US toy firm Hasbro has been fined �4.95m ($7.7m) by the Office of Fair Trading for forcing distributors to fix toy and game prices in the UK.

UK toy sales are worth �1.7bn a year, and Hasbro toys such as Action Man, Harry Potter merchandise, Transformers, Star War dolls and Monopoly games account for nearly a fifth of the total market.

The fine is the largest the OFT has handed out for anti-competitive behaviour, while most of the distributors seem to have escaped without any fine.

The OFT said this was because Hasbro would have refused to sell to them had they refused to accept the company's ban on dropping prices below the official price list.

However, the investigation into Argos and Littlewoods has not been completed yet.

Appeal

In a statement, Hasbro said it was "surprised and disappointed" by the "disproportionate" level of the fine, and said it is planning to appeal.

The activities the OFT cited lasted only six months and covered "a limited number of wholesale distributors", the company said.

It went on: "Hasbro believes that such activities had no significant effect on competitiveness within its small network of distributors or on consumers."

Many of the sales staff responsible had left the company by now, and new senior management had taken over, it said.

Money off for good behaviour

Fix your prices, or else...

But the OFT pointed out that Hasbro has got off more lightly than it might have done - the original fine was �9m.

The OFT's "leniency programme" allows fines to be reduced if the company gives its full co-operation.

And a spokeswoman said that whatever Hasbro said, consumers do lose out from anti-competitive behaviour.

"This is not a victimless crime," she said.

The Consumers' Association (CA), meanwhile, was upset that Hasbro had not been forced to pay the full �9m, given its lack of remorse.

"Price fixing is theft," said CA Campaigns and Communications Director Allen Asher.

"This shows the OFT has teeth and is prepared to use them when consumers and honest competitors are affected."

New laws

The OFT's investigation took place under the 1998 Competition Act which came into effect in March 2000.

The Act was one of the Labour government's early reforms of business regulation, and gave the OFT new, more extensive powers to fine companies for limiting consumer choice.

The maximum fine it can now impose is 10% of a company's turnover for up to three years.

The company's worldwide sales for 2001 amounted to $2.8bn.