If approved, the sanctions, unveiled last week in a filing with the Federal District Court in the District of Columbia, would represent the most draconian marketing curbs ever imposed by government on private industry. They would also be heaped atop requirements that tobacco marketers take action to reduce underage smoking by 6% a year or face additional penalties.
Tobacco companies in 1998 settled 46 state tobacco lawsuits by voluntarily agreeing to marketing curbs, but the kind of curbs sought by the Justice Department have never been imposed unilaterally. Ad groups, worried that the curbs could establish a precedent for government attempts to push similar restrictions on alcohol and food products, sued the Food and Drug Administration when it tried to impose similar limits in 1996. The argument was that such curbs violated the First Amendment. Last week, the Association of National Advertisers said it had similar concerns about the new attempt.
The Justice Department is suing six major tobacco marketers, contending they engaged in a conspiracy to illegally market cigarettes to underage smokers and hide tobacco's cancer-causing qualities. The Justice Department earlier said if it wins the case it would seek $10 billion from tobacco companies for programs over five years to help smokers quit, triggering a debate with tobacco critics who felt the amount wasn't sufficient. But the June 27 filing is the first disclosure of the full sanction set.
Tobacco makers that are part of the suit would have to:
--Provide $4 billion over 10 years to the American Legacy Foundation for an education effort; the anti-smoking foundation was set up by state attorneys general in the voluntary settlement. The education effort is in addition to the $10 billion for anti-smoking programs; Legacy's $400 million a year represents a one-third boost from the funding it got the first five years in the state settlement. The foundation would also get full freedom to say anything in its ads. The 1996 agreement barred Legacy from vilifying tobacco makers.
--Make "corrective communications" about smoking's health effects in monthly mailings to smokers, store displays, full-page ads in major newspapers and on corporate Web sites. The exact communication would be determined by a hearing officer with the companies having no say.
--Halt all price promotion on any of the five cigarette brands smoked by youths 12 to 20. According to government statistics, Marlboro, Newport, Camel, Kool and Parliament, are the top brands smoked by youths 12 to 17.
--Ban motor sports sponsorships, even those overseas for U.S. brands if there is any chance of exposure of the sponsorship occurring in the U.S. Major tobacco makers were already limited in their sponsorship to one U.S. sport by the state settlement.
--Ban flavored cigarettes and the use of "light," "mild" or "natural" to describe any cigarette brand.
--Pull any ads deemed by a hearing officer to appeal to youth.
Violations would carry a severe penalty-an extension of the $10 billion program for five years and additional payments to Legacy.
The proposal drew rebuke from Philip Morris USA parent Altria and Dan Webb, the chief lawyer representing tobacco makers in the case.
Altria's VP-associate general counsel William S. Ohelemeyer called the proposal "a high-minded and socially desired set of concepts" that represents an attempt to nationalize tobacco companies, and shows "blatant disregard" of an appellate court decision limiting remedies to those preventing further conspiracy and unconnected "to evidence or law."