Philip Morris Ltd - s.87B undertaking

The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from Philip Morris Ltd (PML) in relation to the supply of Choice Signature Bold and Choice Signature Classic cigarettes (the Choice cigarettes) which did not comply with the mandatory Reduced Fire Risk Standard (the RFR Standard).

PML has admitted that this supply was likely to contravene section 106(1) of the Australian Consumer Law (ACL). The undertaking also relates to PML’s claims about the compliance of those cigarettes with the RFR Standard. PML has admitted that these claims were likely to contravene sections 18, 29(1)(a), 29(1)(g) and 33 of the ACL.

PML is an importer and wholesaler of various brands of cigarettes, including Marlboro, Peter Jackson, Alpine and Longbeach. In September 2015 it launched two new brand variants, the Choice cigarettes. To comply with the RFR Standard, cigarettes are manufactured such that, when lit and left unattended, they go out by themselves. In laboratory testing, sample Choice cigarettes failed to comply with the RFR Standard.

Due to a number of oversights, PML did not test the Choice cigarettes until after a number of the non-compliant cigarettes had already been sold to consumers. PML has since changed its inventory system to ensure that cigarettes cannot be supplied to retailers until they have passed testing. PML supplied a total of 306,000 non-compliant Choice cigarette packets, of which 192,000 packets were successfully recalled. The non-compliant cigarettes were available at retail from 1 September 2015 to 14 October 2015. All the non-compliant cigarettes were supplied in packets which featured a statement that they complied with the RFR Standard.

To address the ACCC’s concerns, PML provided the ACCC with a section 87B undertaking that it will, for a period of three years:

• ensure that no cigarettes are supplied that do not comply with the RFR Standard

• ensure that no cigarettes are supplied without samples first passing laboratory testing for compliance with the RFR Standard

PML will also make a donation of $300,000 to the NSW Rural Fire Service.