Swedes hope for snus ban reversal after Dalli resignation – minister

Swedish Trade Minister Ewa Björling is hoping the outcome of John Dalli's resignation at the hands of an anti-fraud investigation by OLAF, over allegations that he was aware of a bribe to influence EU tobacco laws, will bring about a change in the EU's outright ban on the sale of Swedish snus tobacco.

The Wall Street Journal said Sweden was "stepping up its efforts" to lift the EU ban on snus tobacco - potentially opening up a $2.3 billion market - after the resignation of John Dalli, whose upcoming review of the Tobacco Products Directive reinforced the ban on smokeless tobacco across Europe.

In an interview, said Björling said this would lead to more transparency in the development of the new tobacco products directive, which is now on ice since the resignation of John Dalli. "I hope the EU Commission themselves now see that all cards must come up on the table and all facts need to be discussed openly," Björling said, arguing that the Commission has so far ignored scientific research indicating that the stuff is less harmful than cigarettes and other forms of smokefree tobacco.

Björling said she found it "highly remarkable" that Dalli was indirectly linked to the bribery allegations, given his often publicly stated opposition to opening up European snus exports for health reasons.

Björling said the case had shone the spotlight on the EU's "bullying of snus" and raised awareness about the Swedish push for uniform regulation on oral tobacco. "There are other forms of oral tobacco sold within the EU but the Swedish snus is banned, even though we know it's less harmful," she said.

Snus, a moist powdered tobacco that is placed under the lip, offers safer alternative than other forms of tobacco its proponents in Sweden argue. Swedish Match, the company that filed the graft complaint against Dalli to the EC, also sells snus in the United States through Philip Morris.

The ban went into effect in 1992 amid concerns over oral cancer, and reinforced by court order when Sweden joined the EU in 1995. An estimated 285 million cans are consumed annually in Sweden and Norway, but these cannot be sold anywhere else.

The ban has cost Sweden at least 3 billion Swedish kronor (€330 million) per year in lost export revenue, according to the Swedish Retail Institute, which estimates the total market potential to be between 13 billion and 15 billion kronor within 10 years of lifting the ban.

Dalli resigned Tuesday amid allegations that he had been aware of contacts made by Maltese businessman Silvio Zammit to gain money from Swedish Match in exchange for seeking to influence the commission's future legislative proposal on tobacco products, in particular the EU export ban on snus Swedish Match Friday alleged the amount offered was €60 million.

Dalli refuted the charges against him and denied all "allegations of any wrongdoing on my part." He said it was tobacco industry officials "that set the ball rolling" on their contacts.

Swedish Match spokeswoman Rupini Bergström said the company "categorically denies" trying to entrap Dalli and has no interest in any kind of delay or disruption of the tobacco directive process.

"We have been waiting for this eagerly for 12 years now and we would like that directive to go forward as planned," she said. "We would hope, under the circumstances, that it will now ensure there is a fair and due process for snus, because snus has never been assessed on its own merit. It has always been lumped together with other types of tobacco," Bergström said.

Merrill Lynch said in a research note that the resignation of Dalli could be "very good" news for Swedish Match, which could expect higher growth prospects and potential takeover speculation should the ban be lifted. "The next health commissioner will have to firmly justify any decision on the EU snus ban. Given significant scientific evidence showing snus to be significantly less harmful than cigarettes, we believe this increases the probability of the EU snus ban being lifted."