Tobacco companies are not so guilty

The appellate court recognized the claim of U.S. authorities to exact from the leading tobacco companies $ 280 billion for consumer misinformation about the dangers of smoking as misconduct. Manufacturers of cigarettes will not be able to easily get rid of the government’s claim. But the main threat to the tobacco industry disappeared.



The government control authority argues that the representatives of the tobacco industry – British American Tobacco, Altria Group and Reynolds American – deliberately kept the data about the damage of smoking on human body from people, and simultaneously stimulated demand for their products through advertising, misinforming consumers.

The Government believes that tobacco manufacturers should be possible to compensate the damage paying as compensation to profit from each cigarette, sold in the period from 1971 to 2000. But the appellate court recognized the claim of U.S. officials legally unfounded.

Lawyers for the complainant, which is the state in this high-profile trial, argue that such an impact measure on the business as “collection of profit, got by unfair way” corresponds to provisions of Racketeer Influenced and Corrupt Organizations Act – RICO, adopted in 1970.

“The law requires adoption of such measures as a prevention of future violations of law, – the judge explains the position. – But forcing the tobacco industry to give up profits for a past period is just punishment for the already committed offence, which of course would not change anything in the future. It is not legally provided. Opposing the commission of a crime in this case may be done by a special court order that prohibits a number of specific actions by the tobacco business, or in extreme cases – the elimination of some corporations, but not collection of revenue.”

However, many lawyers take the opposite view. “The decision of the general trial jurisdiction was quite fair”, said Judge David S. Tatel.

If the state forces tobacco companies to abandon illicit profits, it “will prevent or limit the offenses in the future”, as required by law.

Industry representatives will know that the crime will be followed by the harshest measures, and will not continue making doubtful decisions.

The tobacco industry faces loss of millions dollars according to any of these requirements. But the appellate court excluded the main threat to tobacco business from the government, implementation of which could lead to the bankruptcy of several major tobacco companies.

Representatives of industry, of course, are entirely satisfied with the recent decision of the court. “The verdict of the appellate court is dramatic for the government’s action, ” – says the vice-president of RJ Reynolds Tobacco Company, Charles Blixt.

Representatives of the Altria corporation believes that “the government will have to prove not only that the tobacco companies have committed offenses in the past, but what they intend to do so in the future.”

The stock market was encouraged by the appellate court. Shares of Altria increased by 5, 1% per session – up to $ 67. Shares of Reynolds rose by 4, 5% – to $ 36, 15. British American Tobacco increased its capitalization by 2, 1%.

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