[Intl-tobacco] Zimbabwe: BAT admits collusion with competitor (fwd)

[Robert Weissman]

BAT admits collusion with competitor
by Adam Jones / Consumer Industries Correspondent
Source: Financial Times (uk), Wednesday, 8/1/01

British American Tobacco on Tuesday admitted having colluded with a
competitor in Zimbabwe but stressed that its behaviour was entirely legal.

Martin Broughton, chairman, said the company had been part of an industry
profit-sharing agreement that operated with the full knowledge of the
Zimbabwean government. "In a lot of countries, colluding on prices is not
illegal - or was not illegal."

Asked whether there were any countries where the company was currently
involved in legal price collusion, Mr Broughton replied: "I wouldn't be
surprised if there were."

The profit-sharing scheme in Zimbabwe is thought to have come to an end in
the 1990s.

Mr Broughton's candour came after documents from the BAT archives hinted
at price fixing deals in various countries.

BAT on Tuesday announced first half pre-tax profits of =A3936m ($1.33bn), u=
p
from =A3706m. Sales, including its share of associates and joint ventures,
rose from =A311.9bn to =A313.3bn.

Performance in the first half was buoyed by an increase in European sales.
BAT has taken market share from rivals in eastern Europe.

"Although we have to face the fact that economic conditions are
deteriorating around the world, we confidently expect to continue building
sustainable shareholder value," Mr Broughton said.

BAT said it now expected to save more than =A3350m a year from the takeover
of Rothmans, as opposed to the =A3250m previously expected. However,
integration costs has risen from the =A3400m estimate to =A3550m.

Mr Broughton said that BAT continued to view Gallaher, the UK cigarette
group, as one of several potential takeover targets although its recent
acquisition of Austria Tabak made it less attractive.

If there were any such takeover, BAT would almost certainly be forced to
sell brands to satisfy regulatory requirements.

BAT recently lost a court case to Philip Morris over the right to sell
Marlboro cigarettes in the UK. It had inherited Rothmans' stake in a joint
venture with Philip Morris but the Court of Appeal ruled that the US
company had the right to withdraw Marlboro.

Nonetheless, Mr Broughton said BAT was in talks about the future of the
joint venture and he refused to rule out the possibility that the Marlboro
deal might be able to continue on renegotiated terms. He said a resolution
was expected soon.