ago, a poll suggests. The survey by the NHS Smoking Helpline also found over half of smokers are thinking about giving up the habit in the next 12 months.

The findings follow calls by doctors for smoking to be banned in public places - and a call from a medical journal for it to be banned completely.

A helpline spokeswoman said: "Attitudes to smoking seem to have shifted."

More and more are now aware that passive smoking is bad for their health

Last year saw bans on tobacco advertising and light and mild cigarette branding, new warnings on cigarette packets and TV adverts on the dangers of secondhand smoke.

The heads of 18 medical royal colleges recently called for smoking to be banned in public places, such as restaurants and pubs.

And an editorial in The Lancet medical journal called for a complete ban on the habit because of its effects on people's health.

But the government said while smoke-free places were ideal, the public appeared to have mixed feelings about the idea and a complete ban would be "extreme".

Over 1,300 adults were questioned in the survey for the NHS smoking helpline.

Four out of every five women questioned said they believed smoking was less socially acceptable than it was at the start of 2003.

Forty-three per cent said the warnings and advertising campaigns over the last year had made them more likely to quit.

Many said they had made smoking less attractive, appealing or socially acceptable.

Debbie Findlay, an advisor with the NHS Smoking Helpline, said: "General attitudes to smoking seem to have shifted, and a lot of people are contemplating giving up for 2004.

"It was good to find in our survey that most smokers are aware there is free help available on the NHS to help them give up.

"But nearly a quarter of men intend to go 'cold turkey' when quitting, which almost certainly dooms their attempt to failure. We found many men will refuse help for fear of appearing weak.

"They may think they should be strong enough to quit with willpower alone, but probably don't realise nicotine is as addictive as heroin."

Ian Willmore, from the campaign group Action on Smoking and Health, told BBC News Online: "People used to know it was bad for individuals, but more and more are now aware that passive smoking is bad for their health."

He added the perception of smoking was a significant factor in prompting people to quit - or deterring them from starting smoking in the first place.

"Warnings are important, advertising is important, but in addition, what is and isn't socially acceptable is very important too."

BBC News online, http://news.bbc.co.uk/1/hi/health/3321587.stm
Also reported in The sun, Evening Standard, Daily Express, The Guardian


Bulgaria to try again to sell tobacco firm

Bulgaria has relaunched the privatisation of tobacco manufacturer Bulgartabak. Two previous attempts to sell the industrial giant in whole have failed. The time, a new strategy to break up the group and sell it piece-by-piece to strategic investors offers the only realistic chance to sell the state-run company, according to Bulgartabak Chief Executive Illia Kalloferov.

The new strategy appears logical and viable, economists said, but domestic politics and internal resistance within t the company could prove a problem once again. Political resistance ended the last two attempts and the third attempt could easily fall victim to similar problems, economists said.

Wall Street Europe, 16/12/03



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