Tobacco firms line up £500m claim over plain packs

Supporters of 'standardised packaging' say it will remove one source of advertising. Picture: Jane Barlow
Supporters of 'standardised packaging' say it will remove one source of advertising. Picture: Jane Barlow
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THE tobacco industry is ready to sue the Scottish Government for up to £500 million in damages if plans to introduce plain packaging for cigarettes go ahead.

The Scotsman has learned the figure has been privately briefed to MSPs by tobacco giant Philip Morris, based on the loss of intellectual property rights.

While the firm will not publicly threaten legal action, court cases are under way in Australia, where plain packaging has been introduced, making the prospect of similar action in Scotland “likely”, according to company sources.

But the Scottish Government insists it will bring forward legislation for plain packaging, despite the possibility of legal action. Scotland has already led the way in the UK with moves such as banning smoking in public buildings and introducing minimum pricing for alcohol.

The £500m figure has been revealed as Philip Morris, whose brands include Marlboro, publishes its evidence to the UK government’s review into plain packaging, in which it claims the move has no impact on smoking levels, based on evidence from Australia, and has led to an increase in black-market tobacco.

However, supporters of plain packaging claim its introduction will reduce smoking by removing a means of advertising from the tobacco companies.

They also point out Scotland spends about £500m on tobacco-related health problems.

It is understood Philip Morris and other tobacco companies based their case on legal opinion given by former advocate general for Scotland Lord Davidson, who argued that plain packaging contravened intellectual property rights.

He said the Scottish Government would have to pay substantial compensation to tobacco companies, due to a deprivation of property under Article 1 of Protocol 1 of the European Convention on Human Rights, and similarly under Article 17 of the European Union Charter.

The figure of £400-500m was arrived at by Philip Morris as Scotland’s share of the total liability estimated for the UK by Citigroup in 2008.

The Scottish Government has committed to introduce standardised packaging for tobacco products – commonly referred to as plain packaging – and is expected to legislate in the 2014-15 parliamentary session.

Public health minister Michael Matheson made it clear he wanted Scotland to lead the way with a measure that Prime Minister David Cameron has been reluctant to introduce in England.

He said: “We are determined to see Scotland remain at the forefront of countries committed to bold action to reduce the harm caused by tobacco. The necessary legislation is likely to be passed by the UK government, after the Scottish Parliament last week unanimously backed a legislative consent motion allowing them to do so.”

The Australian government last year won a legal battle with the tobacco companies on plain packaging, but it is facing challenges through the World Trade Organisation.

Mr Matheson said he was confident the Scottish Government could successfully fight any legal challenge, despite the advice given by Lord Davidson.

He said: “We would be very confident of defending any legal action from tobacco companies, having done so successfully on every previous occasion that they have taken legal action against the Scottish Government. We also note Australia has had plain tobacco packaging in place for over a year.

“To build a generation free from tobacco, it is necessary to restrict the imagery and designs that could pull in another generation to use these addictive and lethal products – and no amount of sabre-rattling from the tobacco industry will deter us from striving to achieve that.”

However, some in Holyrood urged caution.

Scottish Conservative health spokesman Jackson Carlaw said: “Reducing the number of new smokers and supporting existing smokers to give up rightly remains a priority for government and the health service.

“However, we remain unconvinced by the arguments made in favour of standardised packaging of tobacco products. While the benefits would, at best, be difficult to quantify, there would also have to be consideration of the implications for cross-border trade and the possible legal impact of such a policy.”

He added: “It would be worthwhile to establish the effectiveness of these measures while monitoring the introduction of standardised packaging in Australia and the impact it has had there.”

Supporters of plain packaging said Scottish ministers should not allow themselves to be bullied by the tobacco industry.

Scottish Labour health spokesman Neil Findlay said: “Public health initiatives should not be held to ransom by the commercial interests of the tobacco giants, so I would hope threats from them wouldn’t stop legislation from being passed to bring in measures that reduce the number of people smoking.

“The health and wellbeing of Scots should be the primary consideration.”

Scottish Lib Dem leader Willie Rennie said: “I hope the Scottish Government are not intimidated by these bullies. On the one hand the industry say plain packaging won’t work, then on the other threaten to sue the government because of it. I tend to think the stronger the opposition from the smoking industry, the greater the benefits will be to our health.”

A Philip Morris spokesman said: “Since plain packaging was introduced, Australians are smoking just as much as before and the black market is booming. All the evidence to date suggests that if plain packaging was introduced in Scotland it would not reduce smoking rates, would grow the already thriving black market, and would cost Scottish taxpayers hundreds of millions of pounds in lost revenue.

“With the Australian government reviewing the effectiveness of plain packaging towards the end of 2014, the Scottish Government should follow the expert advice emerging from Australia and wait for the outcome of that review rather than prejudging it.”