Foreign cigarette firms sue gov’t over PX ruling

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Foreign cigarette firms sue gov’t over PX ruling

British American Tobacco (BAT), the maker of Dunhill cigarettes, and the U.S. company Phillip Morris, the maker of Marlboro and Parliament cigarettes, filed suits against the government on April 1 and March 28, respectively, accusing the government of unfairly prioritizing Korea Tobacco and Ginseng (KT&G) in selecting which cigarettes will be sold at military post exchanges (PX). The two companies also requested that the government also nullify its selection. “The Ministry of National Defense Welfare Agency’s selection of Tabacco brands is not transparent,” claimed BAT.

The Ministry of National Defense Welfare Agency selects cigarette brands to be sold in PX every April through a competitive bidding process. In each selection, it weeds out about four to five brands from the existing 20 and selects new brands.

In the selection process, panels, consisting of military officers, petty officers and soldiers, evaluate the taste, design and price of different cigarettes. The 20 cigarette brands that are currently stored in the PX, including This Plus, Esse and Bohem Cigar, are all from KT&G.

Cigarettes are one of the most commonly purchased items in PX.

“Foreign cigarettes are more popular among the people in the soldier’s age group than those from KT&G, but for some reason, only KT&G products are being sold,” said BAT, which lost in last year’s bid and requested mediation, but was dismissed.

This year’s selection of cigarette brands started on April 4, and the list of brands that went through will be released on April 12. The selected brands will be supplied from May 2016 until April 2017.

“The panels fairly evaluate the products by adhering to the regulations and procedures that are stated in the bid’s notice,” said the Ministry of National Defense. “We’ve strictly followed the protocol for unbiased evaluation this year as well.”

It hasn’t been very long since soldiers were able purchase cigarettes from a variety of selection. Up until 1981, a military cigarette brand called Hwarang was distributed to soldiers for free. After that year, soldiers were instead paid a cigarette stipend. Starting from the mid-2000s, KT&G monopolized the sale of cigarettes in the military and sold tax-free cigarettes at the price of about 250 won (20 cents). From 2005 until 2009, the government began prohibiting the sales of tax-free cigarettes to discourage smoking, and instead started supplying cigarettes at normal prices to the military.

BY LEE YU-JUNG [shin.sooyeon@joongang.co.kr]

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