The Minimum Price Sentence: Italy Convicted

“The Italian Republic, imposing a minimum price for cigarettes, eluded the obligations incumbent on it.” The sentence has arrived: as was foreseen, the “prezzo minimo” is illegal.

Italy will have to pay penalties to the European Union and damages to Yesmoke. However, those who managed the minimum price affair are well aware that it will not be they who pay the penalties; neither will it be Philip Morris. The Italian State will have to shell out the money, that means, those poor bastards, the Italian taxpayers.

According to Italy, the minimum price was justified by the need to “safeguard the health and the lives of people.”

The idea was to avoid prices that were low and that would encourage people, especially young people, to smoke. The EU Court sentence specifies:

“The achievement of this objective presupposes the application of excise taxes, that do not distort the conditions of competition.”

According to the sentence, free competition would be obstructed by:

“Aligning to the higher prices, the retail sale price of the cigarettes situated in the lower part of the price range, neutralizing the price differences between the various products.”

“Il lupo perde il pelo ma non il vizio” – a leopard cannot change its spots. In Italy, the “tassa minima” – minimum tax that officials are working on will push up the prices only of the products in the cheaper range of the market. This will bring us closer to the “prezzo unico” – “single price” of cigarettes, all fixed at the price of Marlboros.

It is true that Yesmokes will stay at 3.80 euro a pack; very probably, they will be the only cigarettes whose prices do not go up closer to Marlboros. But, whereas yesterday, Yesmoke’s profit at 3 euro 80, thanks to the minimum price, was 300%, tomorrow with the minimum tax, it will be close to zero.

For Marlboros, on the other hand, there will be no change: the taxes will be the same, the cost of a pack will be the same and the multinational producer will continue to earn the same science-fiction profits. So much for free competition!

Those smart aleck Italians have found a way to eliminate only halfway their minimum price on cigarettes.

At any rate, at least the partial liberalization of the market will be sufficient for Yesmoke to acquire more market share… and continue to fight for profound changes in the sector.

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