1. No category

20232073 2
L86t IT 3egar*aaa
T5-D MIS
AO
SNOWWO5 430 MOB 2B3 $O
2 LIWWOO HAIZvgsxc i 8HL
01
aaz:ts v
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
:r.i.ti.i,tiixi+cd;/it ►
.1d►Yt.u ..r~.+o~w ........~,. ._
t
TABLE OF CONTENTS
Pa a No .
EXECUTIVE SUMMARY
INTRODUCTION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .w . . . . . . . . .
THE PROPOSED LEGISLATION WILL NOT ACHIEVE ITS OBJECTIVES
.. .
1.
4.
- Current Canadian Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
- Advertising Bans Don't Work
5.
- Cigarette Advertising and Young People . . . . . . . . . . . . . . . . . 9 .
- Spill-Over (Foreign) Advertising
13 .
.
.
.
. . . . . . . . . . . . . . .
.
.
. .
.
.
. . . .
THE PROPOSED LEGISLATION WILL HAVE SERIOUS ECONOMI C
CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 .
-
Economic Impact and the Loss of Jobs . . . . . . . .
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Threat of International Brand Penetration
Trade Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sponsorships . . . . . . . . . . . . . . . . . .w . . . . . . . . . . . . .
. . .
. . .
..
. . .
. . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
15 .
16 .
19 .
22 .
22 .
ADVERTISING BANS AND FUNDAMM"AL FREEDOMS -
A DANGEROUS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
OTHER ISSUES RAISED BY THE LEGISLATION . . . . . . . . . . . . . . . . . . . . . 30.
- Health Warnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 .
- Enforcement, Offenses and Punishments . . . . . . . . . . . . . . . . . . 32 .
A REALISTIC AND WORKABLE ALTERNATIVE . . . . . . . . . . . . . . . . . . . . . . . 36 .
CONCLUSION . . . . . . . . . . . . . . . . .w . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 .
REFERENCES
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
APPENDICES :
Appendix A : Cigarette Sales Trends in Major European
Countries 1969 - 1986 ; Imperial Tobacco
Limited, June 1987 .
Appendix 9 : Economic Impact of the Canadian Tobacco
Industry .
Appendix C : Cigarette and Cigarette Tobacco
Advertising and-Promotion code of the
Canadian Tobacco Manufacturers' Council .
Appendix D : Summary of Proposals made by the Canadian
Tobacco Manufacturers' Council to Ron .
Jake Epp, Minister of National Health and
Welfare, November 28, 1986 .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
" hsYMV4 761 .1 . :
ICON (Pages 1 - 3 )
1 . The Canadian Tobacco Manufacturers' Council opposes
legislation to ban tobacco advertising and promotion for
two basic reasons . All available evidence confirms that
such bans are ineffective in reducing cigarette
consumption . But bans have other negative effects :
They cost jobs, emasculate competition, invite
increasing penetration by international brands, threaten
financial support of sports and arts events, and
infringe on basic economic freedoms .
THE PROPOSED LEGISLATION WILL NOT A OBJECTIVES
(Pages 4 - 14 )
2 . Canadian cigarette consumption has been declining by
about 4 percent a year, from 66 billion units in 1982 to
55 billion last year, and is forecast to continue to
drop at that rate in the years immediately ahead . The
decline reflects heavy federal and provincial taxation,
diminishing popularity of cigarettes among Canadians,
and the impact of anti-smoking campaigns . If the overriding objective is to reduce cigarette consumption, the
current policy mix, including self-restraint on
advertising and promotion, is working .
3 . Marketing experts agree that, in a mature market where
virtually everyone knows of a product's existence and
basic qualities, advertising has little impact on total
demand for the product . It can and does influence brand
selection . That explains why, in at least 12 countries
which have imposed restrictions on advertising, they
have had no measurable impact on established consumption
trends .
4 . The evidence is equally clear in regard to the
insignificant role of advertising in determining whether
young people start to smoke . Reputable studies in
Canada and other countries confirm peer pressure, family
influence, and curiosity as the principal reasons
children try smoking . A World Health Organization study
reported no systematic difference" between youth
smoking patterns in countries with and without
advertising bans .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
i
2 W
S . Otte of the major problems with advertising bans is that,
while they can prevent domestic manufacturers from
communicating with consumers, they cannot stop the flow
of advertising and promotional material into the country
from the world around . Even now two-thirds of the
cigarette ads Canadians see in magazines are in
publications originating in the gaited States or
elsewhere . Canadian television carries many imported
programs in which international tobacco brands are
mentioned or displayed . Canadians travelling outside
the country are exposed to -- and purchase w- items like
Dunhill lighters and Marlboro sports bagw . Legislation
which simply denies Canadian manufacturers the right to
communicate will have little, effect in shielding
Canadians from tobacco advertising .
(Pages 15 - 24 )
6 . The Canadian tobacco industry accounts, directly or
indirectly, for some 60,000 jobs, mostly in Quebec and
Ontario . Expenditures in 1986 on advertising and
promotion totalled almost $80 million . If these
activities were prohibited, as many as'2,500 marketing
and advertising jobs, many of them involving small
independent contractors, would be threatened
immediately . So would the income some 47,000
independent "corner store" retailers receive from the
industry through promotional space rental agreements .
7 . In a free market economy, advertising is a principal
tool of competition, especially in a mature market where
total demand is declining . An advertising ban would
make it extremely difficult for any of the three
remaining Canadian manufacturers to protect or increase
market shares and to promote new product developments .
Such a ban is clearly anti-competitive, anti-consumer
and directly contrary to the spirit and intent of
Canada's competition laws .
8 . international brands, produced mainly in the United
States and United Kingdom, have claimed an increasing
share of cigarette markets in the western world . A
significant part of that increase has occurred in
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
3
countries with some form of domestic advertising ban .
To date, the international brand share of the Canadian
market has been held to barely one percent, largely
because Canadian manufacturers have been able to use
their own advertising and promotion programs to sell
Canadian smokers on domestic brands . If these programs
are prohibited by legislation, Canada will become a more
inviting target for international brand penetration .
And if that occurs, many thousands of Canadian jobs,
including growers, suppliers, distributors and
manufacturers themselves, will be threatened .
9 . Bill C-51 seeks to limit the use of tobacco trademarks
both in cigarette marketing and on non-tobacco products .
Many of these trademarks are international in scope and
such action by Canada could have international
ramifications . The legislation constitutes confiscation
of proprietary rights, national and international,
without redress or compensation .
lo . The Canadian tobacco industry currently spends som e
$10 million a year in support of a variety of cultural,
sport and community events . These are not philanthropic
activities ; they are designed, as with advertising, to
promote brand awareness among Canadians who smoke . In
all cases, the relationships exist because the tobacco
companies and the organization being sponsored have
mutually consented to the relationship and are
comfortable with it . Bill C-51 would replace mutual
consent with government edict and deny these groups
access to sponsorship funds which they will have
difficulty replacing and without which many of them
simply cannot operate .
&==S1DG BANS AND A DANGER S PRECEDENT
(Pages 25 - 29 )
11 . The legislation before Parliament is a direct attack on
the right of manufacturers of a legal product to
communicate information about that product -- and,
equally, the right of Canadian consumers to receive that
information And make their own judgments about it . It
seeks not to limit those rights, as is the case with
products like alcohol and pharmaceuticals, but to
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
4
obliterate them . As such, it poses a serious threat to
freedom of expression, as guaranteed in the Charter of
Rights and Freedoms, and fails any test of being
"demonstrably justified in a free and democratic
society . "
OTM$g TSSUES RAISED E T LEGISLATION (Pages 30 - 35 )
12 . since the CTMC believes consumers are best served when
they have access to full information, its member
companies cannot object to the proposition that
Canadians are entitled to receive from the government
appropriate messages an the subject of smoking and
health . Manufacturers have voluntarily carried such
messages in all their advertising and packaging, on
behalf of the Minister of National Health and Welfare,
since 1973 . If it is now timely to update that message,
we recommend that Canada adopt the four warning messages
currently used, . in the name of the Surgeon-General, in
the United States . We also believe the messages should
be spelled out in the legislation --and not left to
subsequent regulation .
