The author is co-director and spokesperson for the Quebec Coalition for Tobacco Control.
At the end of September, the three largest Canadian tobacco companies which have been placed in insolvency since March 2019 were granted the six-month reprieve they were asking for in order to continue negotiations with their creditors. This is the ninth renewal of the order suspending all litigation and penalties they face, with the aim of settling them at once through negotiations with creditors.
These tobacco companies are facing two enormous claims: 15 billion from the victims who launched class actions in Quebec and who won their case after a legal battle lasting more than 20 years, and more than 500 billion from the ten provinces who want to recover the amounts spent since the 1970s in health care attributable to tobacco products. The total sum far exceeds the 8 billion on the table. If the kitty remains tiny compared to the revenues of the tobacco companies, it is because the manufacturers continue to channel funds indirectly to their parent companies abroad thanks to learned service agreements with companies that are also affiliated with the multinational tobacco companies.
Given that none of the ten provinces opposed the repeated extensions and that eight of them are represented by private law firms whose fees depend purely on the amounts obtained, an almost exclusively financial agreement is to be feared. This is probably the bet the tobacco companies made when they chose to take the approach ” business as usual and behind closed doors, as recommended by the mediation resulting from the Companies’ Creditors Arrangement Act (CCAA).
Added to these disturbing facts is the Heart and Stroke Foundation of Canada’s petition to the court to grant it creditor status to represent future tobacco users, who it claims will provide the bulk funding for negotiated agreements. According to the Foundation, this “inevitable” harm could be mitigated by granting part of the amounts available for the creation of an anti-tobacco fund.
Although the presence of a health group at the negotiating table could be a positive development, the objective of creating an anti-tobacco fund would only endorse the inappropriate approach prioritizing financial compensation. In fact, the creation of such a fund would likely allow the provinces to wrap a deeply flawed agreement in an attractive shroud that would pride itself on pumping money into smoking prevention and cessation efforts.
What is the advantage of prioritizing funding for an extended fight to reduce smoking when bold and effective measures could be directly enshrined in the negotiated agreement?
Faced with the possibility of bankruptcy, the main Canadian tobacco companies are backed into the wall. The provinces are in a historic position to reform the industry. Quebec and Ontario are the two largest creditors and could impose an agreement that would spell the end of this deadly industry rooted in nicotine addiction.
Rather than settling for a fraction of the amounts claimed in their lawsuits (at the expense of those who launched the class action in Quebec), Quebec and the other provinces should aim for the future savings that would result from a accelerated reduction in rates of smoking and nicotine dependence.
A 2020 economic study by Krueger and Associates estimates that Quebec would save more than $22.2 billion, while Ontario would save more than $26.1 billion, if tobacco companies were required to reduce tobacco prevalence to less than 5% by 2035, the current target for Canada’s tobacco strategy.
An agreement could force major tobacco companies to meet interim and final reduction targets or face stiff penalties. In addition to saving lives, such an approach would have the advantage of not linking government compensation to the existence of future “customers”. A 5% reduction by 2035 would represent some 641,000 and some 990,000 fewer smokers in Quebec and Ontario respectively. This is the victory envisaged by 71% of Canadians, who want to see their province take advantage of the context to force tobacco companies to gradually eliminate tobacco consumption in the country, according to a survey conducted in 2021.
Recall that, in this saga, the court concluded that “an order for punitive damages is based primarily on the principle of deterrence and aims to discourage the repetition of similar behavior, both by the individual wrongful than in society”.
Isn’t it time for Quebec and the other provinces to fulfill their duties to protect future generations against avoidable health risks instead of having their eyes riveted on a kitty synonymous with more suffering and addiction among our fellow citizens?