Regulatory News

Souza Cruz, a subsidiary of British Tobacco, obtained an injunction in court that establishes a fine of R$50,000 (US$32,000) for each seizure of cigarettes manufactured in Brazil by Tabacalera del Este (TABESA), the main producer in Paraguay. The initiative was taken to try to combat the smuggling that strongly affects the Brazilian market.

According to Souza Cruz, most of the TABESA production is illegally exported to Brazil, where its products are sold at prices well below that charged by regular trade. The Brazilian company is accusing the Paraguayan company of "unfair competition" and "violation of national economic order" by the "flood of products that do not pay taxes, not subject to the requirements of sanitary control and the rules for regulation."

TABESA said the decision was not communicated and that Brazil is not among the 18 countries for which it exports its products. "If people buy cigarettes in Paraguay, and at their own risk, go to Brazil, where is the responsibility of the factory?" asked Allan Weston, legal counsel for the company, in an interview with the newspaper, Valor Econômico.

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