Probe into cigarette price 'fix'

Supermarkets including Tesco, Sainsbury's and Asda were today among 11 retail giants accused of keeping the cost of cigarettes high.

Tobacco giants Imperial Tobacco and Gallaher are also named in the Office of Fair Trading investigation, which comes just a week after a major inquiry into price-fixing in the construction industry was launched.

The OFT's tobacco investigation alleges that manufacturers and retailers struck deals to restrict the ability to determine selling prices independently, spanning three years between 2000 and 2003.

The OFT is also alleging that Gallaher and Imperial Tobacco co-ordinated indirectly with Asda, Sainsbury's, Shell, Somerfield and Tesco over proposed future retail prices between competitors between 2001 and 2003.

First Quench, Morrisons and the Co-operative Group are also named in the inquiry, which has been ongoing since 2003.

John Fingleton, chief executive of the OFT, said: "For markets to work well for consumers, it is a fundamental principle that pricing decisions should be made independently."

A Tesco spokesman said: "The OFT's investigation appears to centre on major tobacco companies. We do not believe that Tesco has acted in a way that has harmed consumers and we will make this clear to the OFT."