Australian tobacco firms may face legal challenge

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CANBERRA -- Australia's State health ministers are being urged by the Australian Medical Association and the anti-smoking lobby to take legal action against the tobacco industry, following admissions by the Liggett Group in the U.S. that smoking causes cancer.

Reaction from State and Federal governments has been muted although West Australian health minister Tim Price said the companies should fund a public education program on the effects of smoking. Mike Horan, Queensland's health minister said: "This State spends $80m a year on smoke-related illnesses. If the other States invite us to join them in legal action, we will".

Public reaction was reflected on the stock exchange where Australian-listed tobacco companies suffered a hammering, following Liggett's disclosure, with the market slashing about $35m off the value of WD & HO Wills and Rothmans Australia shares.

Australia's market for cigarettes has shrunk about 8% in the past two years, forcing the tobacco companies into disastrous price-cutting.

Defiant Philip Morris, which is seldom traded on the stockmarket here, said the Liggett settlement "was a complete sham...this newest rumored settlement has nothing to do with the rest of the industry and changes nothing."

Copyright March 1997, Crain Communications Inc.

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