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Monthly Archives: July 2010

Japan Tobacco’s Quarterly Profit Drops 47% on Domestic Sales

Japan Tobacco Inc., the world’s third-largest publicly traded cigarette maker, said first- quarter profit fell 47 percent after domestic sales dropped and a stronger yen reduced the value of overseas earnings.

Net income dropped to 22.8 billion yen ($261 million) for the three months ended June, compared with 42.9 billion yen a year earlier, the Tokyo-based company said in a statement today. Last year’s profit was inflated by a one-time gain of 9.1 billion yen from the sale of corporate housing. Total sales rose 0.3 percent to 1.47 trillion yen.

Japan Tobacco said its cigarette sales may decline 16 percent this fiscal year as the government plans to raise taxes by 70 yen per pack in October. The maker of Mild Seven and Seven Star will raise prices more than needed to compensate for the higher tax, as it also seeks to offset lower product sales.

The company was also hammered by a stronger yen, which has risen against all the world’s major currencies in 2010. A stronger local currency cuts the value of overseas earnings when repatriated. Japan Tobacco acquired RJR Nabisco’s international businesses, including the Camel and Winston brands, in 1999 and the U.K.’s Gallaher Group in 2007.

The company, which also sells drugs and frozen food, kept its annual earnings forecast unchanged. Net income will probably decline 3.9 percent to 133 billion yen for the year ending March, it said April 28. Sales may fall 2.5 percent to 5.98 trillion yen.

BHA pushes for smoke-free housing

Meena Carr figured out years ago why her young grandson, Malik, was chronically coughing and wheezing: Her home made him sick. Carr, 69, didn’t smoke cigarettes, but some of her neighbors in the Washington-Beech housing development did, often in the hallway. The smell permeated Carr’s apartment.

Last month, Washington-Beech in Roslindale became the city’s first smoke-free public housing development. Today, Carr plans to join other community leaders, public officials, and housing advocates to discuss the Boston Housing Authority’s more ambitious long-term objective — clearing the air by 2013 at all 64 public housing developments.

That positions Boston to become the first city in Massachusetts, and perhaps the largest housing authority nationwide, to impose such a ban. Under the proposal, still in its initial stages, about 27,000 residents in 12,000 units would be prohibited from smoking in common areas and their own apartments.

“This new initiative will go a long way to encourage more healthy living styles for our residents,’’ said Mayor Thomas M. Menino, who earlier this year unveiled the plan to make housing developments smoke free. “You don’t live in a single-family home, you are in multiunit housing,’’ Menino said. “What you do there has an effect on all other folks living in that building.’’

Today’s meeting at Suffolk University is being billed by officials as a “summit’’ to launch the campaign. Details, including how a ban would be phased in and how violators would be punished, are still unclear. Housing officials say the process will include community debate and a public comment period. By January, they hope to submit a proposal to the Department of Housing and Urban Development.

Nationwide, about 170 public housing authorities — roughly 5 percent — have instituted some kind of no-smoking policy in the past few years, according to the Smoke-Free Environments Law Project in Michigan, a nonprofit that tracks the issue. But so far none as large as Boston’s has implemented the ban, making the city a leader if it moves more quickly than other authorities of similar size.

Jonathan Winickoff, a pediatrician at MassGeneral Hospital for Children, said a ban on smoking in public housing developments would be a natural expansion of a six-year-old state rule that forbids smoking in workplaces, including restaurants and bars.

“People know that smoke doesn’t stop at the doorway. It travels through the air ducts, the hallways, along the electrical routes to contaminate every unit in a building,’’ Winickoff said. “This is bringing the multiunit housing world online with common sense health and safety standards.’’

The housing authority says a poll it conducted this spring found a smoking ban has widespread support among public housing development residents with families. Of 1,300 people surveyed, 92 percent said they favor smoke-free housing, while only 8 percent objected, according to the housing authority.

But that level of support was not necessarily reflected in comments made by residents last week at Washington-Beech, which is halfway through a $100 million project to transform a sea of aging red-brick apartment buildings into a neighborhood of pastel-colored townhouses.

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“You should be able to smoke where you live,’’ said Andrea Venable, 29, through the screen door of a townhouse she shares with her 12-year-old daughter and mother. Venable said that to move into the unit, she had to sign an agreement not to smoke anywhere on the grounds.