13 . The enforcement and penalty provisions-of Bill C-51 are
extreme by any test of comparability with other federal
legislation such as the rood and Drug Act and the
Hazardous Products Act . Given that the issues here
involve commercial practices such as advertising and
promotion, these proposals also fail any test of
reasonable fairness . We cannot believe Parliament
intends to make advertising a cigarette one hundred
times . as offensive as dealing in heroin .
A REALISTIC AND WORXABLE ALTERNATIVE (Pages 36 - 39 )
14 . CTMC member companies are not insensitive to the
concerns of Parliament and the Canadian people . They
have voluntarily restrained their advertising and
promotion activities for the past 23 years and they are
quite prepared to accept -- and cooperate in -reasonable legislation in this area . The CTMC believes
a realistic basis for such legislation can be found in
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
5
proposals made in November, 1986, to the current
Minister of National Health and welfare, proposals which
would strengthen prohibitions against "lifestyle"
advertising by eliminating all people from tobacco ads,
prohibit advertising in youth-oriented publications,
cinema and video cassettes, substantially increase the
size and type of health-related messages in ads and
packaging, adopt the health warning messages used by the
U.S . Surgeon-General, and seek more effective compliance
with existing laws prohibiting tobacco sales to minors .
COU=ION (Pages 40 - 43 )
15 . The industry reiterates its basic objections to this
legislation : Advertising bans do not work to reduce
cigarette consumption, but they do have other serious
negative effects . We would hope Members of Parliament
would find those points substantive and persuasive and
seek a more realistic solution to this question .
16 . We would also hope that, in considering these matters,
Members would take account of other basic questions . If
there are "rights" at stake here, they are not those of
non-smokers ; they are the rights of manufacturers of a
legal product to disseminate information -- and the
right of Canadian consumers to receive and consider such
information . And finally, Members might note that this
legislation does not pursue the declared objective of
reducing smoking by positively promoting the
government's views ; rather it seeks to have itsway by
the negative means of censoring the right of others to
communicate .- That surely is not the Canadian way to
deal with controversial social questions .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
6
telephones . In these cases, advertising is working to
introduce new products and thus to increase the size of the
market as well as to promote a particular brand's share of
that market .
However, in the case of mature consumer markets, in
which virtually the entire population is aware of the
existence of the product such as tobacco, soap and gasoline,
advertising does not have an effect on aggregate demand .
Drivers do not drive more because of gasoline advertisements,
people do not use more soap because of soap advertisements .
Adtrertisinq in mature markets operates at the level of brand
4
competition, where each manufacturer tries to increase its
share of a fixed or diminishing market .
Michael J . Waterson, Director of Research, The
Advertising association, London, England, has put it this
way :
The serious evidence shows that advertising can be
useful, but only when doing the sort of task far
which it is suited . Advertising, when used
skillfully, to publicize a good new brand, can
increase a manufacturer's market share and hens
his profits, and it can do it very quickly . on the
other hand, large mature markets do not expand
rapidly as a rule, and therefore when one prodneer
gains market share, another almost inevitably ewm
out . The evidence available suggests very strangiy
indeed that the total level of advertising plays Do
part in determining the total size of markets sock
as alcohol and tobacco . It is one of many factors
involved in the determination of market shares .'s.
Dr . Scott Ward, Professor of Marketing, Wharton
School of Business, University of Pennsylvania, stated at the
1987 U .S . Congressional hearings on proposals to ban
advertising of tobacco products :
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
7
"Banning or eliminating tobacco product advertising
simply would remove a vehicle *of brand competition .
But it would not reduce tobacco product use o r
prevent people, including some young people, from
deciding to smoke in the first place ."1.
Further confirmation of this basic point can be
found in the recent congressional testimony of Daniel Oliver,
Chairman of the O .S . Federal Trade Commission (FTC), the
agency with probably the most experience and expertise in the
western world on the regulation of advertising, including
cigarette advertising . Here is his comment on the role and
effect of advertising :
i
"In mature industries such as tobacco, alcoholic
beverages, detergents, pet foods and the like, the
availability and uses of the product are already
well-known . In such cases, the effect of
advertising on aggregate demand is likely to be
trivial, if it can be found at all . Far from
stimulating overall demand by conveying new
information to consumers about the existence and
uses of tobacco generally, tobacco advertising is
likely to have its predominant impact in affecting
the consumers' selection among competing brands .
"We can state, however, that the evidence does not
support the view that the prohibition of tobacco
advertising would appreciably diminish overall
cigarette consumption . Moreover, the evidence does
strongly support the position that advertising is
not a major determinant of smoking ."7 .
There is considerable evidence on the subject of
tobacco advertising bans from which to draw . Advertising
bans are not a new idea ; they have been tried in various
countries ranging from those of Eastern Europe where there is
little or no consumer-oriented advertising of any kind to a
number of western nations which have legislated bans of one
form or another over the past decade and more . In many
cases, the bans have not been complete -- indeed they have
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
a
shown the practical difficulties of trying to isolate the
consumer from information about an internationally-available
product -- but together they do provide an indisputable
picture of the ineffectiveness of such prohibitions an
advertising and promotion in affecting consumption trends .
Appendix A to this submission records those trends
in consumption in 12 countries before and following the
introduction of restrictions on advertising and promotion in
that jurisdiction . it is true that some of the restrictions
are more complete than others in either their legislated
coverage or their effective administration . But the
essential point remains unchallenged and unchallengeable :
even in countries with the most comprehensive approach (such
as the Nordic states, for example), there is simply no
evidence to support the contention that a ban on advertising
has had any significant impact on consumption trends as they
existed before the ban was introduced .
These data have been analyzed by a number of
international marketing experts . They have consistently come
to the conclusion that advertising bans don't work .
For example, Professor J .J . Boddewyn, International
Professor of Marketing, Baruch College, City University of
New York, s" earized a 1986 review of evidence in 16
countries, eight centrally-planned and eight free market
economies, as follows :
"There is no evidence from those countries where
tobacco advertising has been banned, that the ban
has been accompanied by any significant reduction
in overall consumption, per capita consumption or
the incidence of smoking . The market trends apparent
prior to the introduction of a ban have largely
continued unchanged in the years following it ."e .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
9
in view of this overwhelming evidence the only
possible conclusion to be reached is that a Canadian
advertising and promotion ban will not work . It will not
reduce smoking in Canada .
icie....ece ae..rei . „s and Young peal .
We are well aware of the particular concern of
Parliamentarians -- and Canadians generally -- over smoking
by young people . The CTMC member companies believe smoking
is an adult activity . we are ready to join with the retail
trade in any effective program to promote better enforcement
of existing laws prohibiting the sale of tobacco products to
minors .
The question, however, in the context of C-51 and
other proposed legislation is not whether young people should
be discouraged from smoking, but whether advertising plays
any significant role in their decision-making process on this
matter and thus whether an advertising ban would be effective
i reducing the incidence of smoking among minors .
Again there is no shortage of research available on
the issue . And again that research points to the same
conclusion : advertising is not a significant factor in
determining whether young people start to smoke .
Canadian research studies,9' including at least one
sponsored by the Government of Canada, identify a number of
reasons influencing a young person's decision to smoke . The
greatest factor identified is peer pressure, the desire to be
accepted, to be "part of the crowd" . Parents, other family
members, teachers, opportunity and plain curiosity are also
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 10 -
cited as influences . Advertising simply is not mentioned as
a significant factor .
In order to update that research, the CTMC and the
Association of Canadian Advertisers (ACA) late last year
commissioned the Children's Research Unit (CRU) of the United
Kingdom, an internationally-renowned research group on
children's behavioral issues, to include Canada in its
international study of factors causing children to initiate
. l0«
smoking
Its basic findings on the question of why Canadian
children tried their first cigarette are summarized as
follows :
Curiosity - 46 percent
"To be like my friends" - 18 "
Pear pressure - 13 "
"To be cool"/"For fun" - 7 "
"Mom let as try onee" 3 "
"Dad let me try one" - 2 "
Don't know - 11
"
Advertising was not mentioned spontaneously by the
children and showed up only as a 2 percent factor when the
children were pressed on the issue . That is hardly
surprising given the strong preference of today's youth for
radio and television as communications media and the absence
of*tobacco ads from radio and TV since 1971 .
I
It is worth noting that in the same study there was
a 95 percent awareness factor among all the young Canadians
interviewed of the possible health hazards of smoking and 100
percent awareness among those who smoked .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
'V
.A .
