The European Commission (EC) has confirmed it is in talks with tobacco company Philip Morris International with the objective of securing a substantial payment to avoid lawsuits over allegations it colluded in the smuggling of cigarettes into the EU.
"We are in negotiations with Philip Morris to combat illegal smuggling and counterfeit cigarettes," said Elisabeth Werner, spokeswoman for budget commissioner Michaele Schreyer. The commission is looking for Philip Morris to make "a large payment over a number of years," she said.
A report earlier today in the Financial Times said that Philip Morris International is offering to pay about $1bn (€0.82bn) to the EU in the deal to stop any lawsuits.
The paper said that the EC confirmed the offer, and that the Commission also hinted that a deal with Philip Morris could pave the way to similar agreements with other tobacco companies.
In 2000 it was estimated that the EU lost an average of €1m in duties per illegal truckload of cigarettes, tantamount to fraud losses of between €1bn-€2bn a year.