Russian Parliament Backs Anti-Smoking Bill in Key Ruling

Russian lawmakers approved a proposed law aimed at cracking down on smoking in the world’s second-largest tobacco market in the crucial second reading.

The State Duma members voted 442 to 1 in favor of the amended and weakened version of the bill, which keeps a ban on smoking in public places, while dropping restrictions on cigarette sales. The government will retain the right to set minimum cigarette prices, the only proposed concession that wasn’t approved by the lawmakers.

Russia’s ban on public smoking will take effect in mid-2014, six months earlier than planned, under the draft law.

Russia’s Health Ministry is satisfied with the law and will continue pushing for higher excise taxes, Deputy Health Minister Sergei Velmyaikin told reporters in Moscow today.

Philip Morris International Inc. (PM), British American Tobacco Plc (BATS), Japan Tobacco Inc. (2914) and Imperial Tobacco Group Plc (IMT), which control 93 percent of the $19.5-billion Russian market, had opposed the curbs on cigarette consumption, which were supported by Prime Minister Dmitry Medvedev and approved on the first reading on Dec. 14. The Duma is yet to vote on the draft in the third reading.

The amended draft “still has a prohibitive angle and has little about promoting a healthy lifestyle,”Alexander Lyutyi, corporate director for BAT Russia, said by phone from Moscow. “In some way, the draft is eliminating competition.”

Previous Proposal

Russia’s government had proposed measures that would outlaw all tobacco advertising and sponsorship as well as kiosk sales immediately, with bans on trade in small retail outlets and smoking in public places taking effect Jan. 1, 2015.

Tobacco makers will be able to sponsor philanthropy and sell cigarettes in all retail outlets except for kiosks, according to Alexei Levchenko, an aide to Deputy Prime Minister Olga Golodets. The draft law also drops plans to end duty-free tobacco sales. Cigarette packs will carry photo warnings starting in June, Velmyaikin said.

The new version of the legislation is a compromise after a “multi-million-dollar campaign” by the tobacco lobby, according to lawmaker Dmitry Nosov.

BAT, Europe’s largest cigarette maker, rose 0.4 percent to 3,262 pence. Philip Morris, the world’s largest publicly traded tobacco company, fell as much as 0.9 percent, the most in three days.

In Russia, 39 percent of the population are regular smokers, according to the World Health Organization. About 400,000 Russians, or 0.3 percent of the population, die each year from smoking-related diseases, Medvedev said in October. That compares with 114,000, or 0.2 percent in the U.K.

Russia is the second-biggest tobacco market after China.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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