BAT share price: Tobacco firms sues UK government over plain packaging law

British American Tobacco (LON:BATS) and peer Philip Morris International have launched legal action against the UK government over its decision to introduce standardised packaging on cigarettes. The industry majors are arguing that the measures infringe their property and trademark rights.

“Legal action is not something we wanted to have to consider and is not something we undertake lightly, but the UK government has left us with no other choice,” said a BAT spokesperson, as quoted by BBC today. “Any business that has property taken away from it by the state would inevitably want to challenge and seek compensation.”
A case that originated in the English High Court is already before the European Union’s Court of Justice in a bid to decide whether standardised packaging is permissible under the EU’s recently enacted tobacco product directive. Tobacco makers and analysts believe the cigarette companies could be in line for billions of pounds of compensation. However, the legal battle is likely to rumble on for years.
The law, which requires all cigarette packages sold in the UK to be unbranded, was approved by the government in March and will come into force in May 2017 after a yearlong transition period. Consequently, brands will no longer be instantly recognisable to purchasers, and the hope is that it will discourage young people from picking up the habit and therefore gradually bring down the number new smokers.
A Department of Health spokesperson insisted that the UK government would not allow public health policy “to be held to ransom by the tobacco industry.” “We would not have gone ahead with standardised packaging unless we had considered it to be defensible in the courts,” the representative added.
BAT’s share price has inched up today. As of 14:29 BST, the stock was changing hands at 3,647.00p – 0.39 percent up on the day.
As of 15:05 BST, Friday, 22 May, British American Tobacco plc share price is 3,646.50p.