British American Tobacco backs down from lawsuit

By GENEVIEVE QUINTAL

British American Tobacco SA (BATSA), the local division of the world’s second-largest cigarette producer, has decided not to challenge the government’s Covid-19 lockdown regulation banning the sale of tobacco products in court, for now.

The company had written to co-operative governance and traditional affairs minister Nkosazana Dlamini-Zuma last week, demanding that the ban be lifted by 10am on Monday or face a court challenge.

However, BATSA on Wednesday said it received a response from the government and based on that it has decided not to go to court but to rather “pursue further discussions with government on the formulation and application of the regulations”.

Two weeks ago Ramaphosa announced that the national lockdown would ease slightly from the beginning of May and that some businesses would reopen under strict conditions, but many of the restrictions would remain in place as the risk of infection remains high.

At the time he said the ban on the sale of cigarettes would be lifted. However, on the eve of SA moving to level four of the risk-adjusted Covid-19 strategy, Dlamini-Zuma announced that after consultation, and 2,000 submissions from the public on the matter, the National Coronavirus Command Council had decided that the ban on the sale of tobacco products would remain in place.

This prompted tobacco companies to consider legal action.

The Fair Trade Independent Tobacco Association (Fita), a lobby group that represents Southern African cigarette manufacturers, earlier this week lodged an application to have the ban overturned.

Issues around the increase in the illicit trade and the loss of tax revenue because of the ban have been raised.

SA Revenue Service (Sars) commissioner Edward Kieswetter said the tax agency is projecting an annual revenue loss of about R285bn based on figures for the first month of the lockdown and the impact of sluggish economic activity.

In April, there was an underrecovery by Sars of over R1.5bn on the sale of alcohol and cigarettes.

BATSA raised concern about the rise in the illicit trade during the lockdown and urged government to consider an approach that would address its concerns as well as ensure legitimate businesses can contribute to the SA economy and future growth.

“The illicit traders are the only beneficiaries of the ban on tobacco sales,” the company said.

“While BATSA supports the government in its mission to prevent the further spread of the virus, we believe it is vital that there is a renewed and stronger effort under level four to permanently close down the illegal supply lines of tobacco that have been established over the past number of weeks. Reopening the legal, taxed and regulated tobacco market must be part of the solution,” it said.

The company said cigarettes should only be sold in established retail outlets where the government’s social distancing guidelines could be enforced. At the moment, smokers were putting themselves and their households at further risk of the virus by moving around in search of cigarettes being sold by illegal traders, it said.

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