The tumour grows

Every day, in some little way, governments grow bigger and bigger.

UPDATE 2-Philip Morris threatens to sue Australia over packaging

Mon Jun 27, 2011 2:37am EDT

* Philip Morris looking at billions of dollars in compensation
* Australian PM rejects legal action, says laws will go ahead
* New cigarette packaging laws expected January 2012
* Laws could cause industry to consolidate to save costs
(Recasts, adds detail)

By Michael Perry

SYDNEY, June 27 (Reuters) – Tobacco giant Philip Morris is threatening to sue the Australian government for possibly billions of dollars over its plan to be the first country to introduce plain, brand-less packaging for cigarettes.

The tobacco firm is fearful that plain-packaging will damage its cigarette brands like Marlboro and Alpine and reduce their ability to compete against other brands.

The Australian government argues that reducing brand identification will make smoking less attractive and in turn reduce smoking rates and the health costs associated with smoking, which is said by Australian health authorities to kill 15,000 people a year in the country.

The fight over cigarette packaging is being closely watched by other tobacco firms and governments, with New Zealand, Canada and Britain among countries considering similar laws.

Analysts also say plain packaging would hit tobacco firms in emerging markets where they are seeking to lure smokers away from cheap brands to more expensive ones and, if widespread, could lead to takeovers in the industry to cut costs.

Philip Morris Asia said on Monday it had served a notice of legal claim on the government under Australia’s bilateral investment treaty with Hong Kong, which holds the government responsible to protect Hong Kong investments in Australia.

http://www.reuters.com/article/2011/06/27/philipmorris-australia-idUSL3E7HR01B20110627