British American Tobacco will launch legal challenge over plain packaging in the UK

British American Tobacco has today confirmed it will commence a legal challenge against the UK Government, if the House of Lords supports MPs who today voted to implement plain packaging for tobacco products.

Jerome Abelman, Corporate & Regulatory Affairs Director, said: “This legislation is a case of the UK Government taking property from a UK business without paying for it. That is illegal under both UK and European law.

“Legal action is not something we want to undertake, nor is it something we enter into lightly - but the UK Government has left us with no other choice after running what can only be described as a flawed consultation process. Any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.”

British American Tobacco’s case will highlight that the UK consultation process was flawed. It will also show that plain packaging violates a number of UK, European Union (EU) and international laws, including EU trademark laws, as well as World Trade Organisation rules regarding international trade.

In December 2012 Australia became the first and only country to introduce plain packaging. In July 2013 the UK Government stated it would “wait until the emerging impact of the decision in Australia can be measured” before making a final decision regarding the policy in the UK. Despite now conceding in its own final Impact Assessment that the evidence from Australia still cannot be relied upon, the UK Government has chosen to adopt plain packaging.

In addition, since the introduction of plain packaging in Australia, the illegal tobacco market has grown by over 25% and is now at its highest level in seven years. This increase is now costing the Australian taxpayer Aus$1.1billion per year in lost excise.

Both the UK Government’s final Impact Assessment and HMRC’s Assessment clearly highlight the risk that plain packaging will increase the illegal tobacco market in the UK, particularly among young people who could become “brand loyal” to unregulated illegal tobacco brands. In this final Impact Assessment, the UK Government estimates that the costs associated with increased consumption of non-duty paid and illicit cigarettes, following implementation of plain packaging, will be approximately £340m, although evidence from Australia suggests that the true cost is likely to be significantly higher.

Mr Abelman concluded: “It’s particularly disappointing that the UK Government has ignored over 100 MPs and the many commentators and organisations who have spoken out against plain packaging – instead choosing to go ahead with a measure that could result in it paying costly compensation when there are other alternative approaches shown to be better at addressing the Government’s concerns.”

ENDS

Notes to editors

•  Australia introduced plain packaging in December 2012 and British American Tobacco challenged the measure at the Australian High Court. In that case, the judges’ ruling agreed that brands and trademarks constituted property and through the introduction of plain packaging, that property had been taken.
•  British American Tobacco did not ultimately prevail in Australia due to a unique requirement in the Australian constitution that meant it would only win the case if it could prove the Australian Government had received a benefit by removing its brands. That requirement does not exist in the UK.