Submission by Imperial Tobacco Australia Limited (PDF 600 KB)

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tobacco products to children, effectively balances public health, competition and consumer choice. The proposed measures represent an inappropriate restriction on the freedom of businesses to compete with one another for a larger portion of market share. ITA is particularly concerned with the second paragraph of Part 6.5, which states: “[t]obacco advertising and marketing efforts by the tobacco industry seek to increase sale and consumption by three mechanisms. Firstly, by advertising and promotion efforts which seek to recruit new smokers by encouraging children or young adults to experiment with tobacco products and progress to regular use. Secondly, by reducing motivation of current smokers to quit. And thirdly, by encouraging relapse and prompting former smokers to resume smoking.” (p 32) A 2008 American publication is referenced in support of these propositions. Clearly, regulation of the tobacco industry in the US is markedly different to the regulatory scheme in Australia. Key points of difference include the presence of pictorial health warnings on Australian tobacco packaging, display bans at most points of sale in Australia and a complete ban on tobacco advertising to consumers. In short, these alleged “advertising and promotion efforts” are not relevant to the Australian context and it is therefore inappropriate to rely upon such a statement to support further regulation in Australia. The publication relied upon is also four years old, pre-dating a number of changes in this area. ITA suggests that the assertions made in this paragraph are inaccurate and inapplicable to the Australian context and requests the removal of these statements from any final report. We note that there is currently a ban on tobacco advertising to consumers in Australia. The ban on advertising calls into question the claims that tobacco companies such as ITA use advertising to recruit new smokers (including children), reduce the motivation of current smokers to quit and encourage relapse by prompting former smokers to relapse. Moreover, the ban on child smoking is strongly supported by the tobacco industry and heavy penalties apply to retailers who supply cigarettes to children. All tobacco products in Australia are presently subject to warning label requirements which ensure that all consumers who chose to smoke are aware of the health risks associated with smoking. We reject that product displays should be banned in tobacconists. People who enter tobacconist shops do so because they are already intent on purchasing a tobacco product. The display is there to inform consumers about which products are available for sale. The advertising of tobacco products to members of the tobacco trade, such as retailers, is permitted. It is important that tobacco manufacturers be able to provide information to legitimate retailers of tobacco products about new and existing tobacco products. There is no reason to restrict the provision of such information to members of the tobacco trade. Alongside our continued objection to plain packaging, which will deny ITA the ability to distinguish its products from those of competitors or counterfeits, there are a number of action items in Part 6.5 that are of concern. 5.1 Action Item 6.5.4 We note that this action item requires the government to report on the possible benefits of requiring tobacco companies to report regularly on expenditure on any form of tobacco promotion and marketing activity (“disclosure requirements”). It is not clear whether the 6
disclosure requirements would involve information being provided to the government or being made publically available. We believe that neither measure is necessary or appropriate, but we are particularly concerned with the suggestion that marketing expenditure should be disclosed to the public and/or our competitors. Information about a business‟s expenditure is plainly commercially sensitive and provides insight into a business‟s priorities, strategic decisions and market position. Confidentiality with respect to marketing and promotional activity encourages innovation by allowing an individual business to benefit from any advantage it obtains through exercising superior skill, strategy and judgment. We believe that such disclosure is a significant invasion of any company‟s confidential information and undermines the ability of businesses to benefit exclusively from their innovative commercial strategies. ITA exercises a significant level of skill and judgment in determining the nature and level of its expenditure on any marketing line item. To disclose the outcome of ITA‟s expenditure decision making process to competitors would deprive ITA of its competitive advantage. We question whether there would be any public benefit from disclosure requirements given that marketing and advertising to consumers in Australia is simply not permitted. Moreover, we question the value of disclosing how much is spent on “marketing” activities without properly understanding the commercial context of the expenditure, as this information would mean little to any party - other than to competitors. Even if ITA were to accept that the government would accrue a benefit through the disclosure requirements, we believe that the extreme costs of such disclosure outweigh any potential benefit. Any requirement that ITA report tobacco promotion and marketing expenditure would result in the disclosure of sensitive commercial information and would undermine the ability of individual businesses to maintain proper competition. Under Australian law, the situations in which companies are legally compelled to disclose commercially sensitive information are scarce, and invariably involve an overwhelming and objectively verifiable public benefit and any such information disclosed is heavily protected. For example, where commercially sensitive information is required for taxation purposes or for the purposes of legal proceedings, the information is legally protected from wider circulation or publication and more often than not subject to strict confidentiality regimes. It is certainly never made available to competitors. In most circumstances where commercially sensitive information may be made public, for example through an FOI request, a business has the opportunity to object to its publication and to protect trade secrets. There is no suggestion in the consultation paper that any such regime is being considered. ITA suggests that in any investigation of the possible benefits of disclosure requirements, a simultaneous investigation into the commercial and economic risks of disclosure requirements is vital. 5.2 Action Item 6.5.5 ITA notes that advertising to consumers is not permitted in Australia. Accordingly we object to use of the term „public relations activities‟ on the basis that it suggests any such activities are “public” or directed to members of the public. ITA opposes any measures taken to eliminate the very limited forms by which tobacco manufacturers may provide information about new and existing tobacco products to legitimate retailers of those tobacco products. 7
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Submission by Imperial Tobacco Australia Limited (PDF 600 KB)

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