Tobacco Companies Go After Bloomberg's Ban on Coupons

Lawsuit does not challenge New York City ordinance's $10.50 pricing minimum

Published in CSP Daily News

NEW YORK -- Tobacco companies and three trade groups representing cigarette retailers asked a federal court on Thursday to block a new law designed to keep tobacco prices sky high in New York City, reported the Associated Press.

The lawsuit, filed in Manhattan, challenges a city ordinance passed last fall that set a minimum price of $10.50 for every pack of cigarettes sold in the city, and prohibited the use of coupons or other promotional discounts to lower that price. The coupon ban also applies to other forms of tobacco.

Tobacco manufacturers and sellers say those restrictions on discounts are an unconstitutional violation of free speech rights.

"The ban on coupons and promotional price discounts raise serious federal and state constitutional questions while also being pre-empted by federal and state laws," said Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO).

The suit asks the court to block parts of the law from taking effect in March. It does not challenge the most high-profile section of the law, which banned the sale of tobacco products to anyone under the age of 21.

Mayor Michael Bloomberg signed New York City's pricing rules into law in November. They were the last in a string of anti-tobacco rules and laws that he championed over his 12 years as mayor that made the city's cigarettes the costliest in the country. Retail prices now often exceed the minimum set by the city, due to high taxes, said the report. Bloomberg left office at the end of December.

The city's Law Department did not respond to a request for comment.

Anti-smoking advocates have pushed for pricing controls as a way of making cigarettes so expensive that people won't pick up the habit, or will be forced to quit.

Courts have generally upheld laws establishing minimum prices, and the lawsuit filed Thursday does not challenge the city's $10.50 pricing minimum.

But in other jurisdictions, legal price minimums usually allow for consumers to pay less through manufacturers coupons and other pricing deals, like "buy one, get one free" sales. The tobacco companies filing the suit, including giants Lorillard, R.J. Reynolds and Philip Morris USA, say they have the right to keep offering consumers those discounts.

The tobacco industry filed a similar lawsuit against the city of Providence, R.I., when it implemented a ban on coupons and discounts. That legal challenge failed when the city's rules were upheld by a federal appeals court.

That decision is not binding in New York, however, Briant said he believes that different legal standards apply there that put this new challenge on better footing.

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