Tobacco manufacturers and retailers fined £225m

The fine - the largest total ever imposed by the Office of Fair Trading (OFT) - came after Imperial Tobacco and Gallaher struck 'price matching' arrangements with retailers in which the prices of their tobacco products were linked to those made by rivals.

The retailers include Leeds-based Asda, Bradford-based Morrisons, the Co-operative Group, Sainsbury's, Shell and Somerfield.

Simon Williams, the OFT's senior director of goods, said: "Practices such as these, which restrict the ability of retailers to set their resale prices for competing brands independently, are unlawful.

"They can lead to reduced competition and ultimately disadvantage consumers."

The OFT said the breaches took place between 2001 and 2003.

The watchdog said the agreements over price links between rival brands "restricted the ability of these retailers to determine their selling prices independently".

Supermarket Asda, one of the six firms which applied for leniency from the OFT in 2008, was fined 14.1m, while the Co-operative Group was handed a 14.2m penalty.

Sainsbury's escaped a fine because it blew the whistle on the practices, while the watchdog has dropped allegations against market leader Tesco due to lack of evidence.

Imperial Tobacco, whose tobacco brands include Lambert & Butler, received the biggest fine - 112.3m - but denied "categorically" that its pricing practices were anti-competitive or impacted consumers.