Calling all retailers. Do you have a cigarette retail program agreement with Altria, R.J. Reynolds or ITG Brands? If you answered yes, then keep reading because a recent court settlement will impact your stores.
In the 1990s, the U.S. Department of Justice (DOJ) and public health groups filed a lawsuit against Altria, Philip Morris USA Inc. and RJ Reynolds. In 2006, a federal judge sided with the government and ordered the manufacturers to take a variety of actions including making “corrective statements” on certain topics. Since 2010, the parties have litigated the implementation of these “corrective statements.”
And that’s where issues arose for retailers. DOJ wanted to require retailers to post “corrective statements” in their stores, even though they were not part of the original lawsuit or responsible for previous statements made by the manufacturers. For the past 17 years, NACS, the tobacco companies and the National Association of Tobacco Outlets (NATO) fought any signage requirement through litigation. Last year, however, negotiations between the tobacco companies and DOJ picked up. NACS, along with NATO, were part of those discussions to advocate for retailers.
Retailers were not parties to the lawsuit and should not be burdened with a court-ordered remedy, but this negotiated outcome avoids even worse results that DOJ and public health groups were advocating.
The agreement reached during those negotiations will require the tobacco companies to supply court-ordered signs to retail stores that have contracts with them. Those stores will be required to post the signs for a total of 21 months. As NACS noted, “Retailers were not parties to the lawsuit and should not be burdened with a court-ordered remedy, but this negotiated outcome avoids even worse results that DOJ and public health groups were advocating.”
AGREEMENT DETAILS
The agreement provides that each store under contract with one of the manufacturers will have to post at least one sign carrying one of 17 different, pre-approved health messages that will be distributed at random to retailers around the country. Tobacco companies will provide each store with a sign that will then be rotated with a new message halfway through the 21-month period.
Each store must keep the initial signs in place for at least nine months, and then there is a three-month rotation period where manufacturers will provide a different sign, which will need to be displayed in place of the first one for the rest of the 21-month period.
The agreement requires the main sign to be 348 square inches in size. The first choice for placement of the sign is attached to or hung above the main cigarette merchandising set. If that’s not possible due to store layout, there are other options for placement. In most cases, tobacco company representatives will post the required signs.
Some retailers, such as those that post ads around their stores for cigarettes from the tobacco companies involved or those with large cigarette racks, will need to post a second sign. Kiosk stores will have the ability to post a smaller sign due to their relatively small size. Full details regarding compliance with the terms of the settlement can be found at the NACS in-store signage settlement topic page at www.convenience.org/Advocacy/Issues/Tobacco/In-Store-Signage-Settlement.
COMPLIANCE CHECKS
Retailers should be aware that part of the agreement provides that the tobacco manufacturers will hire auditors to check for compliance with the requirements in the agreement, and retailers can face penalties if they do not comply with the agreement’s terms.
In most cases, tobacco company representatives will post the required signs
How long retailers have before the signs need to be in place depends upon the U.S. District Court for the District of Columbia. A hearing on the agreement was held on July 28, and the court must approve the agreement before it can move forward. Once the court enters an order approving the agreement, retailers will have nine months to place the signs.
While retailers should not be forced to post signage for litigation that did not include them, a continued fighting the case risked even more difficult outcomes.
NACS urges its members to review the terms of the agreement. NACS held a webinar for its members to explain those terms and plans to have an education session at the 2022 NACS Show October 1-4 in Las Vegas to answer questions about it as well.