On 29 September 2021, the Dutch Competition Authority fined tobacco manufacturers British American Tobacco (BAT), Philip Morris, Japan Tobacco International (JTI), and Imperial Tobacco 82 million euros for anti-competitively sharing confidential information about future prices. In the Netherlands, the infringement lasted from July 2008 to July 2011. On 1 October 2021, two days after the Dutch decision was published, the Belgian Competition Authority charged the same tobacco manufacturers for the same conduct in Belgium. While the infringement is not yet established because the procedure is slightly different in Belgium, we expect that to happen very soon.
Illegal information exchange between cigarette manufacturers in the Netherlands and Belgium
Although consumers pay high taxes when buying cigarettes in both countries, manufacturers can freely set cigarette retail prices (unlike other products, prices are printed on the packages by manufacturers). Therefore, the infringement most likely had a significant impact on consumer prices and, in turn, manufacturers anti-competitively increased their profits. The infringers were also not constrained by competitors that did not participate in the infringement because the four manufacturers covered more than 90% of the market volume in both countries.
According to the two competition authorities, the four manufacturers set their prices knowing about future prices of competitors because they shared prices with wholesalers weeks before they were adjusted on the packaging (and wholesalers shared the information with manufacturers). For example, the Dutch Competition Authority published some snippets from the internal emails sent within JTI recommending that they follow the example of BAT, Philip Morris, and Imperial Tobacco by increasing resale prices by 10 euro cents as of August-September 2009.
10 euro cents (per pack) may sound low when the average consumer price of a cigarette pack during the infringement was as high as 6 euros. But because 5 to 6 hundred million packs of cigarettes were sold in the Netherlands yearly between 2008 and 2011 and 4 to 5 hundred million packs in Belgium, the extra profit generated — assuming a 10 cents per pack price increase and a 90% market coverage — is estimated in the ballpark of 146 million euros in the Netherlands and 126 million euros in Belgium.
The actual damage size may differ depending on the various prices applied by the manufacturers during the infringement period (the 10 cents per pack increase may not be representative to all sales), and the prices they would have set absent the infringement.
Consumers can go to court and claim these damages from the four manufacturers.
Your contacts:
