BTI British American Tobacco PLC

Cigarettes will be sold in uniform packs with no logos, and bearing graphic health warnings

By Saabira Chaudhuri 

LONDON -- A legal challenge by the tobacco industry against plain packaging in the U.K. has failed, opening the door for cigarette packs to be stripped of branding across the country and setting a precedent for other countries in Europe.

Starting Friday, any cigarettes produced for sale in the U.K. will have to follow plain-packaging rules under which cigarettes will be sold in uniform packs stripped of distinctive logos and colors, and adorned with graphic health warnings. Companies will be granted a grace period to sell their current stocks.

The U.K. parliament in March voted to ban branding on cigarette packs starting in May 2016. In response, the tobacco industry mounted a legal challenge, with British American Tobacco PLC, Imperial Brands PLC, Japan Tobacco International and Philip Morris International Inc. filing suits with the High Court in London last summer alleging that plain packaging violates U.K. and European law.

"Clearly, we are disappointed with today's decision, as we believe our legal arguments are strong," said a spokesman for Imperial. He said the company has been preparing for plain packaging for three years and is "confident that our brands and product portfolios are well positioned."

Tobacco companies now need to be granted permission from the U.K. High Court to appeal the judgment.

"We believe that the judgment contains a number of fundamental errors of law and we are applying for leave to appeal the decision," a BAT spokesman said.

Philip Morris, however, has decided not to appeal the decision, said General Counsel Marc Firestone, adding that the company will focus its energy on developing reduced-risk products.

The High Court ruling comes just days after the European Court of Justice upheld the 2014 Tobacco Products Directive, which among other things paved the way for countries to put in place plain-packaging laws.

"This landmark judgment is a crushing defeat for the tobacco industry and fully justifies the government's determination to go ahead with the introduction of standardized packaging," said Deborah Arnott, chief executive of antismoking body Action on Smoking and Health.

Matthew L. Myers, president of the Washington-based Campaign for Tobacco-Free Kids, described the ruling as a "tremendous victory for public health," adding that it "represents a critical step in the growing movement for countries to include plain packaging as part of their comprehensive approach to reducing tobacco use."

BAT argued that the judgment isn't a precedent for other governments to introduce plain packaging. "No two jurisdictions are the same and any government considering plain packaging will need to ensure that it complies with the fundamental rights of businesses relevant to that country, and be mindful of the World Trade Organization dispute on plain packaging, which is still ongoing," said the spokesman.

The governments of Indonesia, Cuba, the Dominican Republic and Honduras have filed a challenge with the World Trade Organization against Australia's plain-packaging laws. A decision or further update is expected in the second half of the year.

Governments in a string of countries have been turning to plain packaging to discourage smoking. France recently passed legislation to require plain packaging, and that law also goes into effect Friday. Australia, Ireland and Hungary have also passed plain-packaging laws. A BAT lawsuit against Australia in 2012 was unsuccessful. A total of 20 countries are looking at plain-packaging regulation, according to Wells Fargo analyst Bonnie Herzog. The U.S.'s free-speech laws make plain-packaging legislation all but impossible there.

The tobacco industry argues that plain packaging doesn't discourage young people from smoking, encourage existing smokers to quit or increase the effectiveness of health warnings.

Public-health officials counter that brand identity -- which is communicated largely through branded packs -- plays a major role in recruiting children and young people as smokers, and that research shows that dull, standardized packs are less attractive to youngsters.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

(END) Dow Jones Newswires

May 20, 2016 02:48 ET (06:48 GMT)

British American Tobacco (NYSE:BTI)
Historical Stock Chart
From Mar 2024 to Apr 2024

British American Tobacco (NYSE:BTI)
Historical Stock Chart
From Apr 2023 to Apr 2024