- 11 -
In addition to updating Canadian data, the CAD
study compared this Canadian research with similar studies on
juvenile smoking in five other countries : Australia, the
United Kingdom, Hong Konq, Norway and Spain . In some of
these countries advertising bans have been in effect for some
time . The study reports on the incidence of smoking among
children aged 11 - 15 years and interestingly records the
highest incidence in Norway where a tobacco advertising ban
has been in effect since 1975 .
The 1986 international study report states :
"In all cases, it is apparent that tobacco
advertising does not significantly influence the
smoking initiation process as far as children and
young people are concerned . Instead, the decision
to start smoking involves mostly a combination of
personal, family and social factors ."11 .
We note that some advocacy groups, while offering
no substantive data on this issue of their own, are wont to
dismiss the CRU studies on the basis that any sponsorship by
the tobacco industry automatically negates the quality of the
research . Lest that form of slander have any wider audience,
we would refer you to a study of Health Behaviour in Schoolchildren conducted under the auspices of the World Health
organization (WHO) in four countries, the united Kingdom,
Austria, Norway and Finland .
That study, as reported by its authors in the My,
1986, edition of Health Promotion, confirmed all of the
essential findings of the CRD research . it found, for
example, that "the degree to which they (young people) spend
their time with peers or with adults is a strong predictor"
of behaviour like smoking or the use of alcohol . On the
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 12 -
specific question of advertising and, more particularly,
advertising bans as they relate to smoking among young
people, the authors reported :
"The lack of clear differences in smoking habits
between countries probably reflects the selection
of countries involved in the study in 1983-841 .
However, since Norway and Finland are countries
with restrictive legislation on advertising of
tobacco products, and the other two countries are
not, a difference might have been expected . No
such systematic differences are found .012 .
If one wants further commentary an this issue from
a source not known for its sympathy to the tobacco industry,
one can find it in a memorandum of May 12, 1986, written by
Neil Collishaw, Chief of the Tobacco Products Unit in Health
and welfare, commenting on an application to the Department
of Consumer and Corporate Affairs to have tobacco products
placed under the Hazardous Products Act . Noting references
in the application to cigarette consumption patterns i n
Norway, including among Norwegian youth, Mr. Collishaw
writes :
I
"Relative to other industrialized countries, Norway
has a very low rate of tobacco consumption . It
also has the longest experience with an effective
prohibition of tobacco advertising . However,
neither data on changes in smoking prevalence among
youth nor changes in overall tobacco consumption in
that country offers compelling evidence that
banning tobacco advertising reduces either smoking
by youths or overall tobacco consumption ." 13 .
The basic point surely is clear . Whether one
wishes fewer Canadians took up smoking at a young age, there
is simply no evidence that advertising -- and, therefore,
,banning advertising -- has any appreciable effect on the
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
- 13 -
issue . Advertising does not make young people smoke ;
banning it will not make them stop smoking .
Sill-Over ftgrsia# ldvertipina
As experience in other countries has shown, one of
the practical problems with advertising bans is that they
require the ability to isolate the domestic population from
information originating in the world beyond one's national
borders . In McLuhan's global village of communication, it is
virtually impossible to build such walls against information
reaching consumers . All the more so for products like
cigarettes which are used, advertised and promoted worldwide .
If that is a problem for just about every country,
it is a virtual impossibility for Canada . Canadians are
major consumers of magazines and other printed material
published in the United States and elsewhere . our television
system is laden with coverage of sports and cultural events
which carry with them frequent audio-and visual references to
advertisers and sponsors . Canadians are a travelling people
and in their winter journeys to the south or trips elsewhere
they are exposed to -- and often affected by -- the consumer
trends and preferences they see around them outside Canada .
Not surprisingly, these general facts of Canadian
life apply specifically to the exposure of Canadians to
cigarette advertising . Currently 66 percent14• of the
cigarette ads Canadians see in magazines are in publications
which originate in the United States or elsewhere and which
cannot be reached by a ban on domestic advertising .
Similarly, cable signals on Canadian television already carry
many programs in which international tobacco brands, while
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 14 -
not being advertised per se, are mentioned or are seen as
sponsors . Again we see no practical way for the Government
and Parliament of Canada to shut the eyes of Canadians to
these TV signals . Nor do we see how Canadian travellers can
be prevented from returning home with a Dunhill lighter or a
Marlboro sports bag -- unless Parliament contemplates making
a crime out of the sheer possession of such items .
On the evidence, advertising bans do not work . . .
period . But given the volume of spillover cigarette
advertising to which Canadians are exposed in foreignproduced magazines, television and other media, it is
difficult to argue that legislation which denies only
Canadian manufacturers the right to advertise could have much
practical effect in removing the existence of tobacco
products from the minds of Canadians .
as we will point out later in this submission, we
are worried that, should legislation like C-51 be enacted,
this question of spillover advertising could present a
serious economic threat to Canadian manufacturers and other
groups who rely on tobacco for their livelihood . But we make
the point here to emphasize that spillover advertising is a
further reason why a ban an Canadian tobacco advertising will
be totally ineffective .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 15 -
Sconamic Smnact and the Loss of Job s
i
The Canadian tobacco industry is a major
contributor to the Canadian economy (see Appendix B) . Latest
available data indicates that directly or indirectly the
industry generates some 60,000 jobs . '
A significant number of these jobs, which are
directly related to marketing and advertising, will be lost
immediately if those activities are effectively banned by
legislation . Many more could disappear later if, as we will
point out shortly, international brands take advantage of the
inability of Canadian manufacturers to protect their current
market and substantially increase their sales in Canada .
In 1986•Canadian cigarette manufacturers spent
approximately $80 million16' on advertising, promotion and
sponsorship . MAY independent consultants in related
industries depend heavily on the industry . Specialists in
market research, product development, packaging design,
product introduction and distribution are among these . The
withdrawal of advertising will have a severe impact an the
outdoor advertising industry, on consumer oriented magazines,
and on the advertising and graphics industries . Many of .
these independent firms will be put at financial risk.
According to an independent analysis 17 . as many as 2,500
jobs could be involved .
The elimination of point of sale materials will
have a severe impact on'some 47,000 privately owned or
operated independent retailers and corner stores . They rely
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 16 i
heavily on the revenues derived from the contribution of a
clock, stare identification signs, vending rack or other
articles at assistance in the conduct of their business .
These promotion pieces are usually furnished under a space
rental agreement affording the retailer a rental return from
the location of the article . ?or smaller privately owned
retail outlets the rental often represents an important
contribution to the retailer's net profit from his store .
The small store operator will have to replace these
components at a cost which he can often ill afford .
In short, no one should believe that legislation
like Bill C-51 is without economic cost . The coats are real,
including the livelihood of thousands of Canadians .
.17
W3
A free market society is founded an competition .
Legislatures pass laws to ensure legitimate, open and free
competition and prohibiting anti-competitive behaviour ; to
that end the current Parliament has enacted a broad revision
of Canadian competition legislation . These laws assume
society to be better served if the producers of legal
products compete openly for a share of the market by
informing the public of the qualities of their goods and
services, so as to permit the consumer to decide which of
those products he wants .
Advertising is one of the principal tools for
competition in the tobacco products industry . its purposes
are to maintain brand loyalty, to induce smokers to switch
brands and to inform smokers of product modifications .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
i
-17-
small changes in brand market shares have
substantial effects on corporate revenues and profits and
consequently, advertising expenditures to defend current
brand shares by preserving brand loyalty are necessary .
There is also considerable financial incentive to induce
brand switching through advertising expenditures and product
improvement . While the industry does feel that advertising
can influence a smoker's choice of cigarette brand,
advertising has little, if any, impact on whether people
smoke or not .
To a non-smoker, cigarettes may appear to begeneric . But to smokers, taste, length, filter, lightness,
tar and nicotine content are all variables influencing their
decision to purchase a particular brand . The change from
full flavour to lighter cigarettes was made in this way .
Manufacturers should be able to appeal to these aspects of
competition . A ban will eliminate all forms of communication
between manufacturers and consumers .
Under Bill C-51, major technological innovations
for new brands could not be advertised, in any way, not even
at the retail counter where the consumer makes the purchase .
Row is the manufacturer to inform the consumer of product
innovation?
