From: The Motley Fool
Failing to reach agreement with the European Union opened up the company to brand-new litigation risks.
Dan Caplinger
Tobacco companies have had to deal with threats of litigation for decades, and to a large extent, they’ve managed to hold back the tide of lawsuits with minimal financial damage. Yet for Philip Morris International (NYSE:PM), 2016 brought a new potential risk related to legal action, when the company failed to persuade the European Union to renew an anti-smuggling agreement with the tobacco giant. As a result, it’s possible that relations between Philip Morris and regulators in Europe could become colder, posing long-term issues that could threaten other initiatives like reduced-risk products.
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Why the deal didn’t get renewed
2016 brought the expiration of the 12-year term of the agreement, and the EU decided in July not to renew the pact. The decision was somewhat contentious, because some member countries in the EU would have preferred to keep agreements in place even when the members of the European Parliament as a whole had voted to recommend not renewing them.
