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Need for more co-operation in illegal trade battle

| May 28, 2015

In a note posted on its website today, British American Tobacco says that it is reiterating the need for greater understanding of the illegal tobacco trade and the criminals behind it, and the need for greater co-operation and collaboration in fighting this trade.

‘This call to action launches as part of a new campaign, developed by British American Tobacco, to raise awareness of the facts around the illegal tobacco trade to coincide with the WHO’s World No Tobacco Day (WNTD) on Sunday 31 May,’ the note said. [The illegal tobacco trade is the WNTD’s focus this year.]

‘The nature and scale of the illegal tobacco trade and the approaches required to tackle it vary from country to country. However, if all of the different organisations involved in the illegal tobacco trade around the world were combined into one conglomerate, they would become the third largest international tobacco company by volume.’

Commenting on the campaign, which uses a fictional tobacco conglomerate, International Tobacco Smugglers Inc, Jerome Abelman, director of legal and external affairs at BAT, said the impact of the illegal tobacco trade might not be felt as immediately and directly as were the impacts of other crimes, but the consequences were very real. “By some estimates, illegal tobacco costs governments around the world $40-$50 billion each year in unpaid tobacco taxes – the equivalent to approximately one $110 million bank robbery every day of the year – and sales of illegal tobacco are reported to fund human trafficking, drug and arms trades as well as terrorist organisations,” he said.

“The amount of illegal tobacco is much more significant than is generally realised: an estimated 400-600 billion cigarettes, the equivalent of approximately 10-12 percent of world consumption. It is a transnational, multi-faceted issue and one that requires a collaborative approach to tackle it, from governments and law enforcement agencies with whom we work in partnership to retailers and customers who can arm themselves with the facts.”

BAT said that the nature of the illegal tobacco trade varied from country to country but the causes were similar. These included large excise increases that caused price differences between countries, and ineffective law enforcement measures.

“We are an important part of the solution and we invest over $75 million each year to fight the illegal tobacco trade,” said Abelman. “British American Tobacco has dedicated Anti-Illicit Trade teams across the globe that work with government agencies, including police and customs officials, with the aim of bringing criminals who are involved in the illegal tobacco trade to justice. We also support the FCTC [the WHO’s Framework Convention on Tobacco Control] Protocol to Eliminate Illicit Trade in Tobacco Products, but this treaty will only be effective if it is consistently applied and enforced by joined up governments.”

Practical guide to safe use of flavors in e-cigarettes

| May 28, 2015

What is being described as the first practical guide to ensure the safe use of flavors in electronic cigarettes has been published by Nicoventures, a nicotine company established by British American Tobacco (Regulatory Toxicology and Pharmacology DOI: 10.1016/j.yrtph.2015.05.018).

A BAT press note said today that while electronic cigarettes and other vapor products delivered nicotine without smoke toxicants, some in the public health community had expressed concerns over the potential health impacts of flavors used in electronic cigarettes. Consequently, the British Standards Institute (BSI) was developing product standards for electronic cigarettes that would provide guidance on manufacturing, testing and safety requirements.

These guidelines laid out the “what” (including the toxicological risk assessment of flavors), said Dr. Sandra Costigan, the principal toxicologist at Nicoventures, while the new guide provided the “how”.

The flavors typically used in electronic cigarettes are food grade, which means that they have been generally ingested rather than inhaled. “This means that the data available is oral and there are large data gaps,” said Costigan, who is a member of the BSI steering committee on electronic cigarettes. “Safe to eat is not the same as safe to inhale. “The data gaps need to be filled.

“In the meantime, what are the kinds of data sources, approaches and scientific rationale that will allow us to determine if we can use a flavor and at what level? This guide explains how to do that.”

The first step apparently is to ensure that any flavors are food grade and to screen out any potential carcinogens or respiratory allergens. “At this stage, in the absence of inhalation data we make quite a lot of use of what are called TTCs or Toxicological Thresholds of Concern,” said Costigan. “TTCs are used by agencies like the WHO and FDA and they basically help define how much of something can be used in the absence of other toxicity data. We use TTCs to determine how much of any particular flavor ingredient can be used.

“The next step is to assess the compounds produced as a result of heating these flavor molecules, as it is the ‘vapor’ – i.e. the aerosol produced on heating the e-liquid – that consumers are exposed to, not the e-liquid itself.  Here we are dealing with new compounds and potential thermal breakdown products, rather than ingredients, and so our approach to acceptable levels will be different.

“None of the draft standards and regulations tell us how to do such a risk assessment, and the scientific literature thus far has focused on problems, such as lack of inhalation data, rather than solutions. Ours is the first sensible and practical guide to help actually conduct such a risk assessment on the flavors, based on sound toxicological principles,” said Costigan.

Imperial repairing cyclone damage in Madagascar

| May 28, 2015

Imperial Tobacco’s subsidiary in Madagascar, Soctam, is helping rebuild facilities for a community left badly damaged by recent cyclones.

So far, Soctam has helped to renew and equip educational and medical facilities in Bevilany – a village 200 km from the company’s tobacco production facility in Mahajanga.

In addition, Soctam has supported the creation of wells for drinking water, a new footbridge to improve access and a project to bring electricity to the 15,000 inhabitants.

