Philip Morris says it will seek billions of dollars in compensation from the Australian government in response to a planned ban on any promotional material on cigarette packs. As from January 2011 the Australian government wants to ban logos, branding, colors and marketing texts on packs of cigarettes - Philip Morris, the world's second largest tobacco company warned that it will seek billions of dollars in compensation. As from January 2011 packs will be olive-brown in color with regular fonts and large graphic images that warn of the dangers of smoking.
Dark-olive brown, according to researchers, is more likely to put off non-smokers from ever starting, and has the lowest appeal for smokers.
Governments and health authorities that are considering similar moves around the world will be keeping a close watch on developments in Australia. US authorities announced last week the introduction of some very graphic images that will appear on packets of cigarettes.
In the UK, the government says it would like to introduce legislation banning shops from openly displaying tobacco products.
Philip Morris is accusing the Australian government of planning an illegal move which breaches the company's intellectual property. A notice of claim has been served - Philip Morris and the Australian government have three months to liaise and negotiate before it goes to court.
Philip Morris has warned that if no common ground is found during those three months, the company will seek compensation "the damage will potentially amount to billions of Australian Dollars," a spokesperson told Dow Jones Newswires.
Nicola Roxon, Health Minister said that there is no way the Australian government will be scared off by legal threats.
Last year Philip Morris had 37.5% of Australia's cigarette market.
BAT (British American Tobacco) PLC is spending heavily on an advertising campaign in response to the new proposed laws.
On being asked at a press conference what the government's reaction is to legal action by Imperial Tobacco, Minister for Health and Ageing, Nicola Roxon said:
"Look, we said from day one, when we released to the public our plain-packaging plans for selling cigarette and tobacco in these very drab packets, with very clear health warnings that we were determined, as a government, to do everything we could to stop or reduce the harms caused from tobacco-related illnesses.
Fifteen thousand Australians still die every year from tobacco-related illnesses, and you can come any day you like to this hospital and see people who are getting treatment at great expense to taxpayers from illnesses that are caused by tobacco.
So, our government is determined to take every step we can to reduce the harm caused by tobacco. We won't be deterred or intimidated by tobacco companies making threats or taking legal action.
We believe we're on very strong ground. This is a world first, so, of course, you would expect tobacco companies to want to fight what our government is doing. But I think the Australian public expects us to put the interests of the public and, particularly, the health interests of the public, before the interests or profits of tobacco companies."
Written by Christian Nordqvist