In his aforementioned testimony to the U .S .
Congress, FTC Chairman Oliver discussed the role of
advertising within a competitive marketplace, remarks which,
it seems to us, are equally applicable to Canada :
"I doubt there is any question that it would be
illegal under our nation's antitrust laws for
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
cigarette companies, on their own, to achieve the
Why would the antitrust laws, which are supposed to
protect consumers, prohibit what these bills
banning cigarette ads seek to accomplish? Because
it is well recognized that the suppression of
truthful information is anti-competitive and bad
for consumers . Such bans close off new product
innovations, exclude competitors, and disserve the
interests of consumers .
"Over the last few decades there has been increasing
recognition of the important role advertising plays
in our economy . We've moved away from th e
generally accepted notion that advertising does
nothing more than manipulate people by forcing them
to do things they would not ordinarily do . This
view of advertising has been replaced by an
appreciation of the role advertising plays in
securing consumer sovereignty . We no longer
believe that advertising simply creates demand . We
now understand that advertising, if it is
successful, helps fulfill demand .
"But what about advertising restrictions to promote
the public health? The question here is whether
something about cigarettes or alcohol, or any
product that may impose health risks, transforms
normally beneficial competitive forces into
something insidious, so that an advertising ban
would for once .be a good thing instead of harmful .
Is advertising for some legal products so
manipulative that a ban is necessary to protect
citizens from themselves? I submit that informed
American consumers are better judges of what's best
for them than consumers handicapped by ignorance ."
7.
We would echo that point in respect to Canadian
consumers . Surely their rights and their interests are best
served when they have access to information about products so
they can make their own judgments -- and not when government
tries, in effect, to make those decisions for them by
shutting off the flow of information .
The comments of Chairman Oliver and others,
providing independent expert testimony on the role of
advertising and its importance in preserving and promoting
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 19 -
competition, have particular relevance to the Canadian
tobacco market . As total Canadian cigarette sales have
declined, there has been an inevitable shrinkage in the
number of manufacturers competing within the domestic market ,
the latest being the consolidation of Rothmans and Benson and
Hedges into a single entity in 1986 . Currently then there
are only three major manufacturers of Canadian' cigarettes
accounting collectively for 99 percent of present production .
one of them already enjoys a 53 percent market share .
Through competition legislation, the government and
Parliament of Canada have affirmed their belief in and
commitment to a competitive marketplace as the best means of
serving the needs of Canadian consumers . If Canadians are to
continue to consume tobacco products, it follows that those
consumer interests are best served by competition in the
production and marketing of these products . A ban on
advertising, a principal means of competition in this
industry, would directly contradict Parliament's commitment
to these consumers .
The Threat of international 2XW Penetration
As we noted previously, such of the cigarette
advertising and promotion which Canadians currently see
originates with Q .S . and other foreign publications and
broadcast signals . As the charts in Appendix A indicate, th e
u .s . and other international brands which these
advertisements promote have gained an increasing share of the
tobacco markets in some of the countries which have banneddomestic cigarette advertising . It is likely that the
continued inflow of international advertising and promotion - which a domestic ban simply cannot stop -- played some role
in shifting consumers in those countries toward these brands .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 20 This trend toward international brands has not
occurred to date in Canada despite the already substantial
level of international advertising which currently spills
into the country . Through their own advertising and
marketing programs, Canadian manufacturers have been able to
persuade Canadian consumers to purchase Canadian brands . in
recent years at least, Q .S . international brand manufacturers
have not made a concerted effort to penetrate the Canadian
market, in part perhaps because some of them have investments
in existing Canadian manufacturers . Whatever the mix of
reasons, the current U .S . international brand share of the
Canadian cigarette market is barely one percent .
The danger in banning advertising and promotion by
Canadian manufacturers is that it might well encourage the
makers of international brands to take a fresh look at the
Canadian market . If that happened, the economic consequences
for the Canadian industry -- and for Canada -- could be
considerable .
The trend toward international consumer products is
well-established, be it in beer, watches, sports shoes,
automobiles or drinking water . in many cases, they have
successfully penetrated markets, including Canada, where
consumers previously were thought to have well-established
preferences for domestic products and tastes .
Insofar as cigarettes are concerned, the trend
within the free world has shown consistent growth in the
market share of international brands . Such brands accounted
for barely 10 percent of the free world market in 1970 ;
today the figure is close to 16 percent . As already noted,
one of the significant growth areas for these brands has been
in countries which have imposed a domestic advertising ban .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-21-
Should Canada enact such a ban, this country could
become an inviting target market as Well . The 66 percent of
magazine ads already accounted for by international brands
would become 100 percent ; their sponsorship of events in the
U .S . and elsewhere would continue to be broadcast into
Canada . There would be no offsetting messages and activities
by Canadian brand producers . International manufacturers
with an existing investment in Canada might be particularly
attracted to the notion of patriating that share of this
market to their U .S . production facilities where there
currently exists the capacity to supply Canada with virtually
no additional investment required . All of these pressures
could only increase in the context of the Canada-U .S . free
trade agreement which will eliminate the traditional tariff
protection Canadian manufacturers have enjoyed in respect of
U .S . international brands .
Should that trend develop in Canada, should the
international brand share of this market approach what they
have achieved in other western countries, the consequences
would be severe . The loss of jobs would extend well beyond
the marketing and advertising sectors to growers, to
suppliers and distributors for the Canadian industry, and, of
course, to Canadian manufacturers . As many as 25,000 jobs
now dependent on the Canadian industry would be threatened .
And all without any measurable impact on cigarette
consumption in Canada, on the number of Canadians, whatever
their age, who start or continue to smoke . Parliament surely
has a responsibility to weigh such potential costs against
the dubious benefits of this legislation .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 22 -
Bill C-51 .broadens the ban on advertising and
promotion by making it illegal to use tobacco trade marks in
any advertising or promotion, including point-of-sale
material, and goes further to make it illegal to use trade
marks associated with tobacco products on non-tobacco goods .
The trade mark area is a complex one and has
significant international and practical aspects . Tobacco
trade marks are often international in scope and ownership .
The legislation would constitute a confiscation of
proprietary rights both nationally and internationally
without redress or compensation .
Many trade marks associated with other products
belong to or are licensed by tobacco manufacturers . Trade
marks, such as Dunhill, Mercedes and Cartier, are most
commonly associated with other exclusive and expensive
products such as clothing, cars, watches and jewelry . But
these are also tobacco trade marks used in Canada . The
legislation would purport to deny Canadians the right to sell
or purchase these non-tobacco products in Canada .
The Canadian tobacco industry is a major financial
supporter of Canadian cultural, sporting and community
events . Current industry expenditures are about $10 million
a year in support of activities ranging from world-class
sports events to community arts and recreational activities .
These are not "philanthropic" activities ; they are
part of marketing programs designed, as is current
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-23 ..
advertising, to promote and reinforce brand loyalties among
Canadians who choose to smoke .
In pursuing that legitimate marketing objective,
Canadian tobacco manufacturers have been responsible and
sensitive sponsors . Conclusive evidence for that statement
can be found in the relationships the companies have
developed, in many cases over a number of years, with the
groups and organizations responsible for these events . These
are, after all, mutual consent relationships : tobacco
companies are under no obligation to sponsor anything and no
organization is obliged to accept their support . These
relationships exist because both parties find them mutually
beneficial and because each side is comfortable with and
respects the role and contribution of the other party .
Bill C-51 is a direct attack on these relationships
and on the very notion of mutual consent . It will have a
disastrous effect on many of these national, regional and
community activities which are and will continue to be
dependent on the ongoing support of sponsors . With some $10
million taken from the available pool of Canadian sponsorship
dollars, their ability to obtain funds will be greatly
diminished .
Diminished, indeed obliterated, as well will be the
right of these organizations to decide for themselves with
whom they wish to be associated in sponsorship . Mutual
consent will be replaced by government edict .
Frankly we find this section of the legislation
impossible to justify . Does anyone seriously argue the
proposition that the existence of a horse race called the
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
_24 _
Rothmans international or a granting body called the du
Maurier council for the Arts actually impacts on the decision
of any Canadian, whatever the age, to begin or continue
smoking? That would be, to put it mildly, a damning
indictment by Parliament of the intelligence of Canadians .
