The Australian Competition and Consumer Commission is carefully examining legal developments in the United States after a major court judgement against a tobacco company over the use of terms such as 'light' and 'mild' on cigarette packaging, ACCC Chairman, Professor Allan Fels, said today.
An Oregon jury has ordered tobacco giant Philip Morris pay US$150 million after a smoker of low tar cigarettes, now deceased, had argued that Philip Morris gave a misleading impression that they were safer than normal cigarettes.
"The ACCC is interested in the outcome of that case and will consider any information that might be relevant to the ACCC's own investigation into whether Australian consumers have been misled by the use of the terms here", Professor Fels said.
He was commenting after the tabling in the Senate of an ACCC report on tobacco.
In September 2001, the Senate asked the ACCC to report on the performance of its statutory functions in relation to the tobacco industry. The report summarises the ACCC’s tobacco-related activities, including:
- the continuing 'light' and 'mild' investigation
- the current inquiry into the destruction of crucial documents by an Australian tobacco company
- recent action against tobacco companies under price fixing and merger laws
- enforcement of the mandatory health warnings on cigarette packaging.
A key finding of the report is that major US-style court judgements against tobacco companies may not be easily translated into the Australian legal system, including Australian trade practices law. This applies not only to the issue of 'light' and 'mild' terminology, but also to more general actions.
US litigation has largely been based on State tort law and Federal 'unjust enrichment' laws, rather than trade practices legislation. There are generally no direct Australian equivalents for these laws. US courts also impose much less strict standards for the certification of class actions.
While private litigants are increasingly looking to test Australian negligence law against tobacco companies in the courts, the possibility of broad-based action under Australia's Trade Practices Act 1974, which the ACCC administers, is not yet clear and requires further examination.
"The US judgement may yield information that will help the ACCC in its current investigation into whether Australian consumers have been misled about the health dangers of so-called 'light' cigarettes", Professor Fels said. "The report to Senate makes it clear that tobacco is a very serious consumer issue, and merits ongoing scrutiny by the ACCC".