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Another blow for business in court battle against South Africa’s cigarette sales ban

July 24, 2020

NoSmoking

The North Gauteng High Court has dismissed the Fair-Trade Independent Tobacco Association’s (Fita’s) leave to appeal its ruling to uphold the country’s tobacco ban.

Fita chairman Sinenhlanhla Mnguni confirmed that the organisation will now approach the Supreme Court of Appeal (SCA) for leave to appeal the ruling.

In a ruling handed down on 26 June, the Pretoria High Court said that Fita’s argument that tobacco products be considered ‘necessary’ due to the negative effects the ban was having on those dependent on the substance was without merit.

The court also noted that Fita’s case ignored the context in which the ban was put in place – an unprecedented global pandemic, which required swift response from the government.

Fita had argued that the ban on the sale of cigarettes was detrimental to both industry and individuals, and that it was premised on irrational reasoning.

Government, meanwhile, argued that the ban is in place to protect the health of South African citizens and would encourage addicts to quit.

It also argued that smoking could lead to an increase in coronavirus cases and even death. Fita said that this is not an issue that is limited to cigarettes.

The North Gauteng High Court has now dismissed this application, which means that Fita will need to take its case to the SCA to proceed further.

Another case surrounding the ban on the sale of tobacco products in South Africa brought by British American Tobacco (BATSA) is set to be heard on 5 and 6 August.

Backfire

Questions about the duration of South Africa’s tobacco product sales ban came under scrutiny this week after a government’s Twitter account ‘erroneously’ indicated that the ban will last throughout the duration of the lockdown.

Government has since clarified that these sales are prohibited under the current level 3 regulations, and are subject to change.

Researchers have also begun to question the effectiveness of the ban.

A report published by the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP) this week showed that the current regulations have opened up loopholes for illicit products to be distributed in South Africa, and have created an environment that will likely encourage smoking once the ban has been lifted.

It also found that, despite the ban being in place, 93% of some 11 million smokers in the country continue to light up. This also implies that smokers are sourcing cigarettes illegally.

Being able to produce cigarettes legally for the export market, but not able to sell cigarettes in South Africa, has created a loophole and an incentive to sell illegally in the very lucrative local market, the REEP said.

“Manufacturers will find it difficult to resist this temptation, especially because so many companies are selling cigarettes, despite the sales ban. Given the tobacco industry’s long record of involvement in illicit trade, it is likely that they will divert cigarettes, ostensibly destined for the export market, to the local market,” it said.

It added that multinationals have been the biggest losers during the lockdown period, and as a result, may enter into a price war to make quick gains after the ban is lifted.

“Their markets have been captured by local companies and, to a lesser extent, by imported cigarettes, significantly reducing their market share. We predict that, once the sales ban is lifted, there will be a price war, in which the multinationals will aim to get some of their market share back and the non-multinational companies will aim to hold on to their markets.”

Ironically, this will lead to lower prices, making it a lot cheaper to smoke, pushing sales. Government’s stated goal of keeping South Africans healthy – and encouraging them to quit smoking – could be undone.

“The resulting price decrease will be detrimental to public health,” the researchers said.

Source: Business Tech