Philip Morris, a unit of Altria Group, is to pay $1.25 billion over 12 years to finance the fight against contraband cigarettes and settle legal disputes with the EU over smuggling charges.
The European Union executive has waged a long-running lawsuit in U.S. courts and has accused the world's largest cigarette maker of colluding in smuggling cigarettes to evade EU customs and taxes. Andre Calantzopoulos, President and CEO of Philip Morris International, said the company had agreed to make funds available for efforts to fight contraband and counterfeit tobacco products. European Budget Commissioner Michaele Schreyer, also in charge of fighting fraud, praised the agreement: "We believe that it will enhance the ability of the European Commission and the member states to combat the illegal trade in cigarettes which results in the loss of substantial tax and customs revenues each year." Philip Morris said the agreement would end all prior disputes over contraband, including civil litigation brought by the European Commission and 10 EU states against the company and a related case brought by Philip Morris against the Commission.