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Supermarkets must pay a multimillion pound fine for ripping off smokers in collusion with Gallaher, the tobacco company, it was announced yesterday.

Asda and Somerfield have admitted fixing the price of cigarettes and overcharging customers under a secret deal with the manufacturer of brands including Benson & Hedges and Silk Cut. The Office of Fair Trading said that a total of £173.3 million in fines and costs had been agreed in one of the biggest settlements of its kind.

Other firms that admitted colluding in the pricing scam include the owner of Threshers, the off-licence chain, and One Stop convenience stores, which must contribute towards the settlement. But the lion’s share of the fine — £93 million — will be paid by Gallaher, owned by Japan Tobacco.

The OFT has been investigating an alleged price-fixing cartel in Britain’s £15 billion-a-year market for cigarettes and rolling tobacco for five years. In April it announced that 11 companies were suspected of swapping price information and linking prices with rival brands between 2000 and 2003.

Other accused firms are fighting the allegations. These are Imperial Tobacco, which owns the Embassy, John Player and Golden Virginia brands, Tesco, Morrisons, Safeway (now taken over by Morrisons), the Co-op and Shell, for its petrol station stores. If they are found guilty of collusion they face serious penalties under the Competition Act.

If they are found guilty of collusion they face serious penalties under the Competition Act and stand to be fined as much as 10 per cent of turnover of each product involved in the cartel.

Sainsbury’s was also part of the original investigation but turned whistleblower and handed over all its papers identifying unlawful practices. It is to be spared a fine provided it continues to assist the investigation.

The six companies fined yesterday made prompt admissions of illicit competition practices in return for lenient fines.

A spokesman for Japan Tobacco said: “We acquired Gallaher’s last year and after applying due diligence in all of this we decided to apply for leniency and have agreed to pay £93 million in fines.”

An Asda spokesman said that it had also agreed to a multimillion-pound fine. “We put our hands up quickly and admitted we have done some wrong but we are not the villains of this piece,” he said.

However, Imperial Tobacco insisted that it had admitted any infringement of the law. A spokesman said that it took compliance with competition law “very seriously” and said that it rejected any suggestion that it had acted in any way contrary to the interests of consumers. “Imperial Tobacco has co-operated fully with the OFT throughout and continues to do so,” he said.

John Fingleton, chief executive at the OFT, said: “The OFT’s objective is to make markets work well for consumers and the economy alike. A cornerstone of this is the principle that companies should set their prices independently.

“The OFT is very pleased that the early co-operation of these parties has enabled the swift resolution of some of this case, which will significantly reduce the costs of pursuing the investigation for the OFT and the businesses concerned.”

The action by the OFT in taking a more active role stamping out cartels and price fixing by manufacturers and retailers has delighted consumer groups such as the National Consumer Council.

Jill Johnstone, its director of policy, said last night: “We are pleased that the OFT is snuffing out cartels as price-fixing clearly cheats consumers.

“One of the biggest issues is that we have no way of knowing when price fixing occurs — often it takes a whistleblower to come forward.”

Deborah Arnott, director of Ash (Action Against Smokers for Health), said that Gallaher had “shown complete contempt for its customers”. The OFT had suggested that the two tobacco firms, which make nine out of every ten cigarettes smoked in Britain, were the hub of the scheme, passing on information to retailers about what their rivals would be charging for leading brands. The net effect was that the prices of competing brands were kept at a comparable level across supermarkets, Shell petrol stations, Thresher offlicences and other outlets.

The regulator’s inquiry unearthed a complex web of indirect communications between retailers and two tobacco groups on future prices with various retail companies acting as middlemen.

- Manages on a day to day basis allocated human, material, financial and other resources in pursuance of the TSEM Tobacco Control Strategy.
- Administers the DoH grant, through taking responsibility for the budget, ensuring it is spent in accordance with plans outlined in the proposal.
- Reports to funding body and TSEM HoS Group.
- Prepares and maintains the TSEM Tobacco Control Strategy within agreed timescales and in accordance with the priorities agreed by the TSEM Heads of Service.
- Monitors the effectiveness of TSEM activities against the Control Strategy and initiates appropriate corrective action.
- Contributes to the preparation of the national and TSEM Strategic Threat Assessments.
- Informs and advises the TSEM Heads of Service and TSEM specialist groups on developments in tobacco control related legislation, policy and strategy.
- Attends the TSEM Regional Tactical Co-ordination Group and other tobacco enforcement related meetings and fora.
- Works with and responds to media requests.
- Prepares and submits applications to attract further resources related to regulation of age restricted products

This week in the New York Times there was an article by the author Tony Horwitz, an Obama supporter and fellow Nicorette addict, urging him to start smoking again in order to win the support of the blue-collar workers who flocked to Hillary Clinton during the Democratic primaries, and who may well determine whether he makes it to the White House in November. Horwitz made the point that Americans on low incomes smoke at twice the rate of the better off, and that most of these smokers are in the states where Obama polled worst in the primaries. To them he might seem "aloof, overgroomed and fussy about eating the right foods and getting enough exercise"; and taking up smoking again "would go a long way towards dispelling his effete image".

Horwitz also pointed out that "indulging in a vice stigmatised by most Americans is an easy way to bond with people with whom you otherwise have nothing in common", and from my own experience I have found this to be the case. I had planned, for the umpteenth time, to give up smoking during my stay in the US this month, but once again I failed. Perversely, I found the opprobrium it attracts a stimulus to go on doing it. I wanted to be on the side of the oppressed, and oppression has a way of bringing its victims together.

At a splendid country wedding in Virginia, where I knew only a handful of the hundreds of guests, I met some really nice and interesting people only because we shared the same disgusting habit. Nowadays smokers gravitate instinctively to each other for they feel at ease in each other's company.

Even on the streets of New York, when people stop you to bum a cigarette or a light, they do so in a modest and courteous manner, knowing that most of the world regards them as pariahs.

For Obama and his supporters, it must be depressing to learn that the Clintons are convinced he cannot win in November. It is not necessarily that they do not want him to. Hillary pledged unequivocal support for him in her concession speech, even echoing his campaign slogan, "Yes, we can". But it's clear that what she really thinks is, "No, he can't".

The journalist John Heilemann, who knows her well, writes in this week's New York magazine: "It would be hard to overstate the private pessimism that Hillary and Bill Clinton feel about Obama's general-election prospects."

Hillary, he says, would feel obliged to accept the vice-presidential slot if it were offered her, for fear of being blamed for Obama's defeat if she refused, "even though in her view his downfall is foreordained and has nothing to do with her". She just doesn't believe that her female and white working-class supporters will cross to him in sufficient numbers to secure his election as president.

This would seem to be reason enough for Obama not to choose her as his running mate, for how could he want a comrade in arms who thinks he is doomed to lose? Another good reason would be the problem of her husband; for Bill, having proved a liability in Hillary's campaign, would probably be even more of one in Obama's.

THE Uganda Revenue Authority (URA) has burned Supermatch cigarettes worth sh422m, the assistant commissioner for customs enforcement, Enock Walugembe, has said.

"The Customs Enforcement Department over the last year impounded 19,670,000 cigarettes worth sh422m that were being smuggled into the country," Walugembe said.

"We want to give accountability to the public in the area of tax compliance on imports," he said at Kigo Prison where the cigarettes were put in an incinerator.

Walugembe said if the cigarettes were not impounded, the Government would have lost sh511m.

"We cannot sell them to the public," he said.