Philip Morris to Combat Online Cigarette Sales

NEW YORK Philip Morris USA has agreed to help combat the sale of cigarettes over the Internet and via the U.S. mail, in a landmark agreement worked out with New York Attorney General Eliot Spitzer.

In the pact disclosed late yesterday, PM said it would voluntarily adopt protocols following an agreement reached with 37 other attorneys general across the U.S.

“This is a major step forward in our ongoing effort to shut down illegal Internet cigarette traffickers,” Spitzer said in a statement. “These illegal enterprises cannot remain in business without a steady supply of cigarettes, and thus restricting that supply can be very effective. We will continue to pursue this goal by asking other cigarette manufacturers to follow Philip Morris’s lead and reduce the flow of their cigarettes to these illegal traffickers.”

According to Spitzer’s office, the protocols agreed to provide for the:

— Termination of shipments of cigarettes to any of PM USA’s direct customers that the attorneys general have found to be engaging in illegal Internet and mail order sales;
— Reduction in the amount of product made available to direct customers found by the attorneys general to be engaged in the illegal resale of PM USA cigarettes to the Internet vendors; and,
— Suspension from the company’s incentive programs of any retailer found by the attorneys general to be engaging in such illegal sales.

“Our voluntary agreement with the state attorneys general builds on Philip Morris USA’s existing trade programs and policies intended to preserve the integrity of our brands and the legitimate trade channels through which they are sold,” Denise Keane, Philip Morris USA executive vice president and general counsel, said in a statement.

The agreement is the third leg of an effort by the attorneys general to stop or slow the online and mail order sale of cigarettes. In March 2005, they reached a deal with major credit card companies not to process payments for Internet cigarette retailers, and following that they had secured deals with both UPS and DHL not to ship such packages.

—Brandweek staff report