Argentine tobacco firms don't deny mkt share deal (fwd)

[Robert Weissman <rob@essential.org>]

Argentine tobacco firms don't deny mkt share deal

By Guillermo Haskel

BUENOS AIRES, Sept 24 (Reuters) - The Argentine units of Philip Morris Cos Inc.
(NYSE:MO - news) and British American Tobacco Plc (quote from Yahoo! UK &
Ireland: BATS.L), while not denying a U.S.
news report that they had agreed to control the local market, said they did
not break the law.

The Los Angeles Times newspaper reported Thursday that British American and
Philip Morris, the two largest cigarette firms
in the world, had joined forces to fix prices and divide their markets in
Argentina, Venezuela and other countries like Costa
Rica.

It added they agreed in 1989 to share the Argentine market, with 50 percent
going for Philip Morris Argentine affiliate
Massalin Particulares and 45 percent for British American's local affiliate
Nobleza-Piccardo .

Jorge Vives, executive vice-president of Massalin, told Reuters earlier this
week: ``There was absolutely no violation of legal
norms on prices and market share.'' Asked if the report were false, he said:
``I don't want to give an opinion on the report.''

Diego Segura, corporate relations manager of BAT local unit Nobleza, said:
``We do not know whether there was an
agreement on prices or market share.''

But he said that, ``All company officials and the firm itself always act not
only within the law, but also within corporate rules
that at times are even stricter than the law.''

Vives and Segura stressed that in 1989 cigarette prices were set by the
authorities. Prices have been free since 1991.

The newspaper said an agreement on prices or market share would be illegal
in the United States, but not necessarily so in
some Latin American countries.

Domestic Commerce Deputy Secretary Silvio Peist told Reuters an agreement
between any companies to abuse a dominant
position would mean breaking the law. But he added there were no plans at
the moment to investigate tobacco companies.

Last year, Massalin established a marketing system through exclusive
distributors barring independent distributors from buying
or reselling its cigarettes. Nobleza filed a suit before the National
Commission for Competition Defense (NCCD) but
nevertheless adopted the same practice as its competitor.

Independent distributors also complained to the NCCD, which ultimately ruled
that no violation of free competition had been
committed.

NCCD said that considering revenue, Massalin had about 63 percent market
share, with the remainder going to Nobleza.

Massalin is 60 percent owned by Philip Morris, with about 35 percent in the
hands of Germany's Reemstma
Cigarettefabriken GmbH and the remainder floating in Buenos Aires. Its
shares closed Friday at a 52-week low of $3.90.
They had peaked in that period at $5.918 in March. They did not trade this week.

Nobleza is 70 percent owned by British American, while the remainder floats
on the Buenos Aires Stock Exchange.