Philip Morris Georgia

Court Sets Unprecedented High Fines on Foreign Tobacco Companies in Georgia

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Photo: მიკაელა რელე / REUTERS

Tbilisi City Court has charged unprecedented high fines on tobacco companies Phillip Morris and British American Tobacco, charging them 93 million GEL and 270 million GEL, respectively. The companies were being sued by two Georgian businesses, Tbilisi Tobacco and Omega Group. Both cases were presided over by the same judge, Vladimer Kakabadze. Transparency International Georgia made an official statement assessing there were violations during the court proceedings and that the case did not receive a fair trial. The chairman of the International Chamber of Commerce (ICC) in Georgia, Fady Asly, accused the business people sueing the foreign companies of playing a “dirty game” and using “the same corrupt judge.”  Philip Morris and British American Tobacco are members of ICC.

Transparency International Georgia explained that Tbilisi City Court made the decision based on the argument that Philip Morris set dumping prices with the intention of monopolizing the tobacco market and driving out its competitors, which caused JSC Tbilisi Tobacco material damages. However, TI Georgia emphasized that, while the court established there was a “violation of law due to dumping pricing ... there is no law regulating dumping in Georgia.”

“The Court failed to take the Report of the Competition Agency into account and established the violation of the Law on Competition without proper justification,” TI Georgia says. Moreover, “based on the Report of the main body for regulating state policy in the sphere of competition, the environment on tobacco market in the disputed period was evaluated as competitive.”

The report further notes that “it is interesting that the Government of Georgia was working on an anti-dumping draft law in November 2015,” though the initiative finally was not implemented.

Transparency International Georgia says the court’s decision raises questions: “The court decision being insufficiently justified, as well as the proceedings being held in an expedited manner and with possible procedural violations, raises legitimate questions in relation to the objective examination of the case and reaffirms doubts in relation to the partiality of the Court.”

The also noted that “the amount [of financial compensation] granted to JSC Tbilisi Tobacco by the Court significantly exceeds the alleged damages sustained if we assume that the company violated the laws of Georgia.”

ICC Georgia Chairman Fady Asly issued an official statement speaking out against three recent Tbilisi City Court decisions against ICC Georgia members:

The mission of the International Chamber of Commerce in Georgia is to strive towards the improvement of the business climate and to protect the interest of its members. Three members of ICC-Georgia have been exposed to very serious damages by business people who have used the same corrupt judge to reach their goal that is to defraud those three companies for a total amount of 150 million USD.

ICC filed an official claim against Judge Vladimir Kakabadze at the High Council of Justice on Friday, March 24; On the same day I gave an interview to TV Pirveli regarding the corruption of the Judge and the attempts to ransom those foreign companies operating in Georgia.

...I am well aware that my public condemnation of the corrupt practices of Judge Kakabadze have unveiled the dirty game of the parties attempting to racketeer the three foreign companies; therefore my statement have seriously jeopardized the success of their criminal enterprise.

Over the past twenty years that I have been heading a major business organization in Georgia I have been confronted to several similar situations.”

Mr. Asly continued that he believes the business people behind the companies will try to threaten him for speaking out:

The criminal minds that planned to defraud the foreign companies in Georgia will mastermind a slander media campaign against me trying to discredit me and spoil my image. In addition they will attempt to use the Judiciary to pressure me and will also try to harm me physically… Nothing will deter me from speaking out the truth and defend my members from your racket and your blackmail.

On March 30th, employees of the Tbilisi Tobacco Company held a demonstration in front of the Movement for Liberty - European Georgia office in Tbilisi, after MP Zurab Tchiaberahsvili spoke about the court being corrupt. The protesters say ICC Georgia Chairman Fady Asly is making irresponsible statements and should stop putting pressure on the court system.

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