Home » Tobacco Bill will have far-reaching consequences for the industry and economy

Tobacco Bill will have far-reaching consequences for the industry and economy

by Yolandi Robberts, Partner & Zimkhitha Mhlahlo, Associate from Webber Wentzel

by Tia

The government is currently considering the Tobacco Products and Electronic Delivery Systems Control Bill, which will regulate the display, promotion and packaging of traditional tobacco products and electronic delivery systems

The Tobacco Products and Electronic Delivery Systems Control Bill (the Tobacco Bill) was tabled at the National Assembly by the Minister of Health on 9 December 2022. It is currently before the Portfolio Committee on Health.

The Tobacco Bill is rooted in the government’s aim of strengthening public health measures to reduce the prevalence of tobacco use and nicotine dependence. It contains a number of amendments that significantly impact on, and will have far-reaching consequences for, the tobacco and electronic delivery systems industry, as well as the South African economy.

Key amendments include:

  • enhanced regulations on the sale and advertising of traditional tobacco products such as cigarettes and cigars;
  • new regulations on the sale and advertising of electronic delivery systems (which have, to date, been largely unregulated in South Africa);
  • the packaging and appearance of those products and imposing standardised packaging requirements (also referred to as plain packaging);
  • the prohibition of all sales through vending machines; and
  • determining that indoor public places and certain outdoor areas are completely smoke-free.

Advertising, promotion and display

The Tobacco Bill takes the regulation of advertising and promotion of tobacco products a step further than the current Tobacco Products Control Act, 1993. It prohibits all promotion and sponsorship of tobacco products and electronic delivery system products in both domestic and cross-border advertising (clause 3(1), and any form of advertising, promotion and marketing of tobacco products and electronic delivery systems (clause 3(2)). It leaves no room for any form of display of tobacco and electronic delivery systems, including both nicotine and non-nicotine products.

A noteworthy amendment is the total ban on the display of tobacco and related electronic delivery products at all points-of-sale of retailers and wholesalers (clause 3(5)).  Instead of displaying the products at their places of business, retailers and wholesalers may make the products available to adult consumers upon request. Retailers and wholesalers may only display a single prescribed notice informing consumers of the list of relevant products available for sale.  This notice must contain only text information and any pictorial health warnings required by law.

The Tobacco Bill also prohibits the sale of tobacco and related products through the placement of vending machines on any premises (clause 3(6)). This is currently permitted in terms of the Tobacco Products Control Act, although with certain restrictions.

Standardised packaging

The Tobacco Bill introduces the long-anticipated concept of standardised packaging.  Clause 4(1) provides that the Minister must prescribe, by way of regulation, standardised packaging and labelling of tobacco products.  The packaging must, amongst other things: (i) have a uniform plain colour and texture; (ii) which material may be used for the products, (iii) the size, type and shape of the packaging; (iv) how the packaging may be opened; and (v) that all “brand elements” (trademark, trade name, logo, graphic arrangement, design, slogan, symbol, motto, selling message, recognisable colour or pattern) on, inside or attached to the individual tobacco product are prohibited (clause 4(2)).

The only information that may appear on the packaging is the brand name and product name in a standard colour and typeface, together with other permitted information such as the manufacturer’s details, health warnings, pictures, graphics and images.

Standardised packaging has been opposed in a number of countries around the world, including Australia and the UK. In 2011, the Commonwealth Parliament of Australia promulgated the controversial Tobacco Plain Packaging Act, 2011 (PPA) which requires all brands of cigarettes to be sold in uniform dark brown packaging containing graphic imagery of the harmful effects of smoking on the body. The constitutionality of the PPA was challenged and the Australian High Court held that it was in line with the Constitution.  The UK also implemented standardised packaging regulations which were challenged for their constitutionality. These regulations were also declared constitutionally valid. Between 2018 and 2022, the World Health Organisation reported that a wave of various other countries has similarly passed legislation to adopt and implement standardised packaging.

In South Africa the imposition of standardised packaging is also likely to rouse vehement opposition. It has been argued that standardised packaging impermissibly impacts on trademarks, which serve a distinctive advertising function in preserving the originality of brands and influencing consumer loyalty to the different brands of tobacco products.

The Explanatory Memorandum to the Tobacco Bill suggests that there will be no financial implication for the State through these amendments.  Many would argue that this is simply not true: if the legislative framework damages the profitability and sustainability of the tobacco industry, it will have a direct impact on the national fiscus. These amendments may fuel the illicit tobacco industry, which will have the opposite effect of what the legislature intended.

Ministerial powers

The Tobacco Bill affords the Minister wide-ranging powers to prescribe regulations. The Minister will prescribe regulations on the crucial aspects of the Bill, such as the packaging of tobacco products and electronic delivery systems as well as how retailers and wholesalers should comply with the total ban on displays on points-of-sale. It is unclear what these regulations will look like, as they will be at the sole discretion of the Minister.  This creates significant uncertainty for the industry.

While legitimate health-related considerations may underpin some of the proposed mechanisms, it remains to be seen whether the more draconian measures are proportional in their impact. There will, however, be an inevitable tension between the economic impact of these measures and the public health interests they purport to serve.  Stakeholders are strongly encouraged to submit their comments by the deadline date of 4 September 2023.

Yolandi Robberts
Zimkhitha Mhlahlo

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