“With all the recent difficulties endured by communities in Madagascar it is important for us to support villages such as Bevilany, said Soctam’s growing manager Emmanuel Durette.

“We were happy to help with income and food sustainability, access to drinking water, medical care and the redevelopment of educational facilities and infrastructure.”

Anti-trust body clears RAI acquisition of Lorillard

| May 27, 2015

Reynolds American (RAI) and Lorillard said yesterday that the US Federal Trade Commission (FTC) had voted to accept a proposed consent agreement, authorizing RAI to close its proposed $27.4 billion acquisition of Lorillard.

The FTC clearance is subject to certain conditions, most of which the companies had previously agreed to as part of the related divestiture transactions announced in July 2014.

In a story for Bloomberg News, Duane Stanford and David McLaughlin said that the approval by the FTC antitrust officials, who voted 3-2 in favor of the agreement, would create a market where two manufacturers produced about nine out of every 10 cigarettes sold.

They said that RAI’s CEO Susan Cameron aimed to ‘carve out $800 million a year in expenses and turn a profit on the deal within the first year’.

In a statement, the FTC said that it had voted to accept for public comment a settlement with RAI to resolve the likely anticompetitive effects of its proposed acquisition of Lorillard. The settlement would allow the acquisition to move forward subject to large divestitures by the parties to Imperial Tobacco Group.

Under the settlement, RAI would buy Lorillard for $27.4 billion and then immediately divest certain assets from RAI and Lorillard to Imperial in a second, $7.1 billion transaction.

At the end of both transactions, RAI would own Lorillard’s Newport brand, while Imperial would own three former RAI brands, Winston, Kool and Salem, as well as Lorillard’s Maverick and e-cigarette Blu brands, and Lorillard’s corporate infrastructure and manufacturing facility.

In a separate press note, the FCTC said that its order required that RAI divested to Imperial the Lorillard manufacturing facilities in Greensboro, North Carolina, and provided Imperial with the opportunity to hire most of the existing Lorillard management, staff, and salesforce. It required also the newly merged Reynolds and Lorillard to provide Imperial with retail shelf space for a short period, and to provide other operational support during the transition. Its order appointed a monitor to oversee the divestiture.

The FTC said in its statement that it believed that RAI’ proposed acquisition of Lorillard was likely to lessen substantially competition on the US market for combustible cigarettes. It concluded, however, that the parties’ proposed post-merger divestitures to Imperial would be effective in restoring competition to the market and that it therefore approved the divestitures as part of a consent order.

There were two dissenting statements; one by FTC commissioner Joshua D. Wright (https://www.ftc.gov/system/files/documents/cases/150526reynoldswrightstatement.pdf) and one by commissioner Julie Brill (https://www.ftc.gov/system/files/documents/cases/150526reynoldsbrillstatement.pdf)

Meanwhile, RAI and Lorillard said in a note posted on RAI’s website that the closing of the acquisition and related transactions remained subject to certain other conditions described in the Joint Proxy Statement/Prospectus dated December 22, 2014. ‘The remaining significant condition to closure of the transaction is approval from the federal district court overseeing United States v. Philip Morris USA Inc., et al,’ it said. ‘This case was brought by the U.S. Department of Justice in 1999 against several tobacco companies, including R.J. Reynolds Tobacco Company, an indirect subsidiary of RAI, and Lorillard Tobacco Company, a subsidiary of Lorillard, Inc.

‘Under the terms of the court’s remedial order entered in 2006, before R.J. Reynolds can transfer cigarette brands to Imperial Tobacco’s ITG Brands, LLC subsidiary, the court must enter an order finding that ITG Brands intends to and is capable of complying with the court’s remedial order in relation to the cigarette brands that ITG Brands is purchasing. The motion is unopposed, the matter has been briefed, and the court held a hearing with all parties on May 19, 2015.

‘The companies have requested that the court rule expeditiously, and they are confident that the acquisition and related transactions will close by the end of June 2015.’

Romania exports cigarettes to North Korea

| May 27, 2015

Romania exported goods worth €90 million (US$98.2 million) to North Korea in 2014, with cigarettes accounting for €83 million (US$90.5 million) of those exports, according to a Romania Insider story relayed by the TMA.

British American Tobacco, Philip Morris International and Japan Tobacco International did not export any cigarettes to North Korea.

But industry observers said that a Chinese-owned cigarette factory in Buzau, which makes cigarettes under the brand names Golden Monkey and Dubliss, could have exported its products to North Korea.

Thailand looks to raise tobacco-buying age to 20

| May 27, 2015

Increasing to 20 the minimum age for buying cigarettes is one of a number of measures contained in a tobacco-control bill endorsed by Thailand’s cabinet on Tuesday, according to a story in The Bangkok Post.

In a move hailed by anti-smoking activists, the cabinet approved in principle legislation that would outlaw also the sale of individual cigarettes.

In addition, the bill would ban manufacturers and importers from sponsoring social activities and models from promoting tobacco products.

Deputy government spokesman Major General Sansern Kaewkumnerd said on Tuesday that the draft bill would be sent to the Council of State to check that it adhered to guidelines issued by the World Health Organization.

If approved, the bill would replace the current tobacco-control and health-protection laws, which have been in effect since 1992.

Attempts to raise the minimum age of cigarette buyers began in 2011 in a move spearheaded by the Public Health Ministry.

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