Belgian justice pursues four tobacco multinationals for price fixing

By communicating their prices to each other through tobacco wholesalers, the four main cigarette manufacturers in Belgium, already convicted in the Netherlands for similar offences, knew that they were in breach of the laws on free competition.

An investigation by the Belgian Competition Authority (BCA) was launched in May 2017, followed by searches in June 2017 at the premises of Philip Morris Benelux, British American Tobacco Belgium, JT International Company Netherlands (Japan Tobacco) and Établissements L. Lacroix Fils (owned by Imperial Brands). It is now taking the form of legal proceedings against these four multinationals for exchanging price information, which constitutes practices that restrict competition.[1].

Offence of obstruction of competition

The four multinationals, often referred to as the Big Four because of their omnipresence in the Western world, alone represent 90% of the Belgian tobacco market. They communicated their prices to tobacco wholesalers, who in return provided them with information on their competitors' prices. This is therefore an indirect form of illicit price fixing, in order to circumvent competition laws and try to escape accusations of cartelism. Practices that could have been spread over several years, estimates the ABC.

A conviction in the Netherlands for similar facts

This Belgian procedure is reminiscent of a very similar situation in the Netherlands, where the Dutch Competition Authority (ACM) imposed a total fine of 82 million euros on these same four industrialists in May 2020.[2]. The process in question was identical, consisting of each manufacturer communicating its prices to wholesalers and aligning its prices with those of competitors. The four cigarette manufacturers had tried to prevent the publication of this judgment, which could not be known until four months after it was pronounced. The period covered by these facts extended from 2008 to 2011, which suggests that such a system has long flourished, if only in the Benelux. Suspicions, investigations, searches and seizures for illicit collusion also concerned these same manufacturers in France in 2015 and 2018.[3], and in Switzerland in 2020.

Persistent collusion practices in Belgium

Price fixing is a recurring practice in the tobacco industry, which has largely become an oligopoly, designed to limit competition, preserve the attractiveness of products and contain the effect of tax increases. It is an attempt to circumvent public price increase strategies, which are recognized levers for reducing tobacco consumption. Moreover, these agreements do not prevent the existence of strong competition between manufacturers on new tobacco and nicotine products (heated/grilled tobacco in particular, but also electronic cigarettes, pouches, etc.)[4].

Keywords: illicit agreement, tobacco prices, competition, Big Four, Belgium.

©Tobacco Free Generation

M.F.

[1] Cigarette companies sued for trading price information between competitors, RTBF, published on 1^er October 2021, accessed October 5, 2021.

[2] Generation Without Tobacco, Netherlands: Tobacco industry convicted of price fixing. , published September 30, 2020, accessed October 5, 2021.

[3] Searches in France at tobacco giants suspected of anti-competitive practices, Le Point, published January 24, 2018, consulted October 5, 2021.

[4] Generation Without Tobacco, IQOS mini-cigarettes banned from import into the United States, published October 4, 2021, accessed October 5, 2021.

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