Philip Morris sues Irish government on tobacco ban

cigarettes
Tobacco giant Philip Morris International is to launch a legal action against the Irish government over its ban on the display of cigarettes in shops.

The owner of leading brands including Marlboro and Chesterfield believes the rule is anti-competitive. The group may also sue the UK if the government goes ahead with a plan to introduce a similar clampdown.

The restriction on displaying tobacco products on shelves came into force in Ireland on July 1 and a similar prohibition is being discussed in the UK. If passed, a ban would become law in 2011. The governments of both countries believe forcing shops to stock cigarettes under the counter, where they cannot be seen by consumers, is an effective measure to combat the problem of teenage smoking.

Similar bans have previously been introduced in Canada and Iceland but critics of such schemes claim they do little to discourage young people from the habit.

Philip Morris, which is being advised on the case by Matheson Ormsby Prentice, an Irish law firm, claims that the ban is anti-competitive because it favours those manufacturers who already have a large market share through the sale of cheaper brands. One insider said: “The legislation just serves to hurt genuine retailers and favour smugglers and counterfeiters to sell their illegal products.”

The US company will argue that if retailers are unable to display cigarettes, smokers are more likely to stick with the brands they currently buy. Critics fear that a ban on being able to display or advertise tobacco products in stores will force many smaller shops out of business.

It is estimated tobacco sales can account for as much as a third of turnover at a typical small retailer. Complying with a ban is expected to cost between £2,000 and £5,000 per shop, according to the Tobacco Retailers Alliance.

The trade body thinks that smokers would be more likely to buy cigarettes from supermarkets and other big retailers, or would encourage the trade of illegally imported cigarettes.

source: http://business.timesonline.co.uk/

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