BUSINESS

BAT suffers series of court defeats to PMI

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A war has been raging between two tobacco giants that are also active in Greece: British American Tobacco (BAT) and Philip Morris International (PMI).

Their conflict began last year, when BAT decided to take PMI to court, accusing it of copying its patents for heated tobacco products. The process is ongoing, with sources saying that all injunction and restriction measures demanded so far have been rejected.

Both PMI and BAT have promoted products in global markets in recent years that do not involve any burning, thereby giving the sense that the risk to users is less than conventional tobacco products. The greater the success these products enjoy among smokers, the stiffer the competition becomes.

BAT has simultaneously filed for injunction against PMI in several countries, including Britain, Romania, the Czech Republic and Bulgaria, but has not been vindicated in any court.

Last week, on March 9, Britain’s Supreme Court rejected BAT’s case on the copyright, ruling in favor of PMI and revoking the BAT’s patent rights. Tobacco market experts estimate that this will have a favorable effect for PMI in other countries where BAT’s case will also be heard. The same occurred in Romania, where the judicial authorities rejected the injunction application against the sale of IQOS and heated tobacco sticks; the reason is that the BAT allegations regarding copyright violations by PMI proved unfounded. There were similar rejections of applications in the Czech Republic, Bulgaria and Poland.

Notably, in the US, the sole tobacco heating product that has been licensed for sale is IQOS by PMI. Referring to its conflict with BAT, PMI stated that its rival’s move forms part of its global strategy that is aimed at undermining the category of tobacco heating products, where it lags considerably, while seeking to strengthen its core activities in the cigarette category.

The tobacco industry has undergone a radical transformation in the last decade, investing even more funds in research and development, so as to be able to offer better alternatives to smokers and distance them from the harmful habit of smoking cigarettes. This general shift has also affected the global pecking order in the sector, as it appears that PMI is among the top 50 companies that have submitted patents at the European Patent Office.

The tobacco heating products of both companies are also sold in Greece, with IQOS by Papastratos arriving first in 2016, followed two years later by British American Tobacco’s Glo. Nielsen data show that in the last quarter of 2020, the IQOS share in the heated sticks market in Attica came to 17.7%, one percentage point above the share of Marlboro tobacco products, which PMI also sells.