[Intl-tobacco] WSJ: Tobacco Firms Discussed Overseas Pricing, According to Internal Industry Documents (fwd)

[Robert Weissman]

Tobacco Firms Discussed Overseas Pricing, According to Internal Industry
Documents
by Gordon Fairclough / gordon.fairclough@wsj.com1
Source: The Wall Street Journal Interactive Edition, Friday, 7/6/01

Executives of British American Tobacco PLC, Philip Morris Cos. and other
major cigarette makers attempted to coordinate price increases and limit
competition in parts of Europe, Africa, Latin America and the Middle East
from the mid-1980s to the early 1990s, dozens of internal industry
documents indicate.

The documents, part of the reams of secret tobacco-industry paperwork made
public as a result of lawsuits filed by state governments and settled in
1998, refer to deals between rival companies to raise prices, allocate
market share and limit production and advertising in various markets
outside the U.S.

The documents are being put on display by plaintiffs' lawyers and
anti-tobacco campaigners who are trying to open a new front in their
assault on the industry by focusing on alleged corporate wrongdoing such
as cigarette smuggling and price-fixing.

The materials have helped to fuel a new batch of lawsuits in the U.S.,
including antitrust cases alleging that the companies fixed prices and
engaged in other anticompetitive behavior here.

But it is unclear whether pricing practices overseas will have any bearing
on litigation in the U.S.

"The activities outlined in those documents certainly were not in
violation of any laws," said Greg Prager, a Philip Morris spokesman. "In
fact, in many cases these arrangements were made with the full knowledge
and support" of national governments.

Mr. Prager pointed to a case now in federal court in Atlanta, where a
judge has reviewed documents related to competitive behavior in five
countries. Mr.  Prager said the court, in a preliminary ruling, found that
the documents failed to show that agreements were made about pricing or
that such practices were forbidden by local law.

In an industry court filing in the Atlanta case, the companies asserted
that in Panama, for example, price-fixing wasn't outlawed until 1996. The
companies also said that in Argentina and France, during the time frame
involved, the government essentially set cigarette prices, sometimes in
consultation with the industry.

Ann Tradigo, a spokeswoman for British American Tobacco in London, said:
"To my knowledge, we've not been involved in anything related to price
fixing" at the times and in the places referred to in the documents. She
declined to comment further, saying it is company policy not to discuss
the specific content of documents, which are "very often taken out of
context."

One document, a memo written by a BAT official after a trip to Nigeria in
1990, says: "The main principle" is that BAT, Philip Morris and another
company "will all sell at the same price." Another BAT document about
activity in Venezuela notes that "it was agreed with [Philip Morris] in
April that export prices should be increased immediately."

"The documents show that this is a regular way of doing business" for the
tobacco companies, said Jeffrey P. Bean, one of a team of lawyers suing
major cigarette makers, alleging that they have illegally colluded to fix
prices in the U.S. "It is coordinated at a very high, central level."

The documents and the U.S. suits could inspire legal action against
cigarette makers in other countries, although tobacco litigation is still
in its infancy overseas. Just this week, however, the Italian government
announced it was launching a price-fixing investigation of cigarette
makers selling their products in Italy.

Public health experts and many governments believe higher tobacco prices
are an important way to discourage smoking and have been loath to take
steps that could make cigarettes cheaper.


URL for this Article:
http://interactive.wsj.com/archive/retrieve.cgi?id=SB994366523987157903.djm