IP/10/1275

Brussels, 1 October 2010

Operation Sirocco 40 million cigarettes seized in joint customs operation

Around 40 million cigarettes, 1 243kg of hand rolled tobacco, 7 038 litres of alcohol and 8 million other counterfeit items including clothing, shoes, toys and electronics, were seized during a joint customs cooperation, coordinated by the European Anti Fraud Office (OLAF). Operation Sirocco , which also led to the arrest of 3 suspected cigarette traffickers, was a joint project carried out by the EU and 11 partner countries from the Union for the Mediterranean (UfM). The final results of this operation, which was conducted in June 2010, were made public today at a meeting in Amman, Jordan.

Algirdas emeta, Commissioner for taxation, customs, anti fraud and audit, said Customs operations not only safeguard the EU s financial interests but also protect our citizens and legitimate businesses. Operation Sirocco shows the great results we can achieve by working in cooperation with our international partners to combat smuggling and fraud. I would like to congratulate all participants for their efforts in this joint customs operation and strongly encourage more such joint actions in the future.

The joint customs operation code named “SIROCCO” focused on deep sea containers loaded in China or the United Arab Emirates and arriving in countries of the Union for the Mediterranean. The aim of the operation was to identify consignments suspected of containing counterfeit or smuggled genuine cigarettes, as well as other counterfeit and illegal goods. The seizures made during this operation on cigarettes alone averted potential losses of customs duties and taxes in the EU of approximately 8 million. The 40 million cigarettes seized equal the yearly consumption of 5 000 persons smoking 20 cigarettes per day.

SIROCCO involved customs authorities from the 27 EU Member States and 11 Non EU partner countries from the Union for the Mediterranean (Albania, Croatia, Egypt, Jordan, Lebanon, Palestinian Authority, Montenegro, Morocco, Syria, Tunisia and Turkey) with the support of the European Commission, the World Customs Organization (WCO), Europol and Interpol.

The operation was coordinated at OLAF headquarters in Brussels via a Permanent Operational Co ordination Unit staffed with customs liaison officers from 9 EU Member States (Belgium, Denmark, Germany, Italy, the Netherlands, Poland, Portugal, Spain and Romania), Egypt, Morocco and Turkey, as well as one liaison officer from Europol.

In the past, several other joint customs operations such as “Diabolo II” were held by OLAF and successfully led to the seizures of millions of counterfeit cigarettes and other items (see IP/10/99 and MEMO/10/23).

For more information, see

MEMO/10/466

Europa – press releases – press release – excise duties/cigarettes: the european
commission alerts member states on minimum retail selling
prices

The European Commission is taking action against Member States that impose minimum retail selling prices on cigarettes. The Commission, in line with the jurisprudence of the European Court of Justice, takes the view that such minimum prices infringe Community law, distort competition and just benefit manufacturers by safeguarding their profit margins. The relevant Council Directive (95/59/EC) on taxes contains the right of the manufacturer and/or importer of tobacco products to determine the retail selling price. Minimum State prices impair this right and are therefore not compatible with the Directive. To achieve the objective of reducing tobacco consumption, the Commission advocates an increase of the excise duties on cheap cigarettes.

I strongly support Member States in their efforts to implement new health policy. However, this must respect Community law.” said Taxation Commissioner L szl&#243 Kov cs. “Introducing minimum retail prices for cigarettes is against Community law and mainly benefits manufacturers who are able to protect their profit margins .

Health protection objectives may be adequately attained by increasing excise duties

Recently, some Member States have introduced in their legislation minimum retail prices for cigarettes on the grounds of health protection. The European Commission has already launched and will continue launching infringement proceedings against Member States introducing this measure.

The Commission recognizes that price and tax measures are effective means for reducing tobacco consumption. However, tax and price measures must be in line with other Treaty obligations.

In this respect, the European Court of Justice has already stated that

• imposing a minimum price is incompatible with the current legal framework (Directive 95/59/EC), since the setting of a minimum price by public authorities inevitably has the effect of limiting the freedom of producers and importers to determine their selling price (see also case C 302/00, Commission/France)
• minimum prices are not necessary, since the health objectives may be attained by increased taxation of tobacco products. (Case C 216/98, Commission/Greece).

The Commission fully supports Member States in designing measures on tobacco control in order to ensure a high level of public health protection. Among the measures that could be used, the European Commission advocates an increase of excise duties and minimum taxes to tackle cigarettes consumption. This would have the same impact on the prices and would not hamper price competition to the sole benefit of manufacturers.

Background

Cigarettes are taxed by means of a specific and an ad valorem excise duty. Specific excise duties are taxes on the quantities of cigarettes. Ad valorem excises are a percentage applied to the price of the cigarettes. Consequently, for cheap cigarettes, the ad valorem excise duty will be small.

In order to increase the price of cheap cigarettes, Member States can either increase the specific excise duties and/or the minimum ad valorem excise duties. Minimum excise duties (calculated on the quantity) are independent of the price of the cigarettes and also ensure that all cigarettes, whether cheap or premium brands, are properly taxed.

The Council, acting on the basis of a report from the Commission, must re examine the rates and structures of excise duties on tobacco products before the end of 2006. In the context of this review, the Commission will examine whether and to what extent the current EU directives can be improved with a view to health protection whilst also respecting the principle of “proportionality”.

Further information on current legislation on tobacco products is available on the following website