Tobacco Plain Packaging

Tobacco Plain Packaging

October 1, 2019

The World Trade Organization issued a favorable ruling for Australia rejecting complaints brought by tobacco exporting countries arguing that Australia’s tobacco plain packaging legislation violates trade rules. Citing econometric analyses conducted by Matrix Economics’ Dr. Tasneem Chipty, the WTO concluded that the legislation is a legitimate measure that is likely to achieve Australia’s public health objectives.

Plain packaging refers to the standardization of tobacco packaging through legislation that requires tobacco companies to remove branding from all tobacco packages. In 2012, Australia became the first country in the world to remove branding from all tobacco packages. Australia was challenged on three fronts: It faced a challenge, brought by British American Tobacco, Imperial Tobacco, Japan Tobacco, and Philip Morris, in the High Court of Australia. It was challenged by Philip Morris Asia under the Hong Kong-Australia bilateral investment treaty. It also faced a set of disputes at the WTO, brought by Honduras, the Dominican Republic, Cuba, and Indonesia.

Dr. Chipty served as an economic expert for the government of Australia in the WTO proceedings, where she studied changes in cigarette sales and smoking prevalence before and after implementation of tobacco plain packaging. Based on a series of econometric analyses, submitted over the course of six expert reports, Dr. Chipty found that the tobacco plain packaging measures had a negative and statistically significant effect on both smoking prevalence and cigarette sales, relative to what the prevalence and sales volume would have been without the packaging changes. Further, Dr. Chipty concluded that the effect of the packaging changes would likely grow over time, given the mechanism through which the public health community expected the policy to work. Matrix’s Principals Dr. Hiu Man Chan and Dr. Ryan Booth also worked on this matter on behalf of the government of Australia to develop evidence in response to the legal challenges surrounding Australia’s tobacco plain packaging legislation.

Honduras and the Dominican Republic have filed appeals before the WTO Appellate Body. The matter is pending at the appellate stage.

Additional information is available here:
Full panel report. (See: WTO Panel Report.)

WTO Disputes and Australia’s Tobacco Plain Packaging. (See related documents here: Department of Foreign Affairs and Trade, Government of Australia.)

Australia’s High Court upheld plain packaging legislation. (See decision here: High Court of Australia.)

Australia prevailed in the investment challenge by Philip Morris Asia under the Hong Kong – Australia bilateral investment treaty.  (See decision here: Permanent Court of Arbitration.)

The Supreme Court of the United Kingdom upheld plain packaging polices, citing heavily to Dr. Chipty’s work in Australia. (See decision here: BAT vs. Department of Health Judgement.)

EU High Court ruled that the new EU directive on tobacco products, which allows member states to introduce plain packaging, is valid. (See decision here: Court of Justice of the European Union.)


Dr. Booth Publishes Article on Airline Pricing

Dr. Booth Publishes Article on Airline Pricing

Matrix’s Dr. Ryan Booth published an article on airline pricing, called “Scarcity, Market Power, and Prices at Slot-constrained Airports: Evidence from Mexico City,” in the April 2019 edition of the Journal of Transport Economics and Policy. As he and his coauthors explain:

    "Many of the world’s major airports are both slot-constrained, meaning that demand for take-offs and landings exceeds airport capacity at certain time periods, and concentrated, meaning that a single airline operates a large share of take-offs and landings. Slot constraints and slot concentration can each lead to higher average fares, but for different reasons that may require different policy prescriptions. In this article, we demonstrate how policy makers can differentiate between the effects of scarcity and concentration on prices, and we apply our methodology to a recent investigation into the allocation of take-off and landing slots at Mexico City’s airport."

The authors use a difference-in-differences econometric framework to separately identify the effects of scarcity and slot concentration on airline prices. They conclude that the higher prices at Mexico City’s airport are driven by the scarcity of take-off and landing slots, not by the concentration of slots allocated to Mexico’s flagship airline, Aeromexico.

Dr. Booth co-authored the article with Ms. Almudena Arcelus, Dr. Aaron M. Fix, Dr. Jee-Yeon K. Lehmann, and Dr. Federico G. Mantovanelli of Analysis Group and Professor Robert S. Pindyck of MIT Sloan School of Management.

Click here to read the article.

Dr. Chipty Was Featured in the March 2018 Spotlight Series

Dr. Chipty Was Featured in the March 2018 Spotlight Series

Matrix’s Dr. Tasneem Chipty was featured in an interview-style format by the Antitrust Practice Group of the American Health Lawyer’s Association, in its March 2018 Spotlight Series. Among other subjects, Dr. Chipty was asked about key issues in health care antitrust analyses, lessons from prominent health care cases, why she started Matrix, and career advice for younger practitioners. Some of the issues she discussed include:

  •  Current position of antitrust analysis in health care and its future.
  • Distinctions in analytical framework between hospital merger evaluations and hospital-physician group merger evaluations, from her involvement in St. Luke’s and Saltzer Medical Center merger.
  • Efficiency justifications in merger cases and expected success of such arguments for future mergers.
  • Applicability of Dr. Chipty’s article on the role of firm size in bilateral negotiations to consolidation in the health care industry.
  • Views on cross market effects in mergers involving health care systems that operate in separate geographic or product markets.

    Dr. Chipty’s interview is published in the March 29, 2018 issue of the AHLA Antitrust Practice Group’s PG Briefing.