Neither can we find much coon sense in the
legislation's attempt to distinguish between corporate and
brand or trade mark sponsorships . As already noted, these
are not charitable programs ; our member companies have
separate budgets for charitable donations . If these
sponsorships and the funds dedicated to them cannot serve
their declared -- and legitimate -- purpose of promoting
brand identification, then there can be no continuing
justification for the expenditures . The fact the
legislation, as drafted, would seem to invite companies to
build "corporate shells" around each brand simply to meet the
provisions of the bill seems to us simply to confirm its
capricious nature .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
CO
- 25 -
•l'/ t :4~Mrt }rt . ;r~ : ► ! ;t .li,? :!'~ 10, !*7,I t 4 p .,l0M /?a .}0 :•) ,
Bill C-61 is without precedent in its attempt not
to limit but to virtually obliterate the right of a
manufacturer of a legal product to disseminate information
about that product -- and the right of Canadian consumers to
receive and consider that information as part of, their
individual decision-making process .
There are restraints on the advertising and
promotion of many products ; alcohol and pharmaceuticals are
two ready examples . Tobacco manufacturers themselves for
more than 20 years have voluntarily limited their activities,
including refraining from the use of radio and television .
There are, of course, laws dealing as well with the veracity
of advertising claims . .
The issue with C-Si is one of degree . The question
which we would hope Parliament will examine seriously and
carefully is whether this legislation in its extremism oversteps previously established limits and, in so doing, creates
a dangerous precedent in terms of our fundamental freedoms as
set forth in the Canadian Charter of Rights and Freedoms .
The constitutional guarantees of the Charter affirm
.freedom of expression, which includes the freedom of
commercial speech and advertising . As long as commercial
speech is not false or misleading, it is constitutionally .
protected and not to be infringed upon except, in the words
of the Charter, where a reasonable limit on the freedom Nan
be demonstrably justified in a free and democratic socieVe .
The Supreme Court of Canada has decided that Baits
on fundamental freedoms are not reasonable unless they
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-26-
effectively advance Parliament's objective . An advertising
ban will not reduce smoking and therefore will not advance
the objectives of Bill C-51 .
Permitting foreign tobacco advertising in foreign
publications circulated in Canada effectively destroys any
argument that banning Canadian advertising is a reasonable
limit on freedom which "can be demonstrably justified in a
free and democratic society" .
If the government does not want people to smoke, it
should either seek to have tobacco banned, or meet the
Supreme Court's next constitutional test ; that is to impair
the freedoms as little as possible by convincing smokers
through government anti-smoking programs . Censorship, all
the more when ineffective, is not appropriate in a free and
democratic society . When one weighs the benefits of an
ineffective advertising and promotion ban against its
negative effects such as reduction of competition, loss of
jobs and loss of financial support to cultural and community
activities, this second test of the Supreme Court also fails .
Should the newly reinforced and entrenched freedom
of speech be abrogated on such unsubstantial grounds? The
right of government to determine what information people
should and should not have an opportunity to obtain ought to
be subject to rigorous evaluation and permitted only in cases
of clearly demonstrable public benefit .
The free flow of commercial information is
indispensable to making properly informed economic decisions
which permit the free market economy to function effectively .
A free market economy is an essential attribute of a free and
democratic society .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-27-
. . .Advertising finances virtually all mass
communications in our society . Speech about
religion, politics, science and art is literally
carried on the shoulders of commercial speech . The
unprecedented flow of information to the average
person that characterizes our free society rests
squarely on the free ride afforded by commercial
speech ."1t .
Freedom to advertise is also important to potential
purchasers of a product . Our free and democratic society
presumes that citizens possess the ability to effectively
govern their daily activities provided they are adequately
informed . Thus Parliament has enacted laws to ensure that
the public receives commercial speech which is neither
deceptive nor misleading . To now deny that the public is
entitled to receive commercial speech is to adopt the highly
paternalistic view that Canadians cannot perceive their own
best interests . The proposed legislation reflects a covert
attempt by the Government of Canada to manipulate the choices
of its citizens not by persuasion or direct regulation, but
by depriving the public of the information needed to make a
free choice .
A recent decision of the Quebec Court of Appeal
respecting the restriction of advertising of the sale of toys
upholds freedom to advertise as an essential component at
freedom of expression, one protected by the Charter . In this
decision, Mr . Justice Kaufman found and spoke to the
fundamental issue :
"Freedoms are fragile, and while the prohibition of
'commercials' directed to children under 13 seas
innocuous, it is an inroad on the right to seal -and with it, the public's right to receive -- my
message, commercial or otherwise, and careful
scrutiny is, therefore, needed .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-28-
"To hold otherwise would, in effect, give carte
blanche to the Legislature . Children under 13
today, so why not 14 or 15 or 16 tomorrow? Toys i n
this case, perhaps something else in another . The
line must be drawn, and the time to do so is now .
1! .
Professor J . C . Luik, a lifelong non-smoker who
recently taught medical ethics and the ethics of advertising
at the University of Manitoba and now teaches at Brock
University, in an article in the May 12, 1987 Globe and Mail,
reacting to Bill C-51, speaks of the broader issue of
advertising bans :
"Free speech is valuable, then, precisely because it
represents our faith in the individual's ability to
make wise decisions about his life and that of his
society . What is so deeply offensive about a ban
on tobacco advertising is that, in restricting free
speech, it inevitably demeans us all by proclaiming
that we are insufficiently rational to understand
the consequences of our actions, to weigh certain
benefits against certain harms, that the Government
is so uncertain of our wisdom it must protect us
from our own folly .
"Also, once we decide that is an official standard
reasonable behaviour to which all must conform,
where do we stop? If we cannot trust the
rationality of the smoker who feels his enjoyment
is worth risking a shorter lifetime, can we really
trust the rationality of the fatty who refuses to
start an exercise program? Can we trust the good
sense of the red meat eater who stupidly prefers
his steak to the latest in lean cuisine? And what
of the credit-card addict who, having been told
never to leave home without it, spends his way into
insolvency? Surely these people are just as
susceptible as the smoker is to advertising .", .-..
An editorial in Maclean's Magazine of June 22, 1987
reiterates the dangers :
For all their dangers, tobacco products are
perfectly legal goods . And the government's
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-
29
-
proposed legislation, Bill C-51, is an unacceptable
affront to freedom of expression as it relates to
those materials . If it passes, the legislation
would set a frightening precedent, opening the door
to selective censorship of advertising of any
product when a lobby group opposed to it becomes
loud enough .
"it does not take a great stretch of the imagination
to predict what will happen when the now temperance
zealots gain enough of a following to demand that
Ottawa extend the provisions of C-51 to liquor,
beer and wine . Will the government then forbid the
mention of alcohol and tobacco in editorial copy?
There is no predictable or natural and to the
.extension of such bans . They are just wrong . If
members of the government are convinced that
tobacco is a genuine danger to society, they should
ban it -- not the advertising message, and the
health warnings that accompany it . Bill C-51 is a
massive threat to the basic freedoms that
constitute our way of life . "
Within the past few years, the Danish Parliament,
the British Parliament and the United States Congress, after
serious consideration of all the issues, have rejecte d
proposed legislation that would ban the advertising and
promotion of tobacco products . We would urge the Parliament
of Canada to do the same .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 30 -
Canadian tobacco manufacturers believe that the
public interest is best served when consumers have the
fullest and freest flow of information about all points of
view an a subject or a product . Thus we cannot object, in
law or in principle, to the proposition that Canadians, in
deciding whether to purchase cigarettes, are entitled to
receive from their government appropriately worded messages
on the subject of smoking and health .
In 1972, the 1964 voluntary code of tobacco
advertising and promotion practices was amended by the
industry at the request of the Minister of Health and
welfare, to require the current health warning being include d
on all cigarette packaging and advertising . The warning is
general in nature and is sufficient to cause potential
consumers to consider the issue of health dangers allegedly
associated with smoking . The warning is clear and
unambiguous .
More recently, other countries, particularly the
U .S . and the U .K ., have required tobacco manufacturers to use
a series of rotating warnings containing more specific
language . All of these warnings are attributed in the case
of the U .S . to the Surgeon General and in the case of the
U .K . to its Health Department .
