The Australian Competition and Consumer Commission is denying authorisation to British American Tobacco, Imperial Tobacco, and Philip Morris to jointly cease supplying retailers or wholesalers they consider to be supplying illicit tobacco.
Between them, these three companies supply well over 90 per cent of the market for tobacco products in Australia, including all of the major brands.
“This kind of interaction between all of the major competitors raises competition concerns, especially in such a highly concentrated market,” ACCC Chairman Rod Sims said.
“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.”
The tobacco companies had submitted that the proposed conduct would reduce retail sales of illicit tobacco in Australia.
They argued 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.
“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 was also concerned that these arrangements would give the tobacco companies a quasi-regulatory role, which may be inconsistent with the World Health Organization Guidelines for implementation of Australia’s obligations under international agreements about tobacco control.
Further information about the application for authorisation is available on the ACCC Authorisations register: British American Tobacco Australia Limited & Ors – Authorisation – A91550