Response to OFT Decision

Imperial Tobacco Group PLC ("Imperial Tobacco") is disappointed by the OFT's Decision to impose a fine of £112.3 million on the Company for allegedly restricting competition. Imperial Tobacco takes compliance with competition law very seriously and continues to reject any suggestion that it acted in breach of the Competition Act or in any way contrary to the interests of consumers.

Imperial Tobacco will review the Decision once it is received from the OFT later today with a view to appealing it to the Competition Appeal Tribunal.

The OFT's Decision relates to certain promotional arrangements that Imperial Tobacco had entered into with multiple retailers prior to August 2003. Imperial Tobacco categorically denies that these promotional arrangements had the purpose or effect of restricting competition.

The purpose of these arrangements was to encourage our brands to be priced competitively and that the promotional discounts given to retailers were passed on to consumers in the form of lower retail prices. Far from being anti-competitive, these arrangements were pro-competitive and to the benefit of consumers. Retailers remained free to set their own prices.

Imperial Tobacco is pleased but not surprised that the OFT has been unable to substantiate two of its earlier allegations as set out in the Statement of Objections issued in April 2008. In particular, the OFT no longer alleges:

·; that Imperial Tobacco was involved in arrangements which had the effect of restricting retailers' abilities to determine their retail prices independently (see note 1); and

·; that Imperial Tobacco was engaged in the indirect exchange of proposed future retail prices with other market participants (see note 2).

Imperial Tobacco rejected both these allegations, which the OFT has today confirmed have now been dropped.

The OFT's investigation began in 2003, and relates to a period from 1 March 2000 to 15 August 2003. Imperial Tobacco has co-operated fully with the OFT throughout its seven year investigation.

Enquiries

Simon Evans (Group Press Officer) Telephone: +44 (0) 117 933 7375

Gerry Gallagher (Director of Investor Communications) Telephone: +44 (0) 117 933 7014

John Nelson-Smith (Investor Relations Manager) Telephone: +44 (0) 117 933 7032

Notes

Note 1: As set out in Note 5 of the OFT's announcement.

Under the Competition Act 1998, infringements may arise because the agreements in question have the object (i.e. objective purpose) and/or the effect of restricting competition. After a seven year investigation, the OFT has not found that the arrangements had any adverse effects on competition. Imperial Tobacco welcomes this conclusion, but does not accept that the agreements had the purpose of restricting competition; indeed, the purpose of the agreements was to ensure lower prices for consumers.

Note 2: In the OFT's press release of 25 April 2008 (http://www.oft.gov.uk/news/press/2008/56-08), the OFT alleged the indirect exchange of proposed future retail prices between competitor manufacturers via retailers and (separately) between competitor retailers via manufacturers. As noted, the OFT has now dropped all of the allegations against the manufacturers and retailers concerned.

Copies of our announcements are available on our website: www.imperial-tobacco.com