BAT's Regulatory Framework and Agreements in Australia: A Research Paper

A Research Paper on Regulatory Framework and agreements of British American Tobacco (BAT) in AustraliaLegal Aspects of International Trade and EnterpriseTrimster: T1 2019Unit Code: HI5015Student Name:Student ID:Executive Summary:In this research paper a familiarisation of the famous MNC has been provided. This further helped to identify the relevant Legislative, regulatory framework/s, treaties, conventions or agreements that are affecting their operation in Australia.In the first passage brief description along with information regarding industries of BAT, global staff, Australian staff and global headquarters has been given.

In the second passage a legislative framework affecting the MNC have been identified and discussed in detail. In the third passage treaties, conventions and agreements have been identified which have impacted the services and products of BAT in Australia.Table of ContentsTopics Page Number1. Executive Summary 22. About British American Tobacco (BAT) 43. The legislative regulatory framework affecting BAT 5-64. Impact of treaties on BAT 7-85.References 9Question 1 About BAT: British American Tobacco company was founded in 1902, gradually it became a market-leading brand by using their successful strategy, talented people and Transforming Tobacco ambition .

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The industry: BAT has created an industry of nicotine and tobacco business.Their products includes vapour, tobacco heating products (THPs), modern oral products, as well as traditional oral products such as Swedish-style snus and American moist snuff.The company offers an extensive range of brands.International Brands include Dunhill, Kent, North State Lucky Strike, Pall Mall, Vogue, Rothmans International, Winfield, State Express 555, KOOL, and Viceroy. In 1997 BAT brought its participation in the sport to new levels with the purchase of the Tyrrell team for approximately Ј30 million.

