Brussels, 09/07/2004 (Agence Europe) - As announced (yesterday's EUROPE, p.9), the European Commission and ten Member States (Belgium, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal and Spain) have signed a twelve-year cooperation with Philip Morris International (PMI) to combat future counterfeiting and smuggling of cigarettes. The Commission states it is willing to negotiate similar agreements with other cigarette manufacturers.
According to the terms of the agreement, which puts an end to all litigation between parties, the US cigarette manufacturer undertakes to pay, in twelve years, up to $1.25 billion to the Commission and to the Member States concerned for measures to fight against these illegal contraband and counterfeit activities (including 50% of this sum during the first three years), without counting the payments by Philip Morris should products be confiscated in the European Community. If other Member States including the new Member States sign the agreement then they may also benefit from such payments.
The agreement provides for new procedures to prevent Philip Morris International products from being diverted to contraband channels in Europe and in the world. Philip Morris should: - use its control system to select and monitor clients; - strengthen mechanisms allowing control and follow up of certain packages; - help the EU more in its fight against the illegal trade in cigarettes. The US manufacturer also agrees to continue to limit its sales so that they remain proportional to the legitimate market demand.
The agreement provides for product control procedures to facilitate prosecution by allowing the moment when the authentic products are turned away from authorised sales channels to be determined. Philip Morris International will mark certain packaging with information indicating the intended retail market of sale, and mark "master cases" of cigarettes with machine-scannable barcode labels.
During a press conference, Commissioner Michaele Schreyer and the president of Philip Morris International, André Calantzopoulos, both welcomed the agreement which is a date to be noted and which is a "major step forward in the battle against contraband and counterfeit cigarettes". The European Union and the Member States each year lose hundreds of millions, if not billions, because of contraband and counterfeit, Mr Calantzopoulos said, saying that more than a million packets of counterfeit cigarettes are sold each day in Europe. He said many of the cigarettes are copies of the well-known brand names, mainly Marlboro, and he feels that consumers are being betrayed as they do not get what they are paying for. According to the Commission, the contraband of Philip Morris cigarettes fell considerably in recent years unlike the counterfeit activities which have increased. From 1 to 2% of cigarettes sold on the market in Europe are imitations. "This agreement can only work if it is fully complied with and we trust this will be the case", the Commissioner added.