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Japan Tobacco Inc., the world's third- largest publicly traded cigarette maker, said full-year profit rose 13 percent after the takeover of Gallaher Group Plc helped increase overseas sales.
Net income was 239 billion yen ($2.3 billion) in the 12 months through March from 211 billion yen a year earlier, Japan Tobacco said in a statement to Tokyo's stock exchange today.
The maker of Camel and Mild Seven cigarettes purchased U.K.-based Gallaher last year to increase tobacco sales in Europe and Russia as smoker numbers fall in its home market. The contribution of overseas cigarette sales to total revenue doubled to 41 percent over the past year. . . .
Tobacco sales in Japan fell 1.6 percent to 3.36 trillion yen as an increase in health consciousness reduces the smoking rate. The percentage of Japanese men that smoke has fallen by half over the past 40 years to about 40 percent.
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A THREE-YEAR legal battle fought by Gallaher, the British maker of Silk Cut and Benson & Hedges cigarettes, has exposed its own connections with tobacco smuggling, sanctions busting and product dumping in the developing world.
Gallaher won its case in the High Court this month against a distributor when Mr Justice Christopher Clarke ruled that the tobacco company had lawfully terminated its contract with Cyprus-based Tlais Enterprises Limited (TEL) because of concerns over smuggling.
More than 20,000 internal documents were disclosed in the course of litigation. And an investigation by The Sunday Times reveals that many of these "cigarette papers" raise serious questions about Gallaher's own complicity in facilitating worldwide smuggling, sanctions busting in Iraq and the dumping of sub-standard cigarettes in Africa and Afghanistan.
A former Gallaher director at the centre of these allegations has blown the whistle despite attempts by the company to gag and discredit him. His witness statements contradict claims by Gallaher to the court that it "deplores smuggling".
Norman Jack alleges Gallaher's board operated a policy of "wilful blindness" . . .
Correspondence seen by this newspaper shows that Gallaher’s new owner, Japan Tobacco (JT), which bought the company last year for £7.5 billion, was concerned about the Iraq matter and further allegations. It wanted to settle the case before the ruling was made public. No deal was possible and Mr Justice Clarke’s 300-page judgment makes uncomfortable reading for all parties.
Jack was the director Gallaher appointed to implement a new and undeclared “trading policy”. It was laid out in a memo written by then chief executive Peter Wilson to his senior managers in May 1999.
It said: “As a consequence of the disruption to our business in Russia we should be seeking alternative sources of business in the short term in order to provide some compensation and to maintain throughput in our factories.”
From then on, Gallaher’s factory in Northern Ireland pumped out billions of Sovereign and Dorchester cigarettes with English health warnings for Jack to sell outside the European Union at low margins and without attempting to build any brand identity.
Tobacco firms and supermarkets face massive fines following allegations of collusion over the price of cigarettes.
Imperial Tobacco, responsible for brands such as Embassy, and Gallaher, which owns Benson & Hedges and Silk Cut, are in the dock.
Eleven stores, including Tesco, Asda, Sainsbury's and Morrisons, are also under investigation for what has been described as 'dodgy dealing'.
The Office of Fair Trading yesterday announced it is investigating claims the companies colluded.
The OFT has issued a statement of objections alleging that certain tobacco manufacturers and retailers have engaged in unlawful practices in relation to retail prices for tobacco products in the UK.
The statement of objections sets out the OFT's proposed findings against tobacco manufacturers Imperial Tobacco and Gallaher, and eleven retailers - Asda, the Co-operative Group, First Quench, Morrisons, Safeway, Sainsbury, Shell, Somerfield, T&S Stores, Tesco and TM Retail.
The OFT alleges that these tobacco manufacturers and retailers variously engaged in one or more unlawful practices in relation to retail prices for some or all of a number of tobacco products in breach of the Competition Act 1998
Tesco Plc, Imperial Tobacco Group Plc and 11 other companies were accused of coordinating cigarette prices between 2000 and 2003 in the U.K. antitrust regulator's first formal probe of tobacco sales.
