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Royal Bank of Scotland has been fined £28.6m by the Office of Fair Trading (OFT) after breaking competition law.

The fine was reduced from £33.6m to reflect RBS's admission and agreement to co-operate over the breaches, the OFT said in a statement.

The OFT began its probe after a tip-off from Barclays Bank that RBS had passed it confidential information about the pricing of loans.

RBS broke the rules between October 2007 and February or March 2008.

The OFT found that individuals in RBS's Professional Practices Coverage Team gave counterparts at Barclays details of the pricing of loans to large professional services firms, such as solicitors, accountancy, and property companies.

Barclays used the information to set its own prices, but escaped a fine because it reported the matter to the OFT.

Under OFT rules, Barclays' tip-off to the OFT means it will get immunity from prosecution. The OFT said that provided Barclays continues to co-operate it "is not expected to pay a fine in this case".

Substantial penalty

Ali Nikpay, OFT senior director of cartels and criminal enforcement, said: "Any company that discloses confidential future pricing information to its competitors risks a substantial penalty.

"It is important that companies operating in the UK understand the seriousness of such conduct and ensure effective competition compliance throughout their organisation," he said.

OFT investigators found that RBS staff passed the information to Barclays during social and industry meetings, and through telephone conversations.

It is understood that the OFT will not launch criminal proceedings against any individuals.

The OFT bases the size of its fines on a company's turnover. The biggest fine so far handed out by the OFT was a £121.5m penalty to British Airways in 2007 for price fixing over fuel surcharges.

The UK taxpayer owns 84% of RBS after the government bailed out the bank at the end of 2008.