The European Commission said Monday it was taking Philip Morris and R.J. Reynolds to court in New York, accusing the two US tobacco giants of involvement in smuggling cigarettes into the European Union.
In a statement, EU Budget Commissioner Michaele Schreyer said lawyers filed a civil action Friday against both multinationals "for their alleged involvement in smuggling cigarettes into the EU."
The case -- based on the United States' RICO act -- "seeks compensation for financial losses the EU has suffered" as well as "injunctive relief in order to prevent further smuggling," Schreyer said.
Philip Morris, best known for Marlboro cigarettes, is the world's biggest tobacco manufacturer; R.J. Reynolds, which makes Camel cigarettes, ranks fourth after Japan Tobacco and British American Tobacco, according to the Fortune Global 500.
Schreyer's spokesman Luc Veron told reporters there was no fixed amount of damages attached to the civil action, which follows on a July 20 warning by the European Commission that it would use the US courts to recover billions of euros (dollars) in customs revenue lost to smuggling activities.
"Four months ago the European Commission decided on a legal action against a number of US tobacco companies in relation to cigarette smuggling," Schreyer said. "The time has come to proceed."
"The protection of the financial interest of the European Union is a high priority of the European Commission," she added. "The present case is a new step in our strategy to fight against fraud and financial irregularities."
The US Racketeer Influenced and Corruption Organizations (RICO) Act on which the EU case is built was passed by the US congress in 1970 originally to combat organized crime.
If successful, a plaintiff using the RICO act can recover up to three times the amount of money lost as a result of a pattern of proven criminal activity, plus legal costs -- BRUSSELS (AFP)
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