Another resident, Julie Silva, 40, said there already was too much regulation of residents’ lives before the smoking ban. Silva, who has emphysema, said she would like to smoke on her front steps, although she wants to eventually quit.

Boston’s plan had its beginnings 10 years ago, when housing officials tried to figure out what was causing high incidences of asthma and other respiratory diseases among public housing residents. Eventually, they focused on second-hand smoking as a cause.

Last October, the housing authority debuted 14 smoke-free units at the Franklin Hill public housing development in Dorchester as a pilot project. Washington-Beech followed in June. Residents there had to agree to refrain from smoking in their homes and common areas. Violators can face “immediate termination’’ of their lease, according to the regulations.

While the city has not yet determined a specific policy for dealing with violations, housing officials said the process likely would be similar to an eviction process and include a lengthy appeals period.

Officials said they realize it will be difficult for some residents to give up smoking and will, in some cases, take into consideration extenuating circumstances. For example, elderly or disabled residents unable to leave their homes might be granted waivers from the rule.

The city will also launch outreach and education efforts, including smoking cessation programs.

“We want to give some comfort to people who are nervous about this policy that we are going to be working on all sides of this issue,’’ said Kate Bennett, the BHA’s special assistant to the administrator for planning. “A lot of people think we are trying to evict smokers. We are trying to create healthy housing.’’

Officials also said they do not expect any legal roadblocks to a smoking ban.

The federal Department of Housing and Urban Development last summer stated that it “strongly encourages’’ public housing authorities to create no-smoking policies in at least some of their housing units. The message dispelled concerns among owners of multiunit buildings that they would be charged with discrimination if they prohibited smoking, said Jim Bergman, director of the Smoke-Free Environments Law Project. The project is part of the Center for Social Gerontology in Michigan, a nonprofit research and advocacy group.

“There’s never been a legal challenge to a smoke-free policy in a housing situation,’’ said Bergman. “There is not a right to smoke.’’

And the smoke-free movement is not limited to public housing. A growing number of privately developed apartment and condominium complexes already have smoking bans in place, including the luxury 241-unit Archstone Avenir in Boston, which opened in March.

Sally Matheu, Archstone group vice president, said the company wanted to promote healthy living and avoid complaints about second-hand smoke. It is the first smoke-free building in the company’s national portfolio of 81,354 units.

“We decided we would take a chance,’’ Matheu said. “It’s been a huge success.’’

At Washington-Beech, Carr also is seeing the benefits of the smoking ban — since it took effect in June, her grandson’s health has already improved.

“We have to educate people on the effects of smoking on nonsmokers,’’ said Carr, who pushed to get cigarettes snuffed out at the complex. “We have to give them a way to help themselves.’’

By Jenifer B. McKim

Uruguay may change anti-smoking law due to complaint

MONTEVIDEO: Uruguay’s government said on Monday it may loosen up the country’s tough laws on smoking to avoid a dispute with Philip Morris, drawing criticism from anti-tobacco activists.

Former Uruguayan President Tabare Vazquez, an oncologist, banned smoking in public buildings four years ago. Tobacco advertising is also banned and cigarettes’ packets must carry large health warnings.

The rules, which also prevent the sale of products branded as “light,” put the small South American country at the vanguard of global anti-smoking laws.

However, the measures have irked global tobacco company Philip Morris International, which earlier this year filed for arbitration at the World Bank’s International Centre for Settlement of Investment Disputes.

Uruguay’s government said the possible reforms to the anti-smoking law would try to invalidate the company’s claim, which says the current law harms its business by preventing it from selling products advertised as “light.”

“On some arguments, Uruguay is very strong from a legal point of view and changes aren’t necessary. On other points, we need to make changes to the law or come up with a new law,” Foreign Minister Luis Almagro told reporters.

The government has said that any changes would be minor. Possible reforms might include reducing the size of health warnings from the current 80% of the packet’s size to 65%, and giving permission to sell “light” cigarettes.

Suggestions that the anti-smoking rules could be changed sparked criticism from health activists, who accused the government of caving into pressure from big business to avert a defeat at the arbitration panel.

Former president Vazquez, who led the crackdown during his term, accused the company of exercising “a blackmailing pressure” with the complaint, which is based on a trade deal between Uruguay and Switzerland, where the tobacco firm is based.