The team raced as Tyrrell for the 1998 season before being renamed as British American Racing(BAR).[3]People in BAT:One of the major reasons BAT reached this position is due to its huge collection of talented workforce.They have created a workfield 55,000 people worldwide. In Fact they were one of just 14 companies to receive the prestigious global accreditation in 2019[4].They have employed approximately 550 full time employees in Australia and over 1100 across the Australasian Area[5].BAT in global:BAT have their headquarter in London, United Kingdom.It has a market-leading position in over 50 countries and operations in around 180 countries[2]Question 2Regulatory Approaches in AustraliaThe current regulatory framework of Australia has put on regulation of tobacco products, poisons, therapeutic goods and consumer goods. Though it varies between states and territories in their regulatory approaches to E-cigarettes. HYPERLINK " 43All Australian jurisdictions have implemented legislation consistent with Schedule 7, and as such the commercial supply of nicotine for use in E‘cigarettes is currently prohibited.45 Current regulatory state and territory frameworks for the use of E‘cigarettes and the sale and marketing of non‘nicotine E‘cigarettes .The commercial supply of nicotine for use in E-cigarettes is prohibited by legislation in all states and territories in Australia.[48]. The New South Wales Government has introduced a bill to prohibit the use of E-cigarettes in areas which are smoke free for tobacco products[52]. In SA & in WA the sale of products that resemble tobacco products is prohibited[53] .Associate Professor Mendelsohn agreed and added that the TGA application process for products is onerous and expensive', which could delay innovation' and be a huge barrier to entry' for new products.73 Restrictions on sale, such as prohibitions on the use of nicotine;Minimum age restrictions for use;Restrictions or prohibition of advertising, promotion and sponsorship;Packaging requirements, such as health warnings, child safety packaging and lists of ingredients, emissions and concentration levels;Product standards for liquid and devices, such as prohibition of certain ingredients or limits on nicotine concentration;Reporting requirements, such as requiring e‘cigarette manufacturers to notify health authorities of their intention to bring a product to market;Taxation; andRestrictions on places of use, such as in public places or in a vehicle with a minor present. HYPERLINK " 105In 2012 British American Tobacco, along with Philip Morris and Imperial Tobacco, sued the Australian Commonwealth government. At the High Court, they argued that the Commonwealth's plain packaging legislation was unconstitutional because it usurped the companies' intellectual property rights and good will on other than just terms. However, the challenge was unsuccessful.[52]Regulatory legislators affecting BATThe majority of Australian tobacco smokers use manufactured cigarettes and, prior to 1999, cigarette brands could be split into three reasonably clear segments: premium, value and budget.5 Value brands were somewhat lighter in weight, so that more cigarettes could be squeezed into a pack. Because tobacco excise was based on the weight of tobacco up to 1999, each value cigarette attracted less excise, making value packs cheaper (per stick) at the wholesale level and therefore increasingly attractive in the face of increases in State value based wholesale licence fees. In contrast, the budget segment was first introduced in 1990 in packets of 50, by which time state licence fees had increased to 50% of the value of wholesale sales. Budget brands are those that, when first introduced, contained more than 40 cigarettes.[44]As well, during this period, in mid-1999 Rothmans and Wills cigarette companies merged (now trading as British American Tobacco Australia (BATA)) and the United Kingdom based Imperial Tobacco entered the Australian market, a condition imposed by the Australian Competition and Consumer Commission in approving the merger.The combined effect of these factors on the Australian tobacco market was quite dramatic. There was an increase in the range of brands available. Recommended prices increased, particularly in the budget segment of the market, greatly reducing the previously very large differential in the price per stick of light budget and heavier premium cigarettes. There were also reports of greatly increased availability of roughly processed tobacco that did not attract tobacco excise duty and possession of which has recently been declared illegal.[44]Question3Cigarette packaging is a key marketing strategy for promoting brand image. Plain packaging has been proposed to limit brand image.Compared with current cigarette packs with full branding, cigarette packs that displayed progressively fewer branding design elements were perceived increasingly unfavourably in terms of smokers' appraisals of the packs, the smokers who might smoke such packs, and the inferred experience of smoking a cigarette from these packs. For example, cardboard brown packs with the number of enclosed cigarettes displayed on the front of the pack and featuring only the brand name in small standard font at the bottom of the pack face were rated as significantly less attractive and popular than original branded packs. Smokers of these plain packs were rated as significantly less trendy/stylish, less sociable/outgoing and less mature than smokers of the original pack. Compared with original packs, smokers inferred that cigarettes from these plain packs would be less rich in tobacco, less satisfying and of lower quality tobacco[898]In April 2010, the Australian government announced that it would pursue mandatory plain packaging of tobacco products.1 This announcement was followed by concrete steps in April 2011, with the release of a consultation paper and exposure draft of the relevant legislation,2 and in July 2011, with the introduction of a revised bill into the Australian House of Representatives.3 The scheme (which is expected to enter into force from to 1 July 2012)4 will apply to all tobacco products, prescribing the shape, size and type of packs and cartons and specifying that all retail packaging (apart from brand names, health warnings and other legislative requirements) must have a matt finish and be coloured either drab dark brown' or as prescribed by regulation.5 No trademarks or other marks (eg graphics, symbols, letters) may appear on tobacco products or retail packaging or wrapping of tobacco products, except that on retail packaging the brand, business or company name ... and any variant name for the tobacco products' may appear in a prescribed place and form, alongside legislative requirements and any other marks permitted by regulation.[777]Hours after the Australian Parliament passed the world's first plain packaging legislation on 21 November 2011, a Philip Morris Asia press release announced that PMA had started formal legal proceedings under the Arbitration Rules of the United Nations Commission on International Trade Law 2010, claiming the legislation did not comply with The Australia " Hong Kong Bilateral Investment Treaty.[1] It was noted that this ad-hoc tribunal meets "behind closed doors" and documentation is usually "kept out of the public domain". HYPERLINK " [2]This challenge was especially contentious as Philip Morris Asia bought a large number of shares in Philip Morris Limited (Australia) after the Australian government announced that they would be considering plain packaging. Andrew Mitchell (international law expert) highlighted that the timing of this acquisition of shares on 23 February 2011, a whole 14 months after the Government announced its intention to introduce plain packs, was a concern. It suggests the acquisition was a strategic move in order to make this argument.[3] It will be very difficult to argue that at the time of making that investment they had a legitimate expectation that plain packaging wasn't going to be introduced when the Government had already announced it was going to do exactly that, he said.[3]In a consolidation of two cases where large tobacco companies challenged the constitutionality of the Australian Commonwealth's Tobacco Plain Packaging Act, the majority of the High Court found for the Commonwealth, upholding the constitutional validity of the Act.The Act specifies all of the physical features of tobacco products, including their dimensions, their colour and finish, and the permitted use of trademarks and other marks. In particular, the Act requires uniform "plain" packaging for all tobacco products, consisting of graphic health warnings on at least 75% of the front of the pack and 90% on the back of the pack, with the brand name only to appear in a specified dimension and font, against a specifically chosen drab brown background.[90]We updated our International Marketing Principles (IMP) in October 2018 to apply across all our products. This reflects the expansion of our product portfolio to include, alongside our conventional combustible tobacco products, a range of potentially reduced-risk products, including vapour, tobacco heating products and oral products. The IMP replace our previous International Marketing Principles, Vapour Products Marketing Principles and Snus Marketing Standards.[555] HYPERLINK " Question3References:1. Leroux, Marcus (27 February 2009). "British American Tobacco profit boosted by weak pound". The Times. UK. Retrieved 29 August 2010.3. "Constructors: BAR". Grandprix.com. 10 March 2007. Retrieved 18 April 20114. of Health, Submission 297.1, pp 1-252.JT International SA v Commonwealth of Australia; British American Tobacco Australasia Limited v The Commonwealth[2012] HCA 43 (5 October 2012)90. M, Younie S, Wakefield M, et alImpact of tobacco tax reforms on tobacco prices and tobacco use in AustraliaTobacco Control 2003;12:ii59-ii66.Publication historyFirst published July 23, 2003.Online issue publication July 23, 2003777.898.Wakefield MA, Germain D, Durkin SJHow does increasingly plainer cigarette packaging influence adult smokers' perceptions about brand image? An experimental studyTobacco Control 2008;17:416-421.555.