Prior to the tabling of Bill C-51, in discussions
with the tobacco industry ; the Minister of Health and welfare
requested the industry to consider an approach similar to
that in the U .H . and U .S . In November, 1986, the Canadian
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
I
- 31 -
tobacco industry responded by indicating that it would comply
with the Minister's request and, in particular, indicated to
the Minister that it accepted that the proposed voluntary
code would include the use of U .S . style warnings on a
rotational basis attributed to the Minister of Health and
Welfare .
I
The Canadian cigarette warnings then would be a s
follows :
HEALTH AND WELFARE CANADA ADVISES : Smoking Causes
Lung Cancer, Heart Disease, Emphysema, And May
Complicate Pregnancy .
HEALTH AND WELFARE CANADA ADVISES : Quitting
Smoking Now Greatly Reduces Serious Risks to Your
Health .
HEALTH AND WELFARE CANADA ADVISES : Smoking by
Pregnant Women May Result in Fetal Injury,
Premature Birth, And Low Birth Weight .
HEALTH AND WELFARE CANADA ADVISES : Cigarette Smoke
Contains Carbon Monoxide .
Since placing that proposal before the Minister, it
has occurred to us that, should the government and Parliament
so wish, a warning message also might be one appropriat e
method to increase public awareness that it is against the
law to sell tobacco products to minors . Such a message might
read :
HEALTH AND WELFARE CANADA ADVISES : It is against
the law to sell tobacco products to minors .
Bill C-51 provides that health warnings will be
required in accordance with regulations to be prescribed .
Draft regulations have not been made public . If Parliament
believes the smoking public requires additional health
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
M
- 32 -
:i
warning information, then it should legislate statutory
warning notices. The text of such notices should be set out
in the legislation, as in the United States, and not in
regulations .
The Minister's Departmental representative has
suggested 15 rotating warnings compared with four in the
U.S .A. That is impractical .
Legislation requiring special warnings covering
tobacco products must take into account the practical
difficulties facing the tobacco industry in arranging for
package redesign and reprinting . These changes cannot be
done instantaneously, particularly where the entire industry
is being required to change all its packaging at once . The
industry is .prepared to commence compliance as soon as the
law is confirmed, starting with the packaging of major
brands, but it will take at least two years to complete
repackaging of all existing brands . The Canadian printing
industry could not most demands of the industry for earlier
compliance .
-1~ • ~ . .
•
. 'jYYr
M-14 I
Bill C-51 makes elaborate provision for procedures
S
to enforce its operative sections (Clauses 10 - 15) and for
penalties to be imposed on those found in violation of then
(Clause 17) . As we will point out, these provisions are
extreme by any test of comparability with other federal
legislation . Given that the issues here involve such matters
of commercial practice as advertising and promotion, these
enforcement and penalty proposals also fail any test of
reasonable fairness .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 33 -
The enforcement provisions of the Bill contemplate
the creation of a new breed of bureaucrat, to be known as
"tobacco product inspectors" and "tobacco product analysts",
to police manufacturers and others involved in activities
covered by the legislation . According to the Bill, these
officials are to be given very broad powers not simply to
inspect places where these activities are carried out, but
even to seize and remove anything they deem relevant to them .
It is not an exaggeration to suggest that these powers,
especially those in Clause 12(2), are so broad as to permit
an inspector to virtually close down a manufacturing or other
facility .
. We would ask the committee, in considering the
reasonableness of such provisions, to remember what Bill C-51
seeks to accomplish -- primarily a virtual ban on advertising
and promotional activities together with a requirement that
manufacturers file certain information (on constituents and
sales by brand and region) with the Minister . Given that the
advertising and promotional activities are by definition
carried out in public, one would not have thought the
Minister needed a new array of bureaucrats, armed with
seizure powers, to keep an eye out for potential violations .
As for constituent reporting, if the Minister had reason to
want to check industry reports for accuracy, one might have
thought he would acquire product samples for independent
testing and verification at his corner store .
I
We would hope the Committee would carefully examine
these provisions of the Bill against an elementary test of
reasonableness . At the least, if tobacco inspectors are to
have CSIS-Like powers of seizure, we would hope that
Parliament would make such powers (as, for example, in Clause
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
'V
CT
v
- 34 -
12(2)), subject to the requirement to obtain an appropriate
court order .
Similarly, ve Mould direct the Committee*s
attention to proposed punishments for offenses set out in
Section 17 of the Bill . For infractions involving
advertising, promotion, labelling and reporting requirements,
the Section suggests that, on summary conviction, a first
offence Mould be subject to fines up to $100,000 and/or
imprisonment up to six months and, for subsequent offenses,
fines up to $300,000 and/or imprisonment up to one year : For
sponsorship violations, the proposed penalties are a mere
$10,000 fine and/or six months imprisonment for a first
offence and $50,000 and/or one year imprisonment for further
summary convictions . We would invite the committee to
compare these penalties with those provided for in other
federal statutes :
I
Category
Food & Drug Act
Summary
conviction
Any provisions
S .26
1st
offense
up to $500
and/or
3 months
6 months
6 months
Subsequent
Up to $100 0
and/o r
6 months
$200 0
and/or
1 year
$2000
or
1 year
Indictable
Up to $5000
and/or
3 years
7
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
Narcotics Act
Possession
S.3
Liability
Hazardous
Products Act
Seek to obtain 3 .3 . 1
Liability
Advertise,sell
import, S . 3
Liability
$1000
$1000
and/or
or
to $1000
years
7
years
and/or
6 months
2 years
A further test of comparability might be with the
Canada Corporations Act which provides .(Section-259) for
penalties for compliance violations ranging from $1,000 to
$10,000 .
If'we understand the message, it is that the
Minister proposes to make advertising a cigarette for sale
100 times as offensive as dealing in heroin . Whatever the
Minister's intent, we trust that is not Parliament's . We
trust, too, there is some sense of natural justice left even
among the most emotionally-committed on this issue .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-36-
The present Cigarette i Cigarette Tobacco
Advertising and Promotion Code, a copy of which is found in
Appendix C, was adopted by the industry January 1, 1976,
after close cooperation and consultation with Health and
Welfare Canada, and in response to that Department's
concerns . It evolved from the earlier Codes of 1964 and 1972
and comprises rules amplified by regulations, guidelines and
specifications .
The rules of the Code are significant in that they
suggest reasonable restraint by the industry in response to
the concerns of the then Winistar of National Health and
Welfare . By way of illustration :
They prohibit the advertising of cigarettes on
radio or television .
The total dollar amount spent by the tobacco
industry is limited to 1971 levels indexed to 754
of the Consumer Price Index .
Incentive programs involving gifts or prizes are
severely limited .
Direct mail is prohibited .
Advertising must not be addressed to the young nor
imply that smoking generally or the smoking of a
specific brand promotes health, success or
advancement .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 37 -
Endorsements by athletes and celebrities are
prohibited . Models employed must have attained the
age of 25 .
The tobacco industry's proposals to the Minister of
National Health and Welfare of November, 1986, attached as
Appendix D, would be even stronger .
The industry rejects the concept of an advertising
ban ; it believes in restraint in advertising and promotion .
Such measures should be in consequence of continuing
discussion and negotiations with proper authorities, in the
present case the Minister of National Health and Welfare .
This principle continues to work well in such countries as
the United Kingdom, West Germany, Switzerland, Holland,
Belgium, and Australia .
Indeed, the tobacco industry has not been
insensitive or unresponsive to the concerns of the Minister .
Discussions had-been held between the Minister and the
industry culminating in CINC's letter of November 28, 1986,
setting forth a number of proposals . The Minister never
replied and tabled Bill C-51 in April, 1987 . No prior
suggestion was made by him to the industry that a total ban
on advertising and promotion was part of his program .
CTMC member companies believe that their proposals
of November, 1986, continue to provide . the basis for a
reasonable and workable program of enhanced restraint on
their advertising and promotional activities . In summary,
those proposals would :
eliminate all people from advertising ;
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 38 -
prohibit advertising in youth-oriented
publications, cinemas or video cassettes ;
substantially increase the size of the health
warnings on packs, billboards and in print ;
adopt the four health warnings used in the United
states attributed to the Surgeon General with
attribution to the Minister of National Health and
Welfare ;
include carbon monoxide levels in warnings ;
reject sponsorships of amateur sports
organizations ;
fix a maximum "tar" level per manufactured
cigarette at 16 mg . ;
cease all new product sampling ;
I
assist in'assurinq compliance with existing law
prohibiting sales to minors ;
provide additional data to the Minister ;
introduce an independent compliance mechanism with
fuller provisions for complaints, review and
meaningful penalties .