“The only thing that Philip Morris is trying to do with this is show its power over a small country that has set an international example on this issue,” he told the state-run television network.

The possible easing of the tobacco measures was also criticised by the country’s Centre for Investigation of the Tobacco Epidemic, a nongovernmental anti-smoking group.

“If the country gives way to this pressure, maybe this or some other multinational will soon try to use another international accord to challenge our ban on smoking in enclosed spaces or the ban on advertising,” Eduardo Bianco, the group’s president, told Reuters.

A representative from Philip Morris International could immediately be reached for comment. – Reuters

Cigarette Vending Machines And Tobacco Displays In Shops

Three quarters of British adults support the removal of shop displays of tobacco (73 per cent) and a complete ban on cigarette vending machines (77 per cent) according to a new survey commissioned by Cancer Research UK this weekend.

These latest figures show the public supports the health community in urging the government to move forward with regulations to protect children from tobacco marketing.

The 2009 Health Act was passed by parliament which set clear deadlines to remove cigarette vending machines in 2011 and to put tobacco displays out of sight in all shops by the end of 2013. But these measures will not be enacted unless the government implements the regulations that are already in place.

Lack of public support has been put forward as an argument against rolling out these regulations. This new survey of more than 1100 people highlights the consistently high level of support from the public for protecting children from tobacco marketing.

An earlier survey in June 2009 found 70 per cent of adults in the UK backed putting tobacco out of sight in shops and 76 per cent supported abolishing cigarette vending machines.

Tobacco has a huge impact on health. Smoking is the single biggest cause of cancer in the world, and accounts for more than one in five UK cancer deaths. In the UK smoking kills five times more people than road accidents, overdoses, murder, suicide and HIV combined.

Smoking causes nine in ten cases of lung cancer. Smoking also increases the risk of over a dozen other cancers including cancers of the mouth, larynx (voice box), pharynx (upper throat), nose and sinuses, oesophagus (food pipe), liver, pancreas, stomach, kidney, bladder, cervix and bowel, as well as one type of ovarian cancer and some types of leukaemia.

Protecting young people from tobacco and stopping the next generation from smoking are key aims in the health community. Every year around 340,000 under-16s try cigarettes for the first time. Research has shown that shop displays play a role in enticing young people to try smoking.

The odds of young people saying they intended to smoke may increase by 35 per cent with every brand that they can name from memorising what they see advertised at point of sale displays.

Jean King, Cancer Research UK’s director of tobacco control, said: “The public is clearly supportive of putting tobacco out of sight. The evidence is compelling and the legislation is in place. This legislation will save lives if it is enacted. Not proceeding with regulations to allow England, Wales and Northern Ireland to put tobacco out of sight is a step backwards.

“It sends a message that tobacco companies’ profits are more important than the health of our children. Ignoring this opportunity commits more lives to be blighted from an addiction that will kill half of all long term users. We urge the government to show its commitment to health.”

References

– The YouGov survey commissioned by Cancer Research UK interviewed 1,106 adults in Britain using an online survey between 22nd and 23rd July 2010.

– It found that 73 per cent of British adults over 18 supported putting tobacco products out of sight of shops to protect children.

– It also found that 77 per cent of adults supported getting rid of cigarette vending machines completely in the UK to protect children.

Source:
Cancer Research UK

British tobacco firm seeks rehearing

In a new plea that U.S. law should not reach overseas, British American Tobacco Co. on Friday asked the Supreme Court to order a second look by lower courts at the federal anti-racketeering law’s scope. That law was used in the federal government’s massive lawsuit against nearly the entire tobacco industry, including the British firm — a case the Supreme Court refused to hear, denying seven separate appeals last month. The petition for rehearing (found here) is based mainly on the Supreme Court’s broad ruling on June 24 against the overseas reach of U.S. securities law (Morrison v. National Australia Bank, 08-1191).

While conceding that the Court seldom grants rehearing to review a case once denied, the petition said it was “far more common” for the Court to agree to rehear a denied case and then set aside a lower court ruling so that “an intervening decision” by the Justices can be taken into account. The D.C. Circuit Court, it argued, should be told to “consider Morrison’s impact in the first instance.” In upholding all key parts of a District Court ruling against the industry, BATCo’s lawyers contended, the Circuit Court created a “flawed ‘exception’ to the traditional presumption against extra-territoriality” of a U.S. law based on the alleged “effects” on the U.S. of overseas conduct.

