Price-fixing: The Economist reveals BAT, RJR



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Thursday 05 July 2001

Embargo: 00:01 Friday 6th July 2001

BAT documents show international price fixing talks with competitors – Kenneth Clarke must investigate, DTI must act

More damning evidence of corporate malpractice emerges today as The Economist highlights documents revealing that British American Tobacco was engaged in price fixing negotiations with its competitors in Africa, Asia, the Middle East and Europe.

The documents describe meetings between BAT and its competitors, Philip Morris and RJ Reynolds at which prices were fixed in key markets – the idea being to control price competition and reduce the marketing costs associated with competing with each other.  The documents also show BAT executives trying to conceal what they were doing, for example by insisting that colleagues stick to verbal communication instead of writing.

Clive Bates, Director of ASH, said:

“BAT and the others have been running a classic cartel- covert anti-competitive meetings to carve up key markets to make more money with less effort.  As if killing their customers isn’t enough, the big tobacco companies have been ripping them off as well.”

ASH said this raised more questions for Kenneth Clarke, the Deputy Chairman of BAT and Tory leadership hopeful.

“Clarke should immediately investigate and find out if this is still going on” said Bates “he is the senior non-executive director at BAT and the rogue behaviour and unacceptable business practices of his company should be his over-riding concern.  If he wants to concentrate on politics he should step down from BAT.  If he wants to carry on at BAT, he should withdraw from politics.

“We want to know what Kenneth Clarke intends to do about the BAT staff that were behind this – is he just going to turn a blind-eye and laugh it off, or is he going to take his corporate governance responsibilities seriously?

ASH has forwarded copies of the documents to the Secretary of State for Trade and Industry, Patricia Hewitt, with a request that the DTI investigation of BAT and its role in smuggling be extended to include price fixing.  Clive Bates said:

“These documents show yet more misconduct from BAT with very senior personnel involved right up to board level.  The DTI should add these price fixing documents to the hundreds relating to smuggling that are already under investigation. The DTI has the power to disqualify directors and it should use these powers to tackle the people in charge at BAT.

For an example see http://www.ash.org.uk/html/smuggling/pdfs/220.pdf or contact ASH

Contact: Clive Bates 020 77395902 (w) 077 6879 1237 (m) 020 8800 1336 (h)