Author: Staff Writer

The funds contributed by four multinational tobacco manufacturers to the EU purportedly to help fight the illicit trade in tobacco products are paid into the EU’s general budget. There is no earmarking of the funds.

This was made clear by the European Commission in answer to two written parliamentary questions by the Irish member of the European Parliament, Nessa Childers.

In a preamble to her questions, Childers said that to address the problem of contraband and counterfeit cigarettes, OLAF had signed legally binding and enforceable agreements with the world’s four largest tobacco manufacturers under which they had agreed to pay a collective total of US$2.15 billion to the EU and countries participating in the agreement, and to support action to prevent their products from falling into the hands of criminals.

‘Does the Commission not believe this extensive financial relationship creates a potential conflict of interest between OLAF as the EU’s anti-fraud office, the Commission as the regulator, and the tobacco industry?’ Childers asked.

‘What safeguards does the Commission have in place to prevent a conflict of interest in this case?’

In answer, the Commission said that the agreements were between the tobacco manufacturers on the one hand and the EU and the participating member states on the other.

The funds received by the EU in accordance with the agreements amounted to just under 10 per cent of the total and were paid directly into the general budget of the EU in line with the principle of universality. There was no earmarking of the funds.

The remaining funds received were transferred to the participating member states.

There was no financial relationship and no conflict of interest between OLAF and the tobacco manufacturers, the Commission said.

At least two other questions arise from this. How much of the money provided by the manufacturers goes towards the fight against the illicit trade in tobacco products?

Why is the smoker being taxed in this way – given that it is the smoker who ultimately pays the levy?

Thailand is aiming to become the country with the largest cigarette-pack health warnings, according to a story in The Nation.

At present, its warnings are said to take up 55 per cent of a pack’s surface area, but that is set to rise to 85 per cent, the country’s Public Health Minister, Pradit Sinthawanarong, said.
After a meeting with the national tobacco control board, Pradit said the board had agreed to issue a ministerial declaration increasing the size of the warnings.

The declaration will come into effect 180 days after publication in the Royal Gazette.
The warnings will include 10 pictures depicting laryngeal cancer, heart failure, stroke, oral cancer, sexual dysfunction, lung cancer, emphysema and chronic bad breath.

Warnings were said to cover 82.5 per cent of the pack in Australia, 80 per cent in Uruguay and Sri Lanka, and 75 per cent in Brunei and Canada.

Corporate Europe Observatory (CEO) has submitted a formal complaint to the EU Ombudsman about the European Commission’s handling of what has become known as ‘Dalligate’.

The former European Commissioner for health and consumer affairs, John Dalli, resigned in October in circumstances that were examined by OLAF, the European Anti-fraud Office, and that are still being investigated. Dalli strenuously denies any wrongdoing.

In its complaint, CEO alleges that the Commission has been guilty of secrecy, the selective release of documents and failure to fulfill its obligations under EU transparency legislation.

On 26 October 2012, CEO requested access to “all documents related to Commissioner Dalli’s resignation over the issues covered in the OLAF investigation, including all minutes (and other notes) of meetings, all correspondence (including by email), both internal and external, and any other documents held by the Commission on these matters’.

The CEO alleges that the Commission has refused to disclose the most important of these documents.

And it alleges that ‘the Commission has unduly refused access to documents, failed to provide clarity about which documents falling under the scope of request actually exist and used delay tactics’, in what amounts to ‘a pattern of serious maladministration’.

The incidence of smoking in Slovenia is declining but nearly a quarter of the country’s population still smokes, according to a story in Slovenska Tiskovna Agencija quoting figures from the latest survey by the Public Health Institute (IVZ).

The survey, which was conducted during 2011 and 2012 among 7,500 respondents between the ages of 15 and 64, found that 24 per cent of Slovenians smoke, a figure that includes 27 per cent of men and 21 per cent of women.

Helena Koprivnikar, of IVZ, said that almost 80 per cent of smokers smoked every day and that 93 per cent of smokers consumed only one kind of tobacco product.

Ninety six per cent of smokers consume factory-made cigarettes, smoking on average almost 16 a day, nine per cent roll their own cigarettes, and just above one per cent smoke cigars.

