Shares in FTSE 100 companies British American Tobacco (BAT) and Imperial Tobacco both closed almost two per cent lower as suggestions spread that the UK and other markets could follow suit. The department of health is keeping a close eye on how Australia implements the laws and potential legal challenges from tobacco firms, having closed a consultation on plain packaging last week.
The Australian bill was passed last year but challenged by global tobacco companies on the basis that it was unconstitutional. They could now dispute the ruling by claiming it violates international trade agreements. “Anyone thinking that the tobacco companies will accept that the fight is over would be clearly mistaken,” said Rupert Casey of law firm Macfarlanes. BAT said: “In the UK, plain packaging would constitute a wholesale expropriation of our valuable intellectual property, requiring payment by the government of very significant compensation.”
Australia’s law will force cigarettes to be sold in olive-coloured packets without logos from December. Tobacco’s global giants argue the move will not discourage smoking, but simply drive down prices and increase trafficking.