Anti-smoking groups fear price war on cigarettes
Aug 22, 2007, 16:03
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ANTI-SMOKING groups fear a wave of cut-price cigarettes on the market because the European Commission is attempting to force the State to abolish the minimum prices on packs of 20 cigarettes. The Commission is arguing that the minimum retail prices for a box of 20 cigarettes distorts market competition and only benefits the manufacturers by safeguarding their profit margins. But some anti-smoking groups such as ASH Ireland fear that the tobacco industry would be able exploit the absence of minimum prices. "The reality is that where minimum pricing doesn't exist, the industry manipulates the price and they give special offers to entice people into smoking their products," its chairman Professor Luke Clancy said. Under an agreement reached with the Irish Tobacco Manufacturers' Advisory Committee, the Department of Health has set a minimum price for the sale of 20 cigarettes of about ˆ1.30 before tax. If this minimum price was abolished there are real fears it could lead to a cigarette price war. The Department of Health said the minimum retail price for cigarettes was a very important part of their National tobacco control policy. A spokeswoman for the Department of Health said that, while the tobacco industry could not absorb the taxation increases in large markets, it could do so in much smaller cigarette markets like Ireland. "Taxation alone is not a sufficient mechanism in smaller markets such as Ireland where the tobacco industry may decide to challenge the government's national health measures by absorbing the taxation increases in whole or in part." Mr Clancy was not convinced by the Commission's argument that the Government could reduce the national tobacco consumption by increasing cigarette taxes instead. "You can do a lot with price through taxation but it's not as flexible as they're suggesting," he said. "We think that to have a minimum price limiting the scope of the tobacco industry to manipulate the market is a good thing," said Mr Clancy who added that the Government had to prepare a 'Plan B' which could then be put into action if it lost the case being brought by the Commission in the European Court of Justice. "If minimum pricing goes, how will we guarantee the same thing? It'll be much more difficult but we should be ready with alternative strategies." The European Commission is also taking similar legal proceedings against a number of other EU countries. The Office of Tobacco Control said it would be very concerned at any decision which would make cigarettes much more accessible to young children. "Price is probably one the most effective instruments in tackling both tobacco uptake by children and then consumption by adults," a spokeswoman said. Around 77pc of the price of a pack of 20 cigarettes is due to taxation, so the tobacco industry's ability to cut cigarette prices may be limited. The Government is fighting the Commission's case on the grounds that minimum prices for cigarettes are a legitimate policy tool that is needed to protect human health.
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