OFT tobacco decision quashed on appeal

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14 December 2011

The competition team at Burges Salmon has supported the Co-operative Group in a successful appeal against the Office of Fair Trading (OFT) - overturning a decision made in April 2010 to impose record fines totalling £225 million on ten retailers and two manufacturers which the OFT alleged had engaged in anti-competitive conduct relating to the pricing of tobacco products between 2000 and 2003.

The judgment was handed down on 12 December by the Competition Appeal Tribunal after the OFT's defence fell apart over the course of the hearing during which none of the 19 witnesses provided any material support to the OFT’s case. The Tribunal stated that '...our unanimous decision is that these appeals should be allowed and the Decision quashed forthwith...’.

Laura Claydon, head of Competition at Burges Salmon, said: “We have a long established relationship with the Co-operative Group and have worked alongside them since the beginning of the OFT's investigation in 2005.  We see this judgment as a vindication for the client - not just of the appeal itself, but the arguments we have been running throughout the seven year process.

"Quite simply, the OFT realised rather late in the day that it could not prove the case it had been maintaining and sought to run a case that was so far removed from its decision that the Tribunal concluded the OFT's decision must be set aside and allow the appeals.

"This is not the first time the OFT has been criticised for its case management. There needs to be much tougher scrutiny internally, and at an early stage, of the evidence the OFT seeks to rely upon during its administrative phase especially witness evidence. Whether the government will now conclude that the system needs a shake-up remains to be seen."

Throughout the case, Burges Salmon worked alongside Helen Jenkins and her team at Oxera (specialist economic consultants) and instructed Rhodri Thompson QC and Christopher Brown at Matrix Chambers.

In addition to specialising in competition litigation, Burges Salmon’s Competition team has extensive experience in all areas of UK and EU competition law including anti-competitive agreements and practices, behavioural issues in relation to 'dominant' companies, internal compliance programmes and merger control.

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