OFT Disappointed Over CAT Decision on Tobacco Appeals

Jack Humphrey, Regulatory journalist
December 19, 2011 /

The Office of Fair Trading (OFT) said it is disappointed by the Competition Appeal Tribunal’s (CAT) decision on the Tobacco appeals, making it “clear” that there is no substance in the issues raised by the regulator.

The OFT found that two tobacco manufacturers and 10 retailers engaged in unlawful practices in relation to retail prices for tobacco products in the UK, and imposed fines totalling £225m in 2010.

The CAT allowed the appeals against the OFT’s Decision with regard to the six appellants.

“We have not come to any view as to whether the agreements described in the Decision or the restraints that the OFT now alleges were entered into would, if proven, amount to infringements of the Chapter 1 provision [of the Competition Act 1998],” CAT said.

The OFT considered it important to fully investigate concerns around the pricing practices of the parties in this case and to make a decision about them.

The OFT’s competition policy and interventions play a valuable role in ensuring that competition thrives in open markets, that markets work well, and in driving compliance through enforcement and other tools.

“We take action not only to address restrictions of competition that can have an impact on consumers but also to deter others from breaching the law,” the OFT said.

Recently published independent research from London Economics research underlined the deterrent effect of the UK competition regime. It estimated that for each completed OFT enforcement case, up to 40 potential infringements are deterred.

Despite the disappointing outcome in the particular facts and circumstances of this case, the OFT will continue to pursue high impact enforcement cases, including taking difficult or highly complex cases of this type that test the law.

The right to appeal against the OFT’s decisions in Competition Act cases is an integral part of the competition regime, and it provides an important safeguard for parties.

The CAT has a full merits review which enables it to take a fresh look at decisions, and to hear witness evidence, including new evidence not presented to the OFT, as in these appeals.

Of the 52 competition decisions that the OFT has made against 504 parties, only nine of those decisions, six of which were infringement and three non-infringement decisions, have been overturned on liability. Twenty-three parties, or under five per cent, have been successful in overturning OFT decisions on liability.

The OFT will consider the judgment in detail, including any broader implications for the way in which it conducts investigations and possible appeals.


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