Brussels, 07/08/2001 (Agence Europe) - Less than a month after the rejection of its first complaint (see EUROPE of 19 July, p.7), the European Commission announced on Monday, as we predicted, that it was lodging another case before the American courts against Philip Morris and RJ Reynolds, suspected of being implicated in cigarette smuggling in Europe (see EUROPE of 3 August, p.4). But, this time, it has decided to lodge a complaint not in its own name but on behalf of ten Member States (Italy, Germany, France, Spain, Portugal, Greece, Belgium, the Netherlands, Finland and Luxembourg) and the Community, which should make the case more admissible before the American courts, the Commission hopes.
The manufacturers concerned are accused to violating the American anticorruption legislation, the "Racketeering Influenced and Corrupt Organization Act". The Commission hopes thus to put an end to the black market and secure compensation for financial losses suffered by European countries that do not perceive taxes on cigarettes fraudulently distributed. The loss of revenue, which has not been quantified precisely, is estimated at several billion euro a year. "It is unfortunate that the European Commission has apparently chosen to squander so much time, effort and money on litigating issues that can best be resolved through cooperation and consensual agreement", commented Philip Morris, which has already proposed to the EU to negotiate out-of-court compensation. "We believe this suit is improper and should be promptly dismissed", Philip Morris adds.
The Commission lodged an initial complaint on 6 November 2000, but it was rejected on 17 July by the "US District Court" of New York. Judge Nicholas Garaufis, who did not pass down verdict on the possible responsibility of the tobacco groups, considered not only that the EU had been unable to prove direct injury to its budget, but also that the Member States should not join in a pending case. Even though certain Member States saw their tax revenue fall, the EU budget does not seem to have been directly affected. The "District Court" did, however, reject all other arguments put forward by the defending parties against the action.
"Protecting the financial interests of the European Union and fighting fraud, remains a top priority for the European Commission", said Commissioner Michaele Schreyer, recalling that "the ruling delivered by the US Court on 17 July 2001 contains many positive aspects, which have encouraged us to pursue our legal case against cigarette smuggling".