Philip Morris, Fortune merger a 'kiss of death' --critics

by Lilita Balane, Newsbreak

Posted at Feb 25 2010 10:49 PM | Updated as of Feb 27 2010 12:35 AM

'It only means more organized efforts to lessen compliance with tobacco control laws'

MANILA, Philippines--Tobacco control advocates on Thursday called the merger of leading cigarette companies Fortune Tobacco Corp and Philip Morris Philippines Manufacturing Inc (PMPMI) a “kiss of death blown to many Filipinos.”

Health Justice, a non-government organization that aims to bridge the gaps between health science and law, said it expects the 2 cigarette manufacturers to also combine their resources in lobbying to weaken tobacco control measures.

“The government can expect more tobacco-industry backed leaders or policy makers, more organized lobbying techniques, more corruption, more smuggling, less tax collection, and less compliance with tobacco control laws,” said lawyer Deborah Sy, executive director of Health Justice.

She specifically reacted to news reports that, "When asked which group (Philip Morris or Fortune) initiated the [merger] talks, PMPMI Chris Nelson said: 'We kissed at the same time.'"

Early Thursday, reports said that PMPMI and Fortune “concluded an agreement to form a new company, Philip Morris Fortune Tobacco Corporation."

“Each contributed selected assets and liabilities into the new company, with each party holding an equal economic interest,” reports quoted PMPMI's Nelson.

Fortune Tobacco, owned by business tycoon Lucio Tan, will control the finances and the distribution, while multi-national PMPMI and maker of top-selling brand Marlboro, will focus on manufacturing, operations and management of the cigarettes.

Fortune, which produces leading local cigarette brands Fortune and Hope, corners 60% of the industry share in the country. PMPMI, which operates a large cigarette manufacturing plant in Batangas, has a 30% share.

With the union of the two companies, 90% of the cigarette market will be in the hands of a single group.

This is not the first time that PMPMI had bought into a local cigarette company in a country where it's operating. In 2005, Switzerland-based Philip Morris International (PMI) acquired majority of Indonesia’s largest tobacco company, PT HM Sampoerna Tbk. Sy said that PMI’s move had resulted to a more “aggressive tobacco industry.”

With PMI’s using a local name, it has the chance to effectively market its own brands. At the same time, PMI is able to lobby systematically against anti-tobacco laws in Indonesia.

Newsbreak earlier reported that tobacco companies, through its group Philippine Tobacco Institute, allegedly distribute lobby money to congressmen, and sometimes contribute to their campaign kitties, to block tobacco control proposals, like putting graphic health warning on tobacco products and increasing its taxes.

The bills, which were not approved before the 14th Congress went on recess, sought to discourage the public from smoking. The World Health Organization recorded some 90,000 smoking-related deaths every year worldwide that can be attributed to high cigarette consumption. (Newsbreak)