The Office of Fair Trading said today it found evidence of 11 retailers and two manufacturers linking the price of tobacco brands made by competing companies. The regulator in London is also examining whether Imperial, Japan Tobacco Inc.'s Gallaher unit and five retailers shared information on prices. . . .
``A manufacturer would ask the retailer to sell his brand X at the same price or at a coordinated price below his competitor's brand Y,'' Gladstone said. ``There were also instances where manufacturers informed retailers about future pricing in the knowledge that retailers would likely tell rival manufacturers.''
The regulator said it may, where applicable, seek to attribute liability to parent companies. The companies can now file arguments refuting the OFT's so-called statement of objections, which lays out the regulator's findings.
Japan Tobacco, which acquired Gallaher last year for $15.4 billion, said it has been fully cooperating with the OFT.
The Office of Fair Trading (OFT) has alleged tobacco firms and supermarkets have been engaged in unlawful practices linked to retail prices for tobacco.
The OFT names 11 retailers, including Asda, Sainsbury and Tesco, and tobacco firms Imperial Tobacco and Gallaher.
One allegation is that retailers and tobacco groups arranged to swap information on future pricing.
A separate allegation is that there was an understanding that the price of some brands would be linked to rival brands.
Major retailers and two tobacco manufacturers are facing an investigation over allegations of unlawful cigarette pricing practices.
Tobacco giants Imperial Tobacco and Gallaher were named alongside chains including supermarkets Tesco, Sainsbury's and Asda in a "statement of objections" issued by the Office of Fair Trading.
The consumer affairs watchdog has accused the groups of anti-competitive pricing, alleging that firms co-ordinated to link the price of some brands to rival products and separately that some of those named arranged to swap information on future pricing.
Competition authorities alleged on Friday that two cigarette companies and eleven retailers had engaged in "unlawful practices" relating to retail tobacco prices.
The Office of Fair Trading (OFT) began probing tobacco pricing in March 2003 but had not revealed the investigation until Friday.
"The OFT has issued a statement of objections alleging that certain tobacco manufacturers and retailers have engaged in unlawful practices in relation to retail prices for tobacco products in the UK," it said in a release.
"The statement of objections sets out the OFT's proposed findings against tobacco manufacturers Imperial Tobacco and Gallaher, and eleven retailers -- Asda, the Co-operative Group, First Quench, Morrisons, Safeway, Sainsbury, Shell, Somerfield, T&S Stores, Tesco and TM Retail."
Tesco Plc, Imperial Tobacco Group Plc and eleven other companies were accused of fixing cigarette prices between 2000 and 2003 by the U.K.'s antitrust regulator, opening the first formal probe of tobacco sales.
The Office of Fair Trading said today it's investigating whether 11 retailers and two manufacturers linked the price of tobacco brands made by competing companies. The regulator in London is also examining whether Imperial, Japan Tobacco Inc.'s Gallaher unit and five retailers shared information on prices.
The probe is the second in the last six months involving U.K. retailers. In December, supermarkets including Wal-Mart Stores Inc.'s Asda and J Sainsbury Plc agreed to pay fines of as much as 116 million pounds ($228.5 million) for fixing milk prices in 2002 and 2003 after an Office of Fair Trading probe. . . .
Royal Dutch Shell Plc, Somerfield Ltd., Co-operative Group Ltd., William Morrison Supermarkets Plc, Safeway Plc, First Quench Retailing Ltd., T&S Stores Plc and TM Retail Ltd. were also named
The competition watchdog is today expected to unveil wide-ranging allegations of cigarette price-fixing involving tobacco companies and retailers, days after it was forced to make a humiliating apology over incorrect accusations in another antitrust probe.
People familiar with the tobacco investigation say the Office of Fair Trading will name leading supermarkets, 48 hours after it agreed to pay Wm Morrison �100,000 damages and costs over mistakes in a statement about alleged milk price-fixing.
