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Friday newspaper round-up: Tobacco companies, Northern Rock, Barclays

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Date: Friday 25 Apr 2008

LONDON (ShareCast) - The competition watchdog is on Friday expected to unveil wide-ranging allegations of cigarette price-fixing involving tobacco companies and retailers, days after it was forced to make a humiliating apology over incorrect accusations in another antitrust probe, reports the FT.

People familiar with the tobacco investigation say the Office of Fair Trading will name leading supermarkets though cigarette suppliers are the main focus of the OFT’s inquiry.

Ron Sandler, executive chairman of Northern Rock, is finalising plans to make 2,000 staff at the troubled bank redundant. The bank is expected to unveil its plan next week - a move which will kick-start a 90-day consultation process with Northern Rock staff and Unite, the financial services union. Although Northern Rock had been expected to make up to one third of its 6,000 staff redundant, it was thought that the job cuts would be spread over three years, reports the Telegraph.

A controversy emerged yesterday over the true state of high street sales as the City joined retailers to attack official figures that indicated a shopping bonanza since the new year. The sharp increase in sales during the January to March period came despite the official data registering a modest 0.4% drop in March alone. Sales of non-food items dropped by 0.7% in March, but already strong estimates for January and February were revised to still higher levels, reports the Times

Barclays held open the possibility of a rights issue yesterday but hinted that it was seeking other ways of beefing up its balance sheet. Marcus Agius, the bank’s chairman, refused to rule out a cash call but told investors at its annual meeting that Barclays had other options open to it. However, Agius said that Barclays could boost its Tier 1 capital, a core measure of financial strength, by retaining earnings – paying out a smaller dividend – managing its balance sheet or raising new equity, writes the Times.

The construction industry is braced for tens of thousands of job cuts after Persimmon, the country’s biggest housebuilder, said it would stop building on new sites until market conditions improve. Building industry sources said that the Northern and Yorkshire regions had already been hit by redundancies and worse was expected as other housebuilders followed Persimmon’s lead and halted new projects, reprorts the Times.

BP announced plans to invest $560m in biofuels on Thursday and argued that its proposals to develop ethanol production from sugar cane in Brazil would not affect food supplies. The oil group plans to spend $60m buying a 50% stake in a Brazilian joint venture and invest a further $500m in two ethanol refineries, says the FT.

One-third of North Sea oil production began grinding to a halt last night and will be sharply reduced for weeks after Ineos shut down the Grangemouth refinery in Scotland to prepare for a two-day strike this weekend. BP warned that it would begin shutting down the Forties Pipeline System (FPS), through which one-third of all North Sea oil and gas flows, by midday today, writes the Independent.

The deadline for a bid for Moss Bros is set to expire today without an offer, adding to a growing belief that Baugur, the Icelandic investment group, will abandon an indicative £40m takeover proposal for the men's wear chain, reports the FT.

ITV's reliance on repeats to fill hours of airtime on its digital channels has led to a multi-million-pound High Court claim by the production company behind A Touch of Frost and The Darling Buds of May. Excelsior Group Productions issued a claim for higher royalty payments against ITV yesterday, saying it was under-compensated for several hundred hours of repeats on ITV2 and ITV3, reports the Telegraph.

Hedge fund TCI is asking the British Government to impose trade sanctions on Japan after its government blocked the activist investor's bid to double its stake in energy producer J-Power. With TCI is facing hundreds of millions of dollars of losses on its J-Power investment, the fund's boss Chris Hohn has written to the Secretary of State for Business, John Hutton, Secretary of State for Energy, Malcolm Wickes, and Digby Jones, Minister for Trade and Investment, asking them to intervene on his behalf, writes the Telegraph.

A public gamble on Grand National winner Comply or Die cost bookmaker William Hill more than £7m, wiping out all of its profits from the rest of the three-day Aintree meeting. Victory by the nine-year old, which was backed down from 11-1 to 7-1 co-favourite on the day of the race, was the bookie's biggest loser in the first 16 weeks of its new financial year, reports the Telegraph.