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Tobacco companies under pressure: Settlement worth billions should end legal dispute
October 20, 2024 – 10:00 p.m
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A settlement worth billions: Tobacco companies such as Philip Morris, BAT and Japan Tobacco are on the verge of one of the largest compensation settlements in recent decades.
The decades-long legal battles between tobacco companies and smokers in Canada are nearing a costly end. Philip Morris, British American Tobacco and Japan Tobacco have agreed to a settlement totaling C$32.5 billion.
A long-standing legal dispute before completion
The shares of the tobacco company Philip Morris International (PMI) remained largely stable, although the news about the billion-dollar settlement made headlines in Canada.
The subsidiary Rothmans, Benson & Hedges is one of the main participants in the case, which stems from claims for damages from more than a million smokers and ex-smokers from Quebec.
More than 20 years of litigation
The Canadian branches of Philip Morris, British American Tobacco (BAT) and Japan Tobacco were involved in a class action lawsuit that began in 1998 and ended in 2015 with a judgment ordering the companies to pay damages.
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It was about allegations that the companies had intentionally concealed the health risks of smoking. The settlement now amounts to 32.5 billion Canadian dollars (approx. 21.7 billion euros).
The comparison should cover all claims
The agreed settlement package calls for the three tobacco companies to make a combination of cash payments and future payments based on a percentage of their sales.
While BAT shares in London fell by 3 percent after the settlement was announced, Philip Morris shares remained almost stable.
The plan, submitted to the Ontario Superior Court of Justice, is intended to end all ongoing litigation in Canada regarding tobacco products. Imperial Tobacco Canada (ITCAN), BAT’s Canadian unit, also supports the plan and hopes for a quick resolution.
Stable shares despite claims worth billions
Despite the massive payment obligations, Philip Morris shares on the New York Stock Exchange (NYSE) remained stable and were only slightly weaker, falling by 0.06 percent to $ 120.06. BAT shares, however, fell more than 3 percent in London, showing that market uncertainty continues.