It was the industry's position a year ago that
these additional restraints could be incorporated into a nonlegislative agreement with the Minister to which C1(C member
companies would be voluntarily, but legally, bound . That
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
-39-
remains our preferred course, .. If, however, Parliament In
determined to legislate this issue, we would recommend theme
proposals as a reasoned and' realistic base upon which to
build such a law .
I
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 40 -
In this submission, we have presented various
evidence and dealt with a variety of specific issues in
support of two essential points :
First, advertising bans simply do not work . They
have not affected cigarette consumption in other countries
and they will not do so in Canada, especially with the volume
of international brand advertising that spills over into this
country .
Second, despite its ineffectiveness in achieving
the primary goal of its sponsors, a ban on tobacco
advertising and promotion will have a real and severe impact
-- on jobs, on competition, on the potential loss of Canadian
markets to foreign manufacturers,-on trade marks, an the
future of many sports and cultural organizations, and an
basic Canadian freedoms .
We would hope Members of Parliament would find
those points substantive and persuasive and would seek a more
realistic solution than those proposed in the legislation
before them . .
But we would hope, too, that Members, whatever
their personal views might be on smoking, might take the time
to think about these questions in a very broad context . For
we believe they raise some quite fundamental questions,
classic questions of what kinds of means we believe are
justified by certain ends and questions about how we in
Canada approach controversial social issues .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 41 -
In our view, the broad issues here are quite clear .
They are not, in any real sense, "health" issues .
Indeed, the word "health" cannot be found in this
legislation . If one truly believes that smoking poses a
totally unacceptable health risk to Canadians -- and that
Canadians are somehow incapable of making that judgment
themselves -- then it seems to us the only honest position is
to seek an outright prohibition of the manufacture and sale
of tobacco products .
Nor, with respect, is this an issue of "non-smokers
rights" . While the concerns of Canadians who do not smoke
are part of the discussion of environmental tobacco smoke
(RTS), they really are not germane to whether tobacco
manufacturers can advertise or sponsor a golf tournament .
Non-smokers have every right to ignore advertising -- and
golf tournaments -- as we are confident they now do with no
cost to themselves .
If there is a "rights" issue here, it involves
tobacco manufacturers and whether they as producers of a
legal product are entitled -- yes, with reasonable restrain t
-- to the same freedom of commercial expression as is enjoyed
by every other Canadian business . And it involves smokers
themselves and whether they as consumers of'a legal product
have a right to receive information about that product, be it
as amorphous as its taste or as specific as its nicotine
level . Those are the "rights" at issue here .
Finally, there is one other fundamental question
worth thinking about .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
- 42 -
As noted at the outset, the sponsors of the bills
before Parliament, including the Minister of Health and
Welfare, have as their declared objective the reduction -and eventual elimination -- of smoking in Canada . They are
certainly entitled to halo and promote those . views . The
government, in particular, has every right, some would say
responsibility, to inform Canadians of its views on smoking
and health . Not only has the industry never questioned that
right, it has actively cooperated with government in
transmitting its messages in advertising and on packaging .
But the legislation before Parliament is not
premised on any government right or responsibility to
communicate its views on smoking to Canadians . Inasmuch a s
it even speaks to this role, any increase in . information that
might result from expanded warning and content messages would
be more than offset by the legislation's prohibition o f
industry advertising which in recent years has been the main
conveyor of these government messages .
This is not legislation which says : we, the
government and Parliament of Canada, have important
information about smoking that we want to place before
Canadians and to which we hope they respond . There is
nothing that positive in Sill C-51 . Rather, this legislation
invokes the censor's approach by denying tobacco
manufacturers any right to communicate their information and
Canadian consumers any right to receive it . it is social
engineering by the most negative means ; it seeks to have the
government's point of view accepted by denying Canadians
access to other information on the subject .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
43
We ask Members of Parliament whether they believe
that is the Canadian way of dealing with controversial social
issues .
we thank you for taking the tins to consider our
point of view .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
R3FE?XVCBS
1 . Production and Disposition of 'tobacco Products, Statistics
Canada, Catalogue 62-0221 Ceceaber 1982 and December 1986 .
2 . Smoking Behaviour of Canadians 1983 . Ottawa, Health and
Welfare Canada, 1985 .
3 . General Social Survey (1985) . Preliminary Data, Cycle One :
Health and Social Support . Ottawa, Statistics Canada, July
1986 .
4 . House of Commons Debates, Vol . 128, go . 285, p . 13624 .
5 . Michael J . Waterson, Statement, O .S . Congress, House Committee
on Energy and Commerce, Subcommittee on Health and the
Environment, Hearings on Proposals to Ban or Restrict Tobacco
Product Advertising, August 1, 1986 .
6 . Dr . Scott Ward, Statement, U .S . Congress, House Committee on
Energy and Commerce, Subcommittee on Health and the
Environment, Hearing on Proposals to Ban or Restrict Tobacco
Product Advertising, August 1, 1986 .
7 . Daniel Oliver, Chairman, Federal Trade Commission, Statement,
Q .S . Congress, House Committee on Transportation, Subcommittee
on Energy and Commerce, Hearing on Cigarette Advertising Ban,
April 3, 1987 .
S . J .J . Boddewyn, "Tobacco Advertising Bans and Consumption in 16
Countries", International Advertising Association, 1986 .
9 . "Soaking and Non-Smoking : A Study of Canadians' Behaviour and
Attitude", Goldfarb Consultants, for Health and Welfare Canada,
September 1981 ; Environmental Influences on Smoking Initiation .
Best, Brown, Sout , White, , vers ty of Waterloo .
Department of Health Studies .
10. Children's Research Unit . An Examination of the Factor s
;. .~ Influencing Juvenile Smoking Initiation in Canada", Association
of Canadian Advertisers Incorporated . May 1987 .
11 . WHY DO JUVENILES START SMOKING? J .J . Boddewyn, International
Advertising Association Inc ., NYC, August 1, 1986, p . 7.
12 . Health Behaviour in schoolchildren A WHO cross-national survey,
Aar, World, Kannas, Rimpela, Health Promotion (May 1986) I
pp. 17-33 . Oxford University Press 1986, p . 19 .
13 . Page 2 of Memorandum .
14. Maclean-Hunter Ltd .-study, Toronto, April 24, 1987 .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
15 . Economic Impact of the Tobacco Industry in Canada for 1984,
Peat Marwick and Partners, Toronto, March, 1986 .
16 . Letter from CTMC President to Harry Bsightwell, M .P ., Acting
Chairman, Legislative Committee on Bill C-204, December 8,
1987 .
17 . Letter to CTMC Chairman from Peat Marwick Consulting Group,
September 22, 1987 .
18 . Burt Neuborne, Professor of Law, New York University, Statement
Q .S . Congress, Souse Committee on Energy and Commerce,
Subcommittee on Transportation, Tourism and Hazardous
Materials, April 3, 1987 .
19 . Irwin Toy Ltd . vs . A .G . of Quebec (1987) 32 D .L .R . (4th) 641 .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
6
APPiDIX
"8 "
ECONOMIC IMPACT OF THE CANADIJUt TOBACCO INDUSTR Y
The cost recent available Statistics Canada estimate (Septre1
1985) shows that some seven million Canadians choose to us* tobacco
products .
Their collective decision directly supports agricultural activity
in five provinces, industrial operations (processing and
manufacturing) in . two provinces, considerable commercial activity
in all provinces and territories and significant input from a large
number of suppliers of goods and services to all sectors that make
up the industry .
Total employment was estimated (by the Peat Marwick Consulting
Group) at some 61,000 person-years in 1984, with 750 of that total
direct employed by the growing, processing, manufacturing,
wholesaling and retailing sections .
In 1986, it is estimated that Canadians spent more than $6 .2
billion on tobacco products, or 1 .2% of the M .
Total government revenue from the manufacture and sale of base
tobacco products was in excess of $4 .1 billion .
Wages and salaries exceeded $1 .2 billion while total net bw,iness
Iacono was estimated at more than $850 million .
