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Big tobacco stopped from punishing illicit retailers

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An illegal tobacco bust in Campsie, in Sydney’s western suburbs. Source: News.com

Tobacco companies eager to stamp out bootleg cigarette sales will not be allowed to take their own action against retailers found in breach of the law.

The Australian Competition and Consumer Commission (ACCC) today announced a draft determination proposing to deny authorisation to British American Tobacco, Imperial Tobacco, and Philip Morris to stop supply to retailers found to be selling illicit tobacco products, due to competition concerns.

ACCC chairman Rod Sims said the national watchdog was concerned about “the potential for the sharing of information broadly”, and that the co-operative scheme could be used to target retailers selling competing brands.

“This could result in detriment to businesses that may be wrongly or mistakenly subject to a joint decision of the applicants to cease supply, without any opportunity for independent review of that decision,” he said.

“While we agree that reducing illicit tobacco sales is in the public interest, we are not satisfied these proposed arrangements would reduce trade in illicit tobacco sufficiently to offset the likely detriments.”

In a joint statement, each of the major tobacco suppliers voiced their disappointment with the decision, which will be passed down in February next year.

British American Tobacco Australia Limited (BATA), Imperial Tobacco Australia Limited (ITA) and Phillip Morris Limited (PML) referred to recent Australian Federal Police concerns that illegal tobacco was related to organized crime and terrorist activity.

”The three tobacco companies are in a unique position to take coordinated action against those retailers and wholesalers who sell black market tobacco,” the companies said.

“We believe that removing the ability of retailers and wholesalers to acquire and supply legal tobacco would be a strong disincentive to trade in illicit products.

“We will carefully consider the detail and implications of the ACCC’s draft determination and are hopeful that the Commission will reconsider the application, as in our view, it would provide a net public benefit.

“In the meantime, the industry will continue to work with all interested parties with an interest in successfully combatting these criminal activities.

“Ignoring the problem will only see the use of illicit tobacco continue to grow.”

KPMG analysts reported that in 2015, 14 per cent of all tobacco consumed in Australia was illicitly sourced, equating to one in every seven cigarettes.

Australasian Association of Convenience Stores CEO Jeff Rogut said his own organization had supported the proposal by the major cigarette companies as part of a raft of measures that would be required to combat the sale of illicit tobacco, in order to send a strong message to retailers who ignore the law.

“As we’ve seen through many of our retailers intelligence reports, it is rife out there at store level,” he said.

“Border Force do a terrific job at the border, but somehow it’s creeping through and making it to stores.

“The problem is at a store or local level, local councils don’t want to be involved because they don’t have the resources to do it, and the Police are busy with serious crime, as they call it, so this issue falls through the cracks.

“So we supported this action as just another tool to support all the other work that’s been done, not in place of, but in support of [other actions].”

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