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Big tobacco fuming: Philip Morris threatens to sue over plain cigarette packaging

Published time: August 13, 2014 14:08
Reuters / Brian Snyder

Reuters / Brian Snyder

Philip Morris International, the world's largest tobacco company and maker of Marlboro cigarettes, is prepared to sue the British government if it implements a law requiring plain packaging of cigarettes.

The UK government’s Department of Health carried out a consultation exercise on potential legislation that would force cigarette makers to sell their products in plain packages with graphic health warnings and no branding.

Reacting to the consultation, Philip Morris said it “is prepared to protect its rights in the courts and to seek fair compensation for the value of its property.”

The government said in April it wanted to implement plain packaging after a review found it could reduce the incidence of children taking up smoking. An estimated 4 percent of children in England between the ages of 11 and 15 years old are believed to be smoking at least once a week.

After the Department of Health published its draft regulations in June, it launched a six-week consultation period that ended last week.

“‘Standardized packaging’ is a euphemism for government-mandated destruction of property,” Philip Morris said in its submission. “It is unlawful, disproportionate, and at odds with the most basic requirements of the rule of law.”

Philip Morris said the value of compensation it would seek could total “billions of pounds” quoting a 2014 Exane BNP Paribas report, which estimated that the value of compensation for tobacco branding in the UK could be between £9 billion and £11 billion.

If it goes ahead, Britain would be the second country after Australia to ban cigarette branding, introduced in the Tobacco Plain Packaging Act 2011. The Australian government is already facing challenges at the World Trade Organization over complaints the laws create illegal obstacles to commerce.

Figures released by the Australian government, however, show adult smoking rates have fallen by 15 percent. Before the measure was introduced in December 2012, daily smoking prevalence stood at 15.1 percent and has now fallen to 12.8 percent.

“This is exactly the strong and convincing evidence the tobacco industry said was needed,” said Deborah Arnott, chief executive of anti-smoking health charity ASH.

The government had rejected the policy last year, leading to accusations that David Cameron’s chief election strategist, Lynton Crosby, was influencing Conservative party policy. It was revealed that Crosby's firm, Crosby Textor, was working for Philip Morris.

At the time of the scandal in June 2013, Liberal Democrat MP Paul Burstow was quoted as saying: “Lynton Crosby cannot remain at the heart of government while he is also serving the interests of the tobacco industry. If he does not go, the prime minister should sack him.” Crosby has kept his job.

There are around 10 million adult smokers in the UK, or about a sixth of the population. Smoking accounts for over one-third of respiratory deaths, over one-quarter of cancer deaths, and about one-seventh of cardiovascular disease deaths.

In 2012-13 the government earned £12.3 billion in revenue from tobacco tax and spent £88.2 million services to help people stop smoking and a further £60.1 million on stop smoking medication.