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Imperial Loses U.K. Court Appeal Over Scotland Display Ban

Imperial Tobacco Group Plc (IMT), the maker of West and Davidoff cigarettes, lost a U.K. Supreme Court appeal over a Scottish law banning vending-machine sales and the display of tobacco products in stores.

Britain’s highest court rejected today Imperial’s claim that the Scottish Parliament, a “devolved” national body created in 1998, doesn’t have the authority to enact such bans. The new rules don’t involve the type of consumer protection or product safety matters that can only be handled by the U.K. Parliament, the court said in a unanimous ruling.

“We know that reducing the number of people that smoke will have wide benefits for Scotland’s health and these bans will play a crucial role in preventing young people from taking up smoking,” Michael Matheson, Scotland’s minister for public health, said in an e-mailed statement about the ruling.

Since 2007, dozens of countries have put in place measures to limit smoking, which killed almost 6 million people last year, according to the American Cancer Society. One of the toughest such laws took effect Dec. 1 in Australia, where cigarettes must now be sold in dark brown packets, with no symbols or images and the same font for all brands.

The purpose of the bans in Scotland is “to discourage or eliminate sales of tobacco products, not to regulate how any sales are to be conducted,” the London-based court said in a summary of the opinion.

Legal Fees

Scotland passed the law in 2010, triggering the lawsuit and a lower-court ruling against Imperial earlier this year. Lawyers for the Edinburgh-based government will now seek to recover its legal fees in the case, Matheson said.

“We’re disappointed with today’s judgment, as we believe our legal argument was strong,” Simon Evans, a spokesman for Bristol, England-based Imperial, said in a phone call. “We’ll now await the publication of the Scottish display ban regulations and consider our options.”

The failed appeal by Imperial is the first case in which provisions of a Scottish law have been challenged on the ground that they overlap with issues reserved for the more-powerful U.K. Parliament, the court said.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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