A member of the European parliament has asked whether newly imposed limits by Spain on the import of cigarettes across the La Línea de la Concepción border with Gibraltar amount to discrimination.

In a written question to the European Commission, the English MEP, Sir Graham Watson, said that, under the rules, introduced at the start of the year, people living within a radius of 15 km of the border – residents of Campo de Gibraltar in southern Spain, who include a sizable number of British people – would be allowed to bring only 80 cigarettes per month across the border, instead of 200 cigarettes.

Citizens who resided in all other parts of Spain would continue to be allowed to cross the border with 200 cigarettes, he said in the preamble to his question.

The MEP asked whether the Commission was aware of this new restriction.

‘Whilst Article 8(2) of the directive [directive 2007/74/EC, which lays down quantitative limits for alcohol and tobacco products exempt from VAT and excise duty] allows Member States to implement lower quantitative limits on tobacco products for non-airline travellers, does the Commission consider such a limited geographical restriction, confined to residents of Campo de Gibraltar, to be:

* in line with the directive, which refers to restrictions applied to Member States as a whole?

* discriminatory against residents of Campo de Gibraltar?

* indirectly discriminatory against the sizable minority of non-Spanish EU citizens and cross-border workers in the area?’ he asked.

Philip Morris USA’s cigarette shipment volume during the 12 months to the end of December, at 134,874 million, was down by 0.2 per cent on that of the 12 months to the end of December 2011.

Marlboro shipments were down by 0.7 per cent to 116,377 million while shipments of other premium brands were down by 8.0 per cent  to 8,629 million.

Discount brand shipments were increased by 15.3 per cent to 9,868 million.

In reporting its full-year and fourth-quarter results yesterday, Altria said that, after adjusting for an extra shipping day and changes in trade inventories, PM USA’s 2012 volume was essentially unchanged; while total industry volume was down by about three per cent.

PM USA’s share of the retail cigarette market during the year to the end of December, at 49.8 per cent, was up by 0.8 of a percentage point.

Marlboro’s share was up by 0.6 of a percentage point to 42.6 per cent while that of the company’s other premium brands was down by 0.3 of a percentage point to 3.4 per cent.

The company’s discount-brands share was up by 0.5 of a percentage point to 3.8 per cent.

Middleton’s cigar shipments during the year to the end of December, at 1,237 million, were down by 0.7 per cent on those of the year to the end of December 2011.

Shipments of Black & Mild were down by 0.6 per cent to 1,219 million while shipments of other brands were down by 10.0 per cent to 18 million.

The company’s share of the domestic retail cigar market was increased by 0.5 of a percentage point to 30.2 per cent, with Black & White’s share was up by 0.5 of a percentage point to 30.0 per cent and the share of its other brands was unchanged at 0.2 per cent.

Meanwhile, PM USA and USSTC’s combined smokeless product shipments during the year to the end of December, at 763.3 million, were increased by 3.9 per cent on those of 2011.

Copenhagen shipments were increased by 10.8 per cent to 392.5 million while Skoal shipments were up by 0.6 per cent to 288.4 million.

Other-brand shipments were down by 12.0 per cent to 82.4 million.

PM USA and USSTC’s combined share of the retail market in smokeless tobacco increased by 0.3 of a percentage point to 55.4 per cent.

Copenhagen’s share was increased by 2.2 of a percentage point to 28.4 per cent while Skoal’s share was down by 0.6 of a percentage point to 22.2 per cent.

The share of the companies’ other brands was down by 1.3 percentage points to 4.8 per cent.

Altria’s full-year reported diluted earnings per share grew by 25.6 per cent to $2.06 while its adjusted diluted earnings per share increased by 7.8 per cent to $2.21.

“Altria delivered strong results and returns for its shareholders in 2012,” said Marty Barrington, Altria’s chairman and CEO. “Altria grew its full-year adjusted diluted earnings per share by 7.8 per cent behind the business performance of our operating companies, complemented by higher earnings from our equity investment in SABMiller.

“Despite a continuing, challenging external environment, our tobacco operating companies’ premium brands had an excellent year as our companies continued investing in their long-term success. These companies grew their adjusted operating companies’ income and gained retail share in cigarettes, cigars and smokeless tobacco for the full year of 2012.”