By Andy Young
The Australian Competition and Consumer Commission (ACCC) has denied authorisation for the three major tobacco companies, British American Tobacco, Imperial Tobacco and Philip Morris, to jointly cease supplying retailers or wholesalers they consider to be supplying illicit tobacco.
The three companies supply over 90 per cent of the tobacco products in Australia, including all major brands, and had applied to the ACCC for authorisation to boycott suspect retailers, arguing that there would be public benefits from increasing the collection of excise from legal tobacco, reducing sales of tobacco without the required health warnings, and benefitting retailers who stock legal tobacco by reducing competition from sales of illicit products.
However, the ACCC rejected the claim, with Chairman Rod Sims saying: “This kind of interaction between all of the major competitors raises competition concerns, especially in such a highly concentrated market.
““The ACCC doesn’t consider that there would be a net public benefit in giving the three dominant tobacco companies immunity for information sharing and joint boycotts of retailers.”
He added: “While any reduction in sales of illicit tobacco is welcome, the ACCC considers that the proposed conduct would have limited effectiveness,” said Mr Sims.
“To the extent that ceasing supply is effective, these companies can already achieve much of this effect by doing this on an individual basis without any requirement for ACCC authorisation.”
The ACCC also said it was concerned that these arrangements would give the tobacco companies a quasi-regulatory role, which may be inconsistent with the World Health Organisation Guidelines for implementation of Australia’s obligations under international agreements about tobacco control.