11A.3Analysis of major industry arguments against plain packaging

Last updated: November 2018

Suggested citation: Scollo, MM, Greenhalgh, EM, & Vittiglia, A. InDepth 11A.3 Analysis of major industry arguments against plain packaging. In Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2018. Available from: http://www.tobaccoinaustralia.org.au/chapter-11-advertising/11a-3-analysis-of-major-industry

Industry arguments against the introduction of plain packaging have included firstly that there is a lack of evidence that plain packaging would result in reduced smoking; secondly that it would be difficult and time-consuming for retailers in small convenience outlets, resulting in errors and delays in serving likely to result in loss of sales to supermarkets and other outlets able to sell at discounted rates; thirdly that such legislation would breach international agreements concerning intellectual property; and finally that it would facilitate illicit trade.

Health groups argue that the harmfulness and addictiveness of tobacco products is sufficient to warrant restriction of all forms of promotion and that packaging is clearly a form of promotion and therefore should not be allowed. Counter-arguments to each of the industry arguments are outlined below.

11A.3.1 Doesn’t work 

The tobacco industry consistently argues that there is no evidence to demonstrate that plain packaging is an effective tobacco control strategy. 

The majority of the research purporting to show the ‘ineffectiveness’ of plain packaging has been conducted and funded (directly or indirectly) by the tobacco industry.1 Since its implementation, the tobacco industry has released a series of reports claiming that there has been no decline in the prevalence of smoking among either adults or children, and no decline in sales of tobacco products in Australia (see Cancer Council Victoria’s critiques of these reports here). Journalists and lobby groups with links to the tobacco industry have also published newspaper articles and YouTube advertisements claiming that plain packaging has failed.2, 3

While the full effect of the tobacco plain packaging measure is expected to be realised over time, the evidence so far suggests that plain packaging has contributed to the decline in smoking prevalence since its implementation in 2012.4 There is also evidence that plain packaging has contributed to reducing the attractiveness and appeal of tobacco products; increasing the noticeability and effectiveness of health warnings; and reducing misperceptions about the relative harmfulness of products (see Section A11.9).

11A.3.2 Inconvenience, errors and lost trade for retailers 

Prior to the implementation of plain packaging, the Alliance of Australian Retailers stated that the changes would make it more time-consuming for retailers to find cigarette packets. The basis of these claims was the findings of a survey of a very small number of retailers, apparently fewer than ten.5 With an erosion of convenience to the purchaser, the Alliance feared that more customers would turn to supermarkets and other retailers able to sell large volumes of stock at discounted rates.6  

Research conducted both before and after the implementation showed that retailers quickly gained experience with the changes, returning to a similar product retrieval time shortly after implementation.7, 8 Another study found that plain packaging actually resulted in modest gains in retailer efficiency.9 While smokers in Australia have been shifting their custom from small retailers to large supermarkets in the wake of large increases in taxes and prices, there was no evidence of an acceleration of that trend after the introduction of plain packaging.10, 11 (see Section 11A.9 and Cancer Council Victoria’s fact sheet)

11A.3.3 Acquisition of intellectual property 

One of the most vocal opponents of the proposed legislation in Australia was Tim Wilson at that time employed at the Institute of Public Affairs. Wilson received widespread media coverage for his views that plain packaging legislation was equivalent to acquiring the intellectual property of tobacco companies and hence in contravention of Section 51 (xxxi) of the Australian Constitution and various international conventions and trade agreements.12 He argued that the Government would be forced to compensate tobacco companies up to $A3 billion dollars annually.13 The $A3b mentioned in Wilson's report appears to be very roughly calculated based on one-third of the amount of total turnover of sales of tobacco products in Australia including revenue from excise and customs duty and goods and services tax.12

Wilson's views about Government liability were quickly dismissed by senior law experts. Professor Mark Davison of Monash University said this line of argument was

'... so weak, it's non-existent. There is no right to use a trademark given by the World Trade Organization agreement. There is a right to prevent others using your trademark but that does not translate into a right to use your own trademark.'

Davison cited in article by Berkovic, The Australian 2010 14

In a seminar organised by the Intellectual Property Research Institute of Australia, Professor Davison comprehensively rebutted Wilsons' arguments15 noting that countries were permitted to amend their intellectual property laws to protect public health. Professor Davison argued that plain packaging does not equate to acquiring the intellectual property of tobacco companies, because the Australian Government does not intend to use the logos and tobacco companies will still maintain full rights to their logos and brand imagery; they will simply no longer be able to use these marketing tools on cigarette packages.16

The legislation provided that in the event (which the Government considered unlikely) that preventing the use of trademarks was found to be contrary to Section 51 (xxxi) of the Constitution, then trademarks would be allowed but would have to conform to restrictions (for instance on size and placement) that would be specified in regulations.

