Philip Morris has shut down a plant in Uruguay, and is seeking compensation for damages allegedly caused by the county’s anti-tobacco measures. The company claims that Uruguay’s tobacco regulations, a reduction in demand, and the presence of illegal products in the market “limit their ability to commercialize their products.” However, none of those reasons will stop Philip Morris from selling its products in the country, they will simply import cigarettes from Argentina.
Members of the tobacco union protested the dismissal of workers at the plant stating that Philip Morris breached all agreements between the union and the company. The company had employed 90 workers and will retain 28 to work at sales and import offices. Uruguay’s Labor Minister said the company did not consult the government first and did not make a pre-announcement about their decision to close the plant.
Smoking in Uruguay in public spaces has been illegal since 2006 and close to 70% of the country’s smokers support the legislation. President Tabre Vazquez, a practicing oncologist, promoted the law stating that an estimated 5,000 people die in Uruguay each year from smoking-related illnesses. The country became the first country in Latin America to ban smoking in enclosed public spaces such as workplaces, shopping malls, restaurants and bars. The law authorizes inspectors from the Public Health Authority to levy fines of $1,000 or more on businesses where people smoke against the rules, including offices. Fines increase for each offense, and businesses could be shut down temporarily.
Closing this plant and suing Uruguay through the World Bank’s International Centre for Settlement of Investment Disputes are just a couple of the tactics the tobacco company is using against Uruguay for banning tobacco in public places and forcing new graphic labels.
There is no need to feel bad for Philip Morris. This cut in demand for tobacco products in Uruguay, and all the lawsuits pending around the world by the tobacco industry has not damaged their bottom line. Their net revenues increased 16.1% in the first nine months of 2011, which equals US$23.4 billion.