Wednesday, 8 June 2011

US Chamber of Commerce and others issue statement opposing plain packaging

Major business interests in Washington have issued an important statement on the implications of Australia's plain packaging policy, and expressed their opposition to this policy.

Although many people appear to feel that the tobacco industry's indignation about plain packaging demonstrates how important plain packaging is in the fight against tobacco, it would appear that the tobacco industry is not alone in its concern for intellectual property in general and the likely benefits to rogue tobacco traders. Two extracts:
However, plain packaging risks establishing a precedent of intellectual property destruction for an entire industry through government mandate that would be very damaging to the legitimate interests of trademark owners to associate their brands with their products, a fundamental protection under trademark law
Moreover, we have genuine concerns that plain packaging will incentivize further the already growing incidence of counterfeit, smuggled and other illicitly traded goods being sold in Australia. There can be little question that plain packaging will make it easier for contraband or counterfeit products to enter the market. This will augment the inevitable downward pressure on prices of legally sold goods when brands are undermined and the market moves toward commoditization. The economic incentives to avoid the legal system will overwhelm any enforcement effort detailed in the legislation. As a country that has supported the Anti-Counterfeiting Trade Agreement (ACTA), Australia should be particularly concerned about these consequences.
 Simon Chapman, professor of public health at the University of Sydney, tries to explain how plain packaging will indubitably help. I find his logic hard to follow:
Profitability in the tobacco industry today rests largely on high-priced premium brands, which are able to attract higher retail prices purely on the strength of branding and pack image. If all packs will look the same, many smokers will wonder why they should shell out far more for a pack that looks the same as every other brand except for brand name and that internal tobacco industry research shows cannot be distinguished from cheaper brands in blinded smoking experiments. The illusion that premium brands are “better” will evaporate, and much profitability with it.
The result of this will surely be falling prices – not an outcome advocated by anti-tobacco activists in general. Chapman is confident that Australia is on top of illicit tobacco, but while it is true that Australia is less exposed than Canada, for example, there is still an issue with illicit tobacco and those involved tend to have an opportunistic streak that would likely be excited by a legitimate-industry-busting initiative like plain packaging.

The Chamber of Commerce and its allies in this statement have made an important case. Brand protection is a guard against cheap imitation, and health authorities that were really interested in health would not attempt to destroy it. Insofar as it represents an attack on intellectual property, the proposed plain packing measure is a dangerous precedent that threatens the benefits of brand packaging not just for tobacco but for any other line of products. Legality brings with it rights and obligations, and brand protection should not be removed from tobacco – or why did we ever bother with it in the first place?


Anonymous said...

This should get interesting.

Plain packaging

Malenfant said...

Simon Chapman wrote:
"The illusion that premium brands are “better” will evaporate, and much profitability with it."

This is the most telling sentence. The goal is to put legitimate enterprises out of business. The stupidity is that, even if they get away with plain packaging and consequently destroy the tobacco industry, they leave only the black market for smokers to turn to.