Australia upholds tobacco branding ban

Source: FT

By Neil Hume in Sydney

Aug 15th

Australia's High Court has rejected a challenge by the world's biggest tobacco companies which are seeking to overturn a law requiring cigarettes to be sold in plain packaging from the start of December.

The country's plain packaging act, which was approved by parliament last year, requires cigarettes to be sold in drab dark brown packaging without logos but featuring graphic images of smoking-related diseases. Brand names can still be used but only in a standard font, size and position.

British American Tobacco, Imperial Tobacco, Philip Morris International, and Japan Tobacco had argued the world's first plain packaging law was unconstitutional because it amounted to an acquisition of intellectual property without adequate compensation.

But the High Court on Wednesday struck down the challenge, which is being closely followed by several countries, including the UK, that are consulting on whether to ban branding from tobacco packaging.

"The plaintiffs argued that some or all of the provisions of the act were invalid because they were an acquisition of property otherwise than on just terms," the court said in a summary of the decision. "At least a majority of the court is of the opinion that the act is not contrary to section 51 of the constitution."

The High Court will publish its reasons for the decision later in the year. The Labor government had argued that it was not acquiring intellectual property, but preventing tobacco companies from using their brands to promote the products.

Nicola Roxon, Australia's attorney-general, and Tanya Plibersek, health minister, welcomed the decision. "This is a victory for all those families who have lost someone to tobacco-related illness," they said in a statement. "No longer when a smoker pulls out a packet of cigarettes will that packet be a mobile billboard."

The decision, which had been expected by legal experts, does not, however, mark the end of the legal battle over plain packaging. It will also be contested under international trade agreements.

Philip Morris is challenging the law under the 1993 Bilateral Investment Treaty between Australia and Hong Kong. This has led to accusations by Ms Roxon that Philip Morris deliberately transferred ownership of its Australian business from a Swiss parent company to Hong Kong so that it could launch proceedings. Trade complaints have also been filed at the World Trade Organisation.

"We will have to wait to read the court's opinion to fully assess today's [Wednesday's] decision," said Philip Morris. "Regardless, the legality of plain packaging, including whether Australia will have to pay substantial compensation to Philip Morris Asia, remains at issue and will be considered in other ongoing legal challenges."

BAT expressed disappointment at the decision and said the Plain Packaging Act was a "bad piece of law that will only benefit organised crime groups which sell illegal tobacco".

"The illegal cigarette black market will grow further when all packs look the same and are easier to copy", said BAT.