BAT’s anti-competitive practices exposed. Companies attending business conference urged to withdraw in protest at BAT’s presence.



Friday 27 July 2007

ASH news release:  Embargo: 00:01 BST Friday 27th July  2007
New research published today provides yet more evidence of the shoddy business practices of BAT, the world’s second largest tobacco company.  A review of the company’s internal documents released through litigation in the USA shows how the company contravened established international business standards as well as its own code of conduct by engaging in anti-competitive practices.  The study, published in the journal Tobacco Control [1], focuses on BAT’s business conduct in Uzbekistan where it acquired the former state-owned tobacco company and established its own private monopoly. BAT subsequently exerted pressure on the Government to reduce cigarette taxes and to overturn tobacco control legislation.

Dr Anna Gilmore, Senior Lecturer at the London School of Hygiene and Tropical Medicine and lead author of the study commented:

 “In stark contrast to the image BAT seeks to portray of a responsible corporation, its own documents reveal its reprehensible conduct in Uzbekistan. In securing its deal in Uzbekistan BAT relied on the active support of President Karimov, whose regime is now notorious for its gross human rights abuses. Simultaneously BAT took advantage of the Uzbeks inexperience in negotiating such deals, engaging in a range of anticompetitive practices that cemented its dominant position and ensured there would be no effective competition from either inside or outside the country. It absorbed competitors, engaged in exclusive deals, secured exclusive rights to manufacturing tobacco products and processing leaf, and acquired a veto over the registration of cigarette brands. We also know from our previous work that BAT’s indulgence in anticompetitive behaviour is not unique to Uzbekistan.”

 

Dr Gilmore added:

“BAT’s conduct in Uzbekistan is questionable for a whole other raft of reasons. Documents show it was actively involved in smuggling cigarettes into the region, that as part of its deal it ensured that highly effective tobacco control legislation was overturned and that tobacco taxes were cut by 50%. Such actions will undoubtedly have increased smoking rates and condemned a large number of the population to an addiction they can ill afford. The British Helsinki Human Rights Group have also highlighted BAT’s appalling treatment of tobacco farmers there.[2]”

 

Despite this incriminating evidence, BAT continues to claim that it is acting responsibly and since 2002 has been issuing social reports annually to justify its actions. [3]  Sadly the corporate white-wash has convinced some conference organisers that BAT is “reformed” .   The Ethical Corporation, for example, has invited BAT to speak at a conference in London in October on “best business practices in emerging markets”. [4]

 

Amanda Sandford, Research Manager of ASH, commented:

“It beggars belief that anyone could be duped into thinking that BAT is worthy of contributing  to a conference on ethical corporate behaviour in emerging markets  As the experience in Uzbekistan and other countries has shown, BAT has contravened internationally agreed standards of behaviour in order to maximise its profits and brush off competitors.

“BAT has a long history of dubious practices and it is totally inappropriate for it to be considered an ‘ethical’ company.  We urge invited speakers at the Ethical Corporation conference to withdraw from the event in protest at the inclusion of BAT. Having BAT speak at a conference on responsible business practice is like having a weapons manufacturer speak at a peace convention.”

 

Notes and links:

[1]  Gilmore A, McKee M and Collin J.  The invisible hand: how British American Tobacco precluded competition in Uzbekistan.  Tobacco Control  2007; 16: 239-247  Note: Copy of full article available on request.  Abstract available at: www.tobaccocontrol.com

[2] British Helsinki Human Rights Group. BAT in Uzbekistan, 2002. [no longer available online]

The report describes how “London-based multinational British American Tobacco (BAT) appears to be exploiting local Uzbek farmers in what amounts to de facto slave labour.”

[3]  BAT’s social reports are available on the BAT website at: www.bat.com ASH’s responses can be viewed at: www.ash.org.uk/information/tobacco-industry/conduct

[4]  Ethical Corporation ‘Responsible Business in Emerging Markets’ summit on 9th – 10th October, in London. Speakers have been invited from the following companies:

* De Beers * IBM * Intel * Unilever * Citigroup * SABMiller * Arcelor Mittal * ICICI Bank * Ford Motor Company * Old Mutual * British American Tobacco * Barclays * RAO UES United Electric Systems of Russia * Banco Real ABN AMRO * BHP Billiton * Absa Group * Nestle *

Contact: Amanda Sandford , ASH  020 7739 5902 (w) ISDN available

Anna Gilmore 07876 748633