BAT wins first round in major tobacco laws case

Cigarette maker British American Tobacco has won the first round of a landmark suit against the State, which would have, among other implications, an annual cost of over Sh400 million.

The firm successfully contested the Tobacco Control Regulations that would have come into effect on June 5, which required that the BAT pays two per cent of its revenues that would be paid into the Tobacco Control Fund. At last year’s total revenue of Sh22 billion, enactment of the regulations would realise about Sh440 million for the fund to be spent on tobacco-related research and rehabilitation of smokers.

Conservatory orders

Justice Mumbi Ngugi in her ruling last month said the petitioner’s concerns merited the conservatory orders which she granted. “That a conservatory order be and is hereby issued staying the coming into force and implementation of the Tobacco Control Regulations,” Mumbi ruled.

Among the arguments presented by the petitioner was that the cigarette maker had not been consulted, and that demanding that it contributes a portion of its revenues to the State was discriminatory. BAT had also argued that the branding requirements including warnings on cigarette packets showing harmful health implications were too costly.

The Tobacco Act, which came into effect in 2007 also sought to restrict smoking to only designated zones, while outlawing the advertising of cigarettes and even sponsorships by companies like BAT.

Health Cabinet Secretary James Macharia, as the drafter of the regulations, was among the defendants in the suit. Now, draft laws pending before the National Assembly could break the impasse with BAT fighting for profits against the State’s desire to limit cigarette smoking.

Allow time

“It is not intended to stop or in any way interfere with the parliamentary process with regard to the Regulations provided for under section 13 of the Statutory Instruments Act,” read in part Mumbi’s ruling.

BAT said after the ruling that the suspension of the regulations would allow time for scrutiny on the contentious issues it had raised. “We believe that publicly elected policy makers have the right to hear all sides of any debate when formulating new laws and that policy makers should be allowed the necessary time to ensure the appropriate due diligence is conducted on any regulation,” the firm said in a statement.

The latest turn of events in the decade-old fight between the State and cigarette makers has seen two committees of the National Assembly at loggerheads over the proposed enactment of the regulations, which BAT argues could ‘place players in the tobacco industry at the risk of shutting down their businesses’.

There have been claims that the cigarette makers could be influencing MPs through lobbying to have their way by rejecting the regulations.

For BAT, which controls about 80 per cent of the Kenyan market, implications of the regulations would be huge.