Plans to cease tobacco supply to suspected illicit traders questioned

The ACCC is proposing to deny authorisation to British American Tobacco, Imperial Tobacco and Philip Morris to jointly halt tobacco supply to retailers or wholesalers they believe are supplying illicit tobacco.

The three companies said they were in a unique position to take coordinated action against those retailers and wholesalers selling black market tobacco.

“We believe that removing the ability of retailers and wholesalers to acquire and supply legal tobacco would be a strong disincentive to trade in illicit products,” they said.

In December, the ACCC said it considered that having the three dominant tobacco companies working together, sharing information and making decisions about whether or not to supply particular retailers raised competition concerns.

“The ACCC is concerned about the potential for the sharing of information broadly, and that, for example, the proposed arrangements could be used to selectively target retailers that stock competing brands,” ACCC Chair Rod Sims said. “This could result in detriment to businesses that may be wrongly or mistakenly subject to a joint decision of the applicants to cease supply, without any opportunity for independent review of that decision.

“While we agree that reducing illicit tobacco sales is in the public interest, we are not satisfied these proposed arrangements would reduce trade in illicit tobacco sufficiently to offset the likely detriments.”

The tobacco companies say they would consider the detail and implications of the ACCC’s draft determination and were hopeful the commission would reconsider the move.

“In the meantime, the industry will continue to work with all parties with an interest in successfully combating these criminal activities,” the companies said. “Ignoring the problem will only see the use of illicit tobacco continue to grow.”

The ACCC says it expects to release its final decision next month.

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