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CMA statement on High Court judgment in Tobacco

The CMA welcomes this judgment of the High Court which recognises the importance of finality and legal certainty in competition investigations and inquiries.

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Today’s judgment relates to agreements between the Office of Fair Trading (OFT), Gallaher and Somerfield concluded during the OFT’s investigation into anti-competitive practices relating to the sale of tobacco. The investigation began in 2003 and was concluded in 2010. Gallaher, Somerfield and other parties to the investigation entered into early resolution agreements in 2008 under which they admitted liability for breaches of the law and paid penalties reduced to reflect their cooperation. Following the OFT’s final decision a number of parties to the Tobacco investigation – but not Gallaher and Somerfield – successfully challenged the OFT’s decision.

Since then Gallaher and Somerfield have brought a series of unsuccessful proceedings against the OFT. Those proceedings have been continued against the Competition and Markets Authority (CMA) since 1 April 2014 when the CMA succeeded the OFT. In the present proceedings Gallaher and Somerfield argued that they had been treated unfairly by comparison with another company that had entered into an early resolution agreement and should have their penalties repaid. The High Court has rejected the claims.

The Tobacco investigation was one of the first occasions on which early resolution agreements were used by the OFT. They are designed to increase the efficiency of anti-trust investigations and to save time and public money in what are often complicated investigations with numerous parties whose interests may conflict. Since 2008 the OFT and now the CMA have built on the experience of the early cases and developed and improved their policy and procedures. Read the guidance on the CMA’s current early resolution procedure (now called settlement). The CMA will study today’s judgment and consider whether its guidance still represents best practice.

For more information on the OFT’s Tobacco investigation see the archived case page. The judgments in the other proceedings Gallaher and Somerfield brought against the OFT (Competition Appeal Tribunal (CAT) decision in 2013 and the Court of Appeal decision in 2014) can be found on the CAT’s website.

Published 26 January 2015