UK court rejects Big Tobacco's appeal against plain packaging

By Paul Sandle and Martinne Geller

LONDON (Reuters) - Britain got the go-ahead on Thursday to make plain packaging compulsory on cigarettes when a court struck down a legal challenge brought by the world's top four tobacco companies.

British American Tobacco (BAT) (BATS.L), Philip Morris International (PM.N), Japan Tobacco International (2914.T) and Imperial Brands (IMB.L) had argued the law, due to take effect on Friday, unlawfully took away their intellectual property.

In its ruling, the High Court rejected their argument and highlighted the moral dimension to the new regulations.

"It is wrong to view this issue purely in monetised terms alone," it said.

"There is a significant moral angle which is embedded in the regulations which is about saving children from a lifetime of addiction, and children and adults from premature death and related suffering and disease."

Smoking kills about 6 million people worldwide every year.

BAT said the judgment contained a number of fundamental errors of law and the company was applying for leave to appeal the ruling. Japan Tobacco also said it intended to appeal but Philip Morris said it would not, while Imperial said it was considering its legal position.

Plain packaging means a ban on all marketing on tobacco packages -- including colours, logos and distinctive fonts -- to try to make smoking less attractive, especially to young people.

British public health minister Jane Ellison said the government would not allow the tobacco industry to dictate policies and hailed the ruling as "a victory for a generation that will grow up smoke-free".

Governments around the world are cracking down on smoking and this month, the EU's highest court upheld a new law requiring tobacco companies to use larger health warnings and bans small packs and menthol cigarettes from 2020.

Also this month, the United States banned sales of e-cigarettes and cigars to minors.

Britain's plain packaging rule will take effect on Friday, the same day as new packaging rules for the broader European Union, although products manufactured before May 20 can continue to be sold by retailers for a further 12 months.

Australia was the first country to make plain packaging compulsory but France and Ireland have also agreed to do so.

Wells Fargo Securities analyst Bonnie Herzog said there was now an increased likelihood that other European countries would follow suit.

In addition to the aim of curbing smoking, data from Australia suggests it could lead consumers to buy cheaper brands, posing a threat to companies' profits.

(Writing by Ben Hirschler; Editing by Louise Ireland and Keith Weir)