Watchdog probes cigarette pricing

The average price of a packet of cigarettes is £4.65

An investigation into possible price fixing in the cigarette trade has been launched by the Office of Fair Trading.

The watchdog has written to a number of manufacturers and retailers requesting information about the issue.

The OFT refused to give any further details, but did add that the inquiry was not related to another probe into the supply of Rizla rolling papers.

A spokeswoman said the watchdog had begun the inquiry as it "suspects a breach of the Competition Act".

However, she stressed that it "could not be assumed that an infringement will be found".

Cooperation

All three of the UK's cigarette makers - Imperial Tobacco, Gallaher and BAT - said they were cooperating with the enquiry and had provided the OFT with information.

Cigarette makers and brands Imperial makes: Regal Embassy Lambert and Butler Gallaher makes: Benson and Hedges Silk Cut BAT makes: Rothmans

The average price of a packet of cigarettes across the UK is £4.65, according to figures from the Tobacco Manufacturers Association.

But that price can range from just under £4 for the more "budget" brands to just over £5.

Imperial and Gallaher shares were two of the top three losers on the FTSE 100 on Monday, with the former slumping 2.9% and Gallaher sliding 2.8%.