Australian government accuses Philip Morris of transferring its Australian business to Hong Kong with full knowledge of the plain-packaging cigarette laws

Michelle Rivera

LOS ANGELES , December 23, 2011 (Industry Intelligence) – In a written statement, the Australian government accused Philip Morris International of "corporate restructuring," stating that Philip Morris transferred its Australian business to Hong Kong with full knowledge of the plain-packaging cigarette laws, the Wall Street Journal reported on Dec. 21.

Philip Morris recently shifted ownership of its Australian market to the company’s Hong Kong office.

In 1993, Australia and Hong Kong struck a trade agreement to safeguard their respective offshore investments. Philip Morris contends that the plain-packaging laws violate the trade agreement.

A spokesman for Philip Morris, Chris Argent, stated that the ownership transfer occurred for “legitimate business purposes.”

Cigarette companies believe the new plain-packaging laws rob them of intellectual property. In November, Philip Morris, Imperial Tobacco Group PLC, British American Tobacco PLC and Japan Tobacco Inc. all filed High Court cases regarding the matter. The United Nations Tribunal is expected to combine the cases into one case, which it will arbitrate next year.

The new plain-packaging laws will be effective in December 2012.

Philip Morris claims it owned approximately 38% of the Australian cigarette market in 2010. The company has over 800 employees in Australia.

The primary source of this article is the Wall Street Journal, New York, New York, on Dec. 21, 2011.

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