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Preventing Illegal Tobacco Sales

Illicit Trade in the EU

A Problem Without Borders

The illegal cigarette trade doesnt begin or stop at EU borders. In fact, much of the illicit tobacco enters from outside Europe. That’s why concerted action within the EU can have a global impact. We're committed to encouraging open dialogue about the most effective ways to combat illicit trade in tobacco products by involving manufacturers, suppliers of key components, technology providers, customs authorities, and other law enforcement agencies.

We continue with our considerable efforts to combat the illicit tobacco trade in the EU wherever we run our business. The EU is currently contemplating new legislation that covers illicit trade under the Tobacco Products Directive, and we firmly believe that this presents a unique opportunity for the EU and the industry to put in place an effective and lasting solution to this growing and complex issue.
  • Alvise Giustiniani, Head of the Anti-Illicit Trade Department, Philip Morris International

We fully support ratification of the World Health Organization’s FCTC Protocol to Eliminate Illicit Trade in Tobacco Products, an important advance in combatting illegal and unregulated tobacco trade. We are convinced that ratifying the FCTC Protocol will help the EU gain the upper hand in fighting the black market in tobacco products and will pave the way for controls in tracking and tracing, licensing, and due diligence.

Learn more about our approach by reading our position paper ‘Fighting the Illicit Trade in Tobacco in the EU.’

Cooperating with the EU and its member states

In 2004, Philip Morris International, the European Union, and 10 of its member states signed a 12-year cooperation agreement, which by 2009 was ratified by all 28 member states. The purpose of the agreement was to coordinate efforts in combatting illicit trade in PMI brands within the EU.

As part of the agreement, we introduced stringent record-keeping, screening standards for potential business partners, and strict control of cash payments. We also provided USD 1.25 billion in funding to the Commission and member states to underpin these efforts over the course of the agreement.

This agreement has served its purpose, reducing PMI contraband on the illicit tobacco market and providing public revenues of around USD 1 billion to member states and the EU budget. In a changing legal and market environment, we will redeploy our resources and continue to fight illegal tobacco trade by focusing on cheap whites, strict law enforcement, and strengthened international cooperation.
  • Kristalina Georgieva, former EU Commissioner, following the agreement’s expiration in July 2016
We are cooperating with the EU to fight illicit trade

Results from the 2016 EU Commission report

The anti-contraband and anti-counterfeit cooperation between PMI and the EU has been highly successful.

  • 85-percent drop in the volume of genuine PMI cigarettes seized by member states between 2006 and 2014 – The 2016 EU Commission report states that the PMI agreement has effectively met its objective of reducing the prevalence of PMI contraband on the illicit EU tobacco market as demonstrated by an 85-percent drop in the volume of genuine PMI cigarettes seized by member states between 2006 and 2014. 
  • 87 illegal cigarette factories were raided, inspected, and shuttered – Thanks to PMI’s support of investigative work and analysis of counterfeit cigarette seizures in the EU, investigators could establish links between different smuggling routes. The result of these efforts is the closure of a substantial number of illegal cigarette factories in the EU.
  • Close to 50 percent of total PMI volume is covered by carton-level tracking & tracing – PMI has been progressively moving from master-level to carton-level tracking and tracing. Our products are tracked at the master-case level in over 120 countries. Now, close to 50 percent of our total volume, including duty free, is covered at the carton level. We have also informed authorities that we expect to increase pack-level tracing, prior to it becoming mandatory in the EU under the Tobacco Products Directive.

Effective supply-chain controls are key to how we run our business in the EU and beyond

These measures include:

Know your customer
Who are we selling our products to?
pmi keyfact icon 11
Volume monitoring
    To ensure sales meet real consumer demand
Tracking and tracing
    Determine points where goods might be diverted from normal sales channels
      Cooperating with authorities to exchange information on cigarette seizures
    Encouraging open dialogue to combat illicit trade
    Reports, fact sheets and infographics about our progress

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