The cigarette announcement - the latest sign of the OFT's tightening clampdown on antitrust activity - relates to alleged deals between the tobacco companies and a broad spectrum of retailers, people familiar with the investigation say.
Companies involved in price-fixing can face fines of up to 10 per cent of annual turnover
The United Kingdom Office of Fair Trade is set to unveil wide-ranging allegations that tobacco companies and retailers fixed cigarette prices, the Financial Times reported citing people familiar with the tobacco investigation.
The allegations come two days after the OFT was forced to apologise to Wm Morrisons and agreed to pay 100,000 pounds in damages and costs after admitting inaccuracies in another antitrust probe.
The cigarette announcement, expected today, relates to alleged deals between the tobacco companies and a range of retailers, with cigarette suppliers the main focus of the enquiry, the report added.
The Office of Fair Trading has today issued a statement of objections alleging that certain tobacco manufacturers and retailers have engaged in unlawful practices in relation to retail prices for tobacco products in the UK.
John Fingleton, the OFT's chief executive, said: 'For markets to work well for consumers, it is a fundamental principle that pricing decisions should be made independently. If we find evidence of anti-competitive activity, we are prepared to use the appropriate powers to punish the companies involved and to deter other businesses from taking part in such behaviour."
Reynolds American Inc. (NYSE: RAI) announced today that R.J. Reynolds Tobacco C.V. (RJRTCV), an indirect wholly owned subsidiary of RAI, will receive a payment of euro 265.0 million (approximately $387.6 million) from Gallaher Limited (Gallaher), a JT International (JTI) Group company, resulting from the termination of the joint-venture agreement between RJRTCV and a Gallaher affiliate.
In accordance with the terms of the joint venture, RJRTCV will receive 40 percent of that total, euro 106.0 million (approximately $155.0 million), on or before April 20, 2008. Gallaher will pay the remaining 60 percent of the valuation amount in six equal annual installments of euro 26.5 million (approximately $38.8 million), beginning in April 2009. The dollar values reflect a euros-to-dollars exchange rate of 1.4625, calculated on the morning of Feb. 20, 2008.
R.J. Reynolds Tobacco Co. will receive $387.6 million from Gallaher Ltd. as part of settling the demise of their international joint venture last year, according to a regulatory filing today.
Reynolds formed Reynolds-Gallaher International in 2002 to give the manufacturer access to cigarette sales in most countries in the European Union. The agreement was scheduled to run through 2012.
But the partnership ended last May, about a month after Japan Tobacco Inc., the world's third-largest publicly traded cigarette manufacturer, completed its purchase of Gallaher, based in London, for $14.7 billion. The joint venture between Reynolds and Gallaher ceased to exist Dec. 31, and the settlement was reached Wednesday.
Reynolds received the settlement money, which equals 265 million euros, because Gallaher's licensed trademarks in the joint venture were determined to be of greater value.
Today Japan Tobacco International signed up to an anti-smuggling Agreement with 26 of the 27 EU Member States. [1] The UK is the only Member State left out of the Agreement, which leaves it completely isolated from the rest of Europe. This means that the UK will not benefit from measures hammered out between the European Commission and JTI, which ensure that the company is required to control the illicit trade in its products and will pay heavily if its cigarettes continue to be smuggled.
The agreement between JTI and the European Commission is equivalent to the agreement struck between Philip Morris International and the EC in 2004. [2] This means that two of the top three tobacco companies in the world by market share have now signed up to Agreements with the EU. The UK refused to sign the PMI agreement, arguing that as PMI only had a small market share in the UK, the Agreement was not relevant. This argument will not wash with Japan Tobacco, which recently acquired UK-based Gallaher, the UK's second-largest tobacco company by market share with an almost 40% market share and therefore has a significant stake in, and control over the UK tobacco trade. [3] Gallaher will fully join up to the Agreement in two years, but the general compliance obligations apply immediately.