On 15 August 2012 the High Court of Australia indicated in its brief 'pronouncement of orders' that the legislation was not contrary to the Constitution.17 The detailed reasoning for the decision released by the Court on the 5 October 2012 indicated that the legislation did not result in an acquisition of any property to which section 51(xxxi) of the Constitution applies and that it was within the legislative competence of the Parliament.18

Additional legal challenges by the tobacco industry have been similarly unsuccessful. On 17 December 2015, the Arbitral Tribunal dismissed Philip Morris Asia’s challenge to Australian plain packaging laws under a 1993 bilateral investment treaty between Australia and Hong Kong. PMA argued that Australia’s plain packaging legislation expropriates its intellectual property. The Tribunal agreed with the Australian Government’s counter argument that the initiation of the proceedings constituted an ‘abuse of rights’.19  

On 28 June 2018, the World Trade Organization (WTO) dismissed claims against Australian plain packaging laws bought on by Cuba, Dominican Republic, Honduras and Indonesia.20 The panel rejected a large number of arguments made by the complainants on the effects of tobacco plain packaging on the tobacco industry’s intellectual property. The panel confirmed that the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement does not provide for a right to use a trademark. Honduras has since appealed the decision.21  

11A.3.4 Facilitation of illicit trade

Several tobacco companies have argued that plain packaging facilitates illicit trade and increases use among minors.22  

As is discussed in full in Chapter 13, Section 13.7, reports funded by the tobacco industry attempting to quantify the extent of illicit trade23-31 appear to have generated exaggerated estimates that do not correspond with estimates derived from Australian Government surveys32-37 or assessments by Australian Government revenue collection agencies38—see Section 13.7.4.8. A review of literature concerning illicit trade in tobacco products conducted by the International Agency for Research on Cancer39 found that illicit trade tended to be more common in countries with high levels of international trade, lax customs surveillance and where political instability facilitates corruption among government officials and reduces the probability of detection—see Section 13.7.2. None of these conditions apply in Australia. 

Although the tobacco industry continues to fund reports purporting to show very high levels of illicit tobacco use in Australia, data derived from sources independent of the tobacco industry suggests relatively low and stable levels of use, both prior to and since the implementation of plain packaging (see Cancer Council Victoria’s fact sheet). The draft legislation released by the Australian Government40 and the legislation as passed into law41 specified that anti-counterfeiting measures would be allowed on packs including alphanumeric codes and covert markings. Forensic-level differentiation of the content of the cardboard and other material is not prohibited. The Australian Government has also increased penalties for those found guilty of engaging in illicit trade in tobacco.42  

Relevant news and research

For recent news items and research on this topic, click here.(Last updated April 2019)

 

References 

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14. Berkovic N. Legal experts back Canberra. The Australian, 2010; 30 April. 

15. Davison M. Banning tobacco logos: A look at the issues, 2010, Intellectual Property Research Institute of Australia University of Melbourne: Melbourne. Available from: http://www.ipria.org/events/seminar/2010/Presentations/Mark%20Davison%20-%20Tobacco%20Presentation%20%5BCompatibility%20Mode%5D.pdf.

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17. JT International v Commonwealth of Australia; British American Tobacco Australasia Limited & Ors v Commonwealth of Australia,. 2012. Available from: http://www.hcourt.gov.au/assets/publications/judgment-summaries/2012/projt-2012-08-15.pdf.

18. JT International SA v Commonwealth of Australia. 43 (5 October 2012). High Court of Australia, 2012. Available from: http://www.austlii.edu.au/au/cases/cth/HCA/2012/43.html.

19. McCabe Centre for Law and Cancer. Investment tribunal dismisses Philip Morris Asia’s challenge to Australia’s plain packaging. UN Tobacco Control, 2016. Available from: http://untobaccocontrol.org/kh/legal-challenges/investment-tribunal-dismisses-philip-morris-asias-challenge-australias-plain-packaging/

20. Liberman J. Australia delivered third resounding legal victory in plain packaging laws. McCabe Centre for Law & Cancer, 2018. Available from: http://www.mccabecentre.org/blog/wto-panel-report.html

21. No authors listed. Honduras appeals WTO landmark ruling on Australia's plain tobacco packaging. Reuters, 2018. Available from: https://www.reuters.com/article/us-wto-tobacco-honduras/honduras-appeals-wto-landmark-ruling-on-australias-plain-tobacco-packaging-idUSKBN1KA1T5

22.   Plain packaging. London: British American Tobacco 2018. Viewed 2 August 2018. Available from: http://www.bat.com/plainpackaging

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41. Tobacco Plain Packaging Act. No. 148 2011; Available from: http://www.comlaw.gov.au/Details/C2011A00148

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