Millions-fined tobacco manufacturers for shoddy prices | Financial

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The four companies make many different brands of cigarettes, such as Marlboro, Lucky Strike, Gauloises and Camel. British American Tobacco (BAT) receives the highest fine, of more than 31 million euros. Philip Morris Netherlands follows with more than 27.5 million euros. JT International Company Netherlands and Van Nelle Tabak Netherlands are also fined, of more than 13 million euros and more than 10 million euros respectively.

The distortion of competition took place between July 2008 and July 2011. “It was consistent practice for cigarette manufacturers to receive information from wholesalers about the consumer prices of packets of cigarettes from competitors before those prices took effect. This allowed those manufacturers to pre-align their own prices with those of their competitors. competitors “, said ACM Chairman of the Board Martijn Snoep. “Manufacturers knew that exchanging this kind of information was at odds with competition rules,” he added.

All four cigarette manufacturers have objected to the decision, the watchdog said. Three manufacturers have also objected to publication of the fine decision itself, but the provision judge in Rotterdam has rejected this.

Philip Morris Netherlands says in a response to dispute the allegations “strongly”. “We act in accordance with applicable laws and regulations”, emphasizes a spokesman. BAT also says that it complies with all applicable laws and regulations. Van Nelle Tabak and JT International were not immediately available for comment.

Collusion

ACM’s fine decision shows how the cigarette manufacturers colluded among themselves. The parties gained insight into each other’s price behavior through their buyers, especially wholesalers and retail chains. What also makes the case special is the exceptional position of cigarette manufacturers in setting prices. Each cigarette manufacturer determines the price of a pack and mentions it on the pack. This is different from almost all other consumer products, where the retailer determines the price.

With cigarettes, all manufacturers send their new price list to wholesalers and other buyers a few weeks before the prices are adjusted in the store. They can then already adjust their sales systems. However, some customers also forwarded those price lists directly to competing manufacturers before the new prices came into effect. ACM gained insight into e-mails between employees of wholesalers and tobacco producers. Test balloons with information were also sent to the wholesalers to see what the reaction of competitors would be. Manufacturers knew this would be passed on.

Incidentally, the original basic fine for the tobacco manufacturers was considerably higher. This was reduced by 50 percent due to exceptional circumstances, for example because it is the first time that ACM has applied the cartel prohibition to an indirect form of information exchange between competitors. Wholesalers and retail chains themselves are not involved in the ACM investigation, according to a spokesperson. He points out that the “punishable part of the case” lies with the manufacturers.





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