In 1987, the decline in domestic consumption of Canadian clWettes
continued . Statistics Canada reports a six percent decline in the
first 10 months of the year, for a total decline of some 3% over
the last five years . There will be 900 fewer jobs in the
manufacturing sector at the and of the year . And, because of lower
tobacco requirements by manufacturers, employment in the
agricultural sector has also been affected dramatically . Sore
will be about 300 fewer tobacco farms in 1988 than theres this
year, with a significant impact on permanent and seasonal
employment .
However, given the fact that tobacco tax rates are climbi1 faster
than inflation, government tax revenues continue to incres*„ At
the present time, governments take an average of 64% of retail
price of a package of cigarettes, while the production sec t
(growers, processors, manufacturers) gets 200 and the trade
(wholesalers and retailers) an average of 16% .
Hereunder is the cigarette tax table at December 1, 1987 .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
TAXES ON CANADIAN CIGARETTES
AT DECEMBER 1, 198 7
Jurisdiction
Cents per Pack 1 Change Since
of 25 98 1 .12 .86
-British Columbia
1 Change Since
1 .1 .8 2
102
+ 9 .7%
+ 291 %
Alberta
100
+270 .0%
+12501
Saskatchewan
117
+ 14 .71
+ 355 %
Manitoba
137 (115 + 22*) + 34 .0%
+ 391 %
90 (71 + 19*) + 5 .81
+ 219 1
Ontario
Quebec
113
New Brunswick
106
+ 4 .01
+ 265 1
Nova Scotia
112
+ 28 .7%
+ 448 1
Prince Edward Island
Newfoundland
87
NIL
NIL
158 (120 + .38*) + 1 .2%
B .N .T .
92
Yukon
80
Canada
92 (80 + 12*) + 3 .3%
* Indicates sales tax
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
+ 4 .01
NIL
+ 282 %
+ 348 %
+ 254 8
+ 200 %
+ 306 1
+ 230 1
AP
IA
"C`
PURPOSE AND INTENT OF THE CODE :
Cigarette
& Cigarette Tobacco
Advertising and
Promotion Code
The purpose of this Code Is to establish and
confine uniform standards of cigarette and
cigarette tobacco advertising and promotion In
Canada .
Rum 4 -- No ciggette or oiparsiie tobacco
brand .trail be promoted by Incentive
programs inter ng M the Consumer
sash of other pdaeL Osupens redteernabie for gills and related alit
catalogues will not be advertised .
The Intent is that iM Members of the Canadian
Tobacco Manufacturers' Council voluntarily
comply with the Cods.
Rule 6-Direct mail advertising will not be
Used sea medium to promote the safe
of cigarettes or cigarette tobacco .
Members . Canadian Tobacco Manufacturers'
Council:
Rule 4-All advertising will be In conformity
with the Canadian Cote of AdvertisIng Standards as Issued by the AdvertishV Standards Council.
SEASON & HEDGES (CANADA) INC .
IMPERIAL TOBACCO LIMITED
RJR-MACDONALD ItIC.
ROTHMANS OF PALL MALL CANADA LIMITE D
of the
ADVERTISING REGULATIONS
CANADIAN
TOBACCO MANUFACTURERS'
COUNCIL.
e
As amended January lot. 198 4
,2ZRZ ZOe
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
Rule 1-There will be no cigarette or .cigarette
tobacco advertising on radio or ishvisiom. nor with such media be utsed
for the promotion of sponsorships of
sports or other popular events whether through, the use of brand or corporate name or logo.
Rule 2 - The Industry will limit Meal cigarette
and cigarette tobacco advertising.
promotion and sponsorship expenditures for any year to 1971 levels . The
limits will be revised annually to
compensate for cost Increases or
dsattmes- .
Rule 3-Advertising of sponsored events associated with a brand or corporate
name or logo will be limited to nonbroadcast media and such advertising
together with promotional material
will not Include package Wantirica
lion, product setting line or slogan, or
the words "cigarette" +'- "
Rule 7 - Cigarette or cigarette tobacco adverts!" will be addressed to adults 18
Yom of No or over and will be
directed solely to the increase of
cigarette brand shares.
Rule 6 -No advertising will state or Imply that
smoking the brand advertised toomoles physical health or that smoking
a particular brand is better for health
than smoking any other brand of cigarettes, or is essential to romance,
prominence. success or personal
Advancement.
Rude 9 - No advertising will we, as endorsers .
athletes or celebrities In the entertainment world.
Rule 19-Ali models used In cigarette and cigaratte tobacco advertising will be at
least 25 years of ago.
Rule 11- No cigarette or cigarette tobacco product will be advertised on billboards
located In the Immediate vicinity of
primary or secondary schools.
Rum 12 - AN cigarette packages and Carron, cigaret tobacco packages and containers
Imparted or manufactured for use in
Canada will bear, dearly and proml-
I
N
-6
A ~p
If I
fills
1iI1I
a
_ae 2
LI
li t
I
g!
O
M
O
94
I
i
i
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
I
I
1±
.
I
.
Lb
L
o
.1
. w i
APPENDIX -D-
SUMMA" Of CTMC VOLUNTARY U IDERTARINGS
ON TOBACCO CODS AND RELATED MATTER S
1 . Broader Application of the Cod e
CTMC is prepared to act as a coordinating body in assisting
the Minister to apply an amended Code to all manufacturers
and importers and to all products .
2 . Advertising
CTMC members will not advertise in youth-oriented
publications or in cinemas or on video cassettes .
Members will continue to voluntarily limit total annual
adviertising,promotion and sponsorship expenditures according
to the established formula which provides year-to-year
increases less than the national inflation rate .
Members will eliminate people from all tobacco advertising .
3 . Warning Messages/Content Listings
Use of current US health warning messages (4) on the basis
of random but broadly equal distribution (except permanent
pieces) ..
Add average carbon monoxide levels to existing information
on tar and nicotine for cigarettes only .
Significantly increase the total space and type size
dedicated to warning messages and content listings as
follows :
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
.
Y
I
F
2
on packages, both side panels (one Uglish, one Preach)
totally reserved for massages/listings, 9 point type on
flip-top packages, 10 point type on others .
on cartons, both side panels (one Xnglish, one French)
totally reserved for messages/listings, 12 point type .
on billboards, 20% of available space for messages -and, if Minister so wishes, content listings, enlarged
type .
in print advertising 17 .50 of available space with
enlarged type size .
in point-of-sale material, a visual impact formula
equivalent to 17 .5 per cent, depending on the size of
material .
Health warning will continue to be attributed to the
Minister or his Department .
i
4 . Sponsorships
Members henceforth will reject all requests for financial
and other support from amateur sports organizations .
S . Compliance Mechanis m
CTMC agrees to transfer authority for investigating all
complaints and enforcing compliance with the Code to a
totally independent body .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
Our preference is to use the
resources of the advertising
pre-clearance is available .
:istiag -- and proven
.andards Council . Voaugtary
CTMC accepts that the ccmpliar._e board, whatever mosl is
chosen, should have the power .o impose meaningful financial
penalties for non-compliance .
6 . Maximum "Tar" Leve l
Maximum permissible "tar" level to be reduced to 16 mp ,
7 . Provision of Informatio n
CTMC members will continue to provide the Minister S"
monthly sales data on cigarettes in the foes he prs
on the understanding he will respect provisions of fk
Access to InforaGation Act against publication of
commercially sensitive information .
CTMC members will individually provide annual list
additives by product line , on the understanding tkga,
information is privileged and confidential, as abo%
Members will provide quarterly information on tar, (y,tine
and carbon monoxide levels in form requested . We 4W
prepared to work with the Health Protection Branch
develop standards for testing and reporting othera
and to resolve technical problems in developing acm
data for some non-cigarette products .
http://legacy.library.ucsf.edu/tid/rel46a99/pdf
N
N
W
N
O
'V
co
CT
r
-4-
8 . Sampling
All sampling will cease .
9 . Sales to Minor s
CTMC is prepared to work with distributors and retailers to
develop an effective public information campaign in regard
to existing laws prohibiting the was of tobacco products to
minors .
3
A
10 . Formalization and Duratio n
CTMC proposes a formal five-year voluntary agreement between
Health a Welfare and t1 member companies .
CTMC - november 28, 1986
http://legacy.library.ucsf.edu/tid/rel46a99/pdf