“The D.C. Circuit Court held that RICO [the anti-racketeering law] could properly be applied to BATCo’s foreign conduct based on that novel theory, and on its twin conclusions that the ‘effects’ test could be properly transplanted from securities and antitrust law to RICO and that a severely watered-down version of the ‘effects’ test is satisfied here,” the petition said. The Morrison decision, it added, directly rejected that test for securities law, thus undercutting the Circuit Court’s conclusion about BATCo.

“Not only does Morrison invalidate the rationales underlying the D.C. Circuit’s extraterritoriality decision, but it also repudiates the legal authorities on which the lower courts relied,” the petition contended. “In light of Morrison, there is a virtual certainty — far more than merely the requisite ‘reasonable probability’ — that the D.C. Circuit would reject the premises underlying its decision to use the ‘effects’ test (a) to measure RICO’s extraterritorial reach, and more generally (b) to disregard the presumption against extraterritorial application of U.S. laws.”

Within the wording of the RICO law, how that law’s various parts fit together, and the history of its passage by Congress, there is “substantial evidence…that Congress did not intend RICO to extend beyond the Nation’s borders….Morrison reaffirmed that domestic conduct must be the ‘focus of congressional concern’ for it to render an otherwise extraterritorial application of a U.S. statute domestic in nature.”

Under the Supreme Court’s Rule 44, the Justice Department will not be allowed to respond to the rehearing petition unless the Court asked it to do so. And, the Rule adds, “in the absence of extraordinary circumstances,” a rehearing petition will not be granted if no response has been requested. Amicus briefs also will not be accepted on such a plea.

In the government’s RICO case against the cigarette-making companies, it charged that the firms had engaged — for more than four decades — in a scheme to defraud the American consuming public by denying and covering up the health hazards of smoking. As the case was finally resolved in many respects in the government’s favor, it was based solely on the RICO statute. The Justice Department, anti-smoking groups, and most of the major cigarette companies had sought review by the Justices; all were denied (as usual, without comment) on June 28. The one key part of the Department’s case that failed in the D.C. Circuit was a plea to force the industry to forfeit some $280 billion in profits it had made since 1971. The Supreme Court, in fact, had refused twice to hear a government appeal on that point — once when the case was in the midst of trial, and then again in the June 28 denials.

Pennsylvania court sides with cops over on-duty tobacco use

A western Pennsylvania police union has won a ruling from the state Supreme Court that borough officials may not unilaterally ban officers on duty from using smokeless tobacco in nonpublic work spaces or smoking in some official vehicles.

The decision made public Thursday said Ellwood City’s 2006 ban on tobacco use on borough property will have limited application to members of the police union, unless they agree to it through contract negotiations.

“While local legislation which promotes clean air and warns of the risks of tobacco use may be laudatory, it may not serve as a barrier to negotiations over this topic when it constitutes a working condition subject to mandatory bargaining,” wrote Justice Debra McCloskey Todd for the unanimous court.

The court overturned a 2008 Commonwealth Court ruling that had upheld the complete prohibition, but officers still are prevented from smoking in public places or inside borough buildings and vehicles used for mass transit because of the Pennsylvania Clean Indoor Air Act of 2008.

A divided Commonwealth Court panel had deemed the ban a legal exercise of the borough’s police powers, saying it was related to its efforts to promote health and welfare.

But Eric Stoltenberg, the lawyer for the union, the Ellwood City Police Wage and Policy Unit, called the ruling a victory for police and firefighter unions across the state.

“Our worry was geesh, now boroughs are going to start saying we did this under police power, and it’s a managerial right,” he said.

He said the Supreme Court’s ruling means the ban is automatically lifted. If the borough and union can’t agree, the matter would have to be resolved by binding arbitration.

But Ellwood City Mayor Anthony Court said Thursday the borough’s 14 officers have been prevented from using chewing tobacco in nonpublic buildings or smoking in vehicles while the case was on appeal.

“Until it comes to the forefront, it’s going to stay status quo,” Court said. “And then we’ll have to deal with it, one way or another.”

He said the borough would try to impose the ban through the union contract.

By MARK SCOLFORO