Tobacco Products Directive: The EC's Regulatory Impact Assessment is not sufficiently robust, Oxera concludes

Brussels, Belgium (ots) - The Regulatory Impact Assessment (RIA)
undertaken by the European Commission on its proposed revisions to
the 2001 Tobacco Products Directive (TPD) is not sufficiently robust
when reviewed from the perspective of regulatory best practice,
including the Commission's own guidelines for RIA's (1), reveals
Oxera, an economics consultancy, in a report commissioned by Japan
Tobacco International (JTI).

"The aim of Oxera's review was not to question the objectives
behind the proposals; we support sound tobacco regulation. However,
from the perspective of best practice in public policy, regulation
and economic analysis, we concluded that the RIA is not sufficiently
robust and contains a number of significant shortcomings", said Dr.
Gunnar Niels, Director at Oxera. "This is not to say that there is no
underlying economic case for some of the proposed regulations, or
other forms of tobacco regulation. However, a more robust RIA would
benefit regulatory decision-making in this area", he added.

Oxera highlights four key shortcomings:

- Lack of clarity on the objectives: While the overall objective
of the TPD revision is said to improve the functioning of the
internal market, a number of aspects of the proposed regulations seem
to go against criteria that are normally considered to be part of a
well- functioning market, including innovation, competition, consumer
choice and cross-border trade. In fact, most elements of the RIA seem
to be driven primarily by public health considerations, identified as
an additional objective, rather than the internal market.

- The baseline scenario is not clearly defined and is not based on
available evidence. The RIA assumes without any supporting evidence
that the current trend towards decreasing tobacco consumption will
stop if regulations remain unchanged, and that any further reduction
in consumption would be attributed to the proposed regulations rather
than existing regulations or other factors.

- Reliance on assumptions rather than evidence: The RIA assumes
that the TPD would result in a 2% reduction in tobacco consumption
within five years of the proposed regulation changes. The 2%
reduction in tobacco consumption is assumed rather than derived from
evidence or from analysis. In addition, the cost-benefit analysis has
been applied solely to the final proposed package of measures, rather
than to the individual areas separately. This goes against the
Commission's own guidelines (2).

- Limited reference to evidence or analysis in the RIA to support
the proposals: There is limited reference to evidence in the RIA to
support the proposals on packaging; ingredients and other tobacco
products; and track and trace.

Thierry Lebeaux, Head of EU Affairs at JTI, commented: "This
report further demonstrates that the Proposal to revise the EU TPD
has not been properly thought through. In the interest of quality
regulation, we hope that Oxera's conclusions will be taken into
consideration before any new measures are voted on", he concluded.

(1) See page 4 and 8 of Oxera's review.
(2) See page 4 of Oxera's review.

Download review: http://www.jti.com/how-we-do-business/key-
regulatory-submissions/

About JTI

JTI, a member of the Japan Tobacco Group of Companies, is a
leading international tobacco manufacturer. It markets world-renowned
brands such as Camel, Winston and Mevius (Mild Seven). Other global
brands include Benson & Hedges, Silk Cut, Sobranie, Glamour and LD.
With headquarters in Geneva, Switzerland, and about 25,000 employees
worldwide, JTI has operations in more than 120 countries. Its core
revenue in the fiscal year ended December 31, 2012, was USD 11.8
billion. For more information, visit: www.jti.com

About Oxera

Oxera is an independent economics consultancy based in Oxford,
London and Brussels with more than 30 years of experience in the
areas of regulation, competition and finance. During this period,
Oxera has built a track record and reputation in analysing public
policy, price controls, developing regulatory frameworks in a number
of sectors such as energy, water, transport, communications,
financial services and health. Oxera has made leading contributions
to the development of RIA methodologies in Europe, and has advised
the European Commission, national government bodies and private
sector clients on RIAs in a variety of industries.

Contact
Thierry Lebeaux
JTI EU Affairs Office
Tel.: +32/26-26-2471
E-Mail: thierry.lebeaux@jti.com

Gunnar Niels Oxera
Tel.: +44/1865-253000
E-Mail: gunnar.niels@oxera.com