Tobacco: Russian regulator launches legal action against BAT

British American Tobacco has become the latest UK company to be targeted in Russia with threats of legal action by the country’s consumer rights agency, Rospotrebnadzor.

Gennady Onishchenko, director of Rospotrebnadzor, said yesterday that he had signed a lawsuit against BAT for “misleading” consumers and infringing their rights, although he would not give details.

A few weeks ago he attacked the wider global tobacco companies, threatening them with legal action for “nicotine genocide”, allegedly for making huge profits at the expense of Russians’ health.

Yesterday Onishchenko repeated those claims, saying the tobacco producers viewed Russia as “an uncivilised market where they can sell dangerous and poisonous products”.

BAT said last night that it had received no claims from the regulator, but stressed it always acted inside the law. The London-based group has been a keen purchaser of local tobacco companies and has also found Russia a growing market for its top brands, such as Dunhill and Kent.

Western companies in the oil and mining sectors have faced similar attacks by environmental and financial watchdogs, which have usually been interpreted as attempts by the Kremlin to crack down on foreign firms.

Last week BP agreed to make wholesale changes to the management structure of its TNK-BP joint venture – including the removal of its chief executive, Robert Dudley, a former BP man. Shell handed over a large share of its Sakhalin gas field business to the state-owned Gazprom after destabilising criticism from regulators.

The relationship between Russia and western investors has been soured by military intervention in Georgia. UK-Russian relations are poor since the killing in London of Alexander Litvinenko.

BAT said no claim from the consumer body would be justified. “We have yet to receive an official claim from Mr Onishchenko on this subject, so are not aware of any details.” Market watchers said the suit was likely to focus on “light” and “superlight” labelling on cigarette packs.

The Kremlin has acknowledged that the country must do more to combat smoking. Russia recently ratified the World Health Organisation’s framework convention on tobacco control, which mandates a series of measures within five years, including higher prices for cigarettes.

http://www.guardian.co.uk/business/2008/sep/09/britishamericantobacco.tobaccoindustry