Ref. Ares(2019)6526326 - 22/10/2019
Annex: List of documents pertaining to request
1
All
Minutes Annual meetings 2018 (pp.1-4)
22/11/2018 Ares(2018)6413235
Note for the file
Subject: Annual meeting with the three cooperating tobacco manufacturers, Brussels 22 November 2018,
Imperial Tobacco (ITL), (pp.1-2)
The Chair acknowledged the impact which the upcoming implementation of the track & trace and security
feature requirements under the EU's Tobacco Products Directive (which will be applicable as of 20 May 2019)
would have on the related provisions under the cooperation agreement.
The Chair expressed trust that a satisfactory solution for all stakeholders would be found soon and declared
that the Commission was working to update the implementation the Tobacco Agreements in line with the
requirements of the Tobacco Products Directive implementing provisions on traceability.
On Tracking and Tracing, ITL indicated that significant investment and resource is required to support the
development of a new T&T architecture. The company had questions about the additional benefits which T&T
provides to the EU. ITL signalled that providing tracking equipment to all economic operators involved in
tobacco trade requires considerable economic effort and that it will be difficult to guarantee the delivery of
solutions on time due to the number of parties involved. At the same time the company declared that they are
committed to meet the EUTPD implementation deadline.
Japan Tobacco International (JTI), (pp.2-3)
The Chair underlined that the Commission its doing its best to ensure that the upcoming implementation of
the track & trace and security feature requirements under the EU's Tobacco Products Directive will not hinder
the companies' current level of cooperation with OLAF and Member States.
On T&T, JTI referred to the perceived delays in some Member States and suppliers (UIDissuers), issues with
access to secondary repository, monitoring their second line customers and the difficulty to implement Annex
6 of the Agreement (countries outside the EU required to T&T) countries.
British American Tobacco (BAT), (p.4)
The Chair acknowledged the impact which the upcoming implementation of the track trace and security
feature requirements under the EU's Tobacco Products Directive (whichwill be applicable as of 20 May 2019)
would have on the related provisions under the cooperation agreement.
The Chair expressed trust that a satisfactory solution for all stakeholders would be found soon and declared
that the Commission was working to update the implementation the Tobacco Agreements in line with the
requirements of the Tobacco Products Directive implementing provisions on traceability. BAT referred to the
main issues the company is facing (as well as their implications) in view of adapting the track and trace systems
to the requirements under the Tobacco Products Directive.
2 JTI
Report on meeting with JTI representatives (p.1)
08/05/2019
Ares(2019)5332826
Venue and date: Brussels, OLAF 8
May 2019
OLAF met with JTI to discuss implementation of their tracking and tracing obligations under
the 2007 tobacco agreement in light of the legal requirements arising from the EU Tobacco
Products Directive as well as relevant global tracking and tracing regimes.
Issues discussed – Implemetation Tracking and Tracing:
JTI outlined their manufacturing and distribution processes and how they are implementing their tracking and
tracing obligations. They outlined some complexities related to Unique Identifiers, ID issuers and reporting
transactional information. They also expressed concern whether distributors and wholesalers will be ready to
meet their obligations as of 20 May 2019.
JTI raised the issue that as there will soon be tobacco products in circulation with, and without, tracking and
tracing markings (no markings needed if manufactured/imported prior to 20 May 2019). It remains to be seen
how this will play out in practice during the first months of the traceability system.
1
3
JTI
JTI's message to OLAF on T&T
29/01/2019 Ares(2019)551570
Subject: FW: EU Track and Trace system
Attachments: M letter on T&T.PDF
Thank you for your letter. Under the new TPD2 T&T system JTI will not have access to any track and trace
information after our first customer.
In specific response to your question, the above is a bit different from your reference to the "factory floor,"
because we have different distribution structures in the various 28 Member States (e.g., in some Member
States we have a single distributor, while in others we distribute to retail ourselves and have visibility of our
products from the factory floor to as long as the product remains in our possession). Nevertheless, in any
scenario, once the product leaves our possession we have no current permission or agreements to capture
subsequent track and trace data from our customers, their subsequent customers, wholesalers, distributors,
retail, etc.
I trust this is responsive to your question, but please don't hesitate to contact me for any followup. In addition,
has reminded me that we had discussed getting JTI's technical experts together with the EU's technical experts
in the first few months of 2019, so I look forward to supporting this if you feel it would benefit the EU's
approach.
Best regards,
4
JTI
OLAF's letter to JTI on T&T
28/01/2019 Ares(2019)464111
I wish to follow-up to our meeting on 18 October 2018 at which we also reflected on possible
adjustments to the way that the 2007 IT International Cooperation Agreement between the European
Community and the Participating Member States is applied in light of legislative developments.
In this regard I would wish to clarify one particular aspect which is relevant to our IT system design in
implementing these adjustments. This is also a matter which has been raised with us by public authorities in
the EU.
Concretely, I would wish to understand better whether you as manufacturer, in implementing the new EU
track and trace system under the 2014 Tobacco Products Directive, will have in practice any visibility of track
and trace data outside your respective factory floors, and if so, to which data elements.
Thank you in advance for this information.
5 JTI
JTI note Tobacco Products Directive and Track & Trace 22/11/2018 Ares(2018)6244711
Re: Tobacco Products Directive and Track & Trace
As I mentioned during our meetings on June 21, 2018 and October 18, 2018, please take note that JTI will now
begin to experience periodic interruptions in our original track and trace program that was developed and
implemented pursuant to the December 2007 Cooperation Agreement between the EU and JTI. These
interruptions are due to the mandatory preparations in order to comply with the new legal obligations for
track and trace set forth in Tobacco Products Directive
2014/40/EU and Commission Implementing Regulation (EU) 2011574 (TPD2).
As discussed, we are trying our best to keep these interruptions to an absolut minimum, but due to capacity
issues and mandatory technical changes, these commercially reasonable interruptions cannot be avoided and
will continue until the new TPD2 track and trace has been implemented by the EU.
We thank you for your kind understanding of the above and please do not hesitate to
contact me with any questions you may have.
2
6 JTI Report on the meeting with JTI on Tracking and Tracing (pp.1-2) 21/06/2018 Ares(2018)3529793
Note to the file
Subject: Report on the meeting with JTI on Tracking and Tracing
I. General information
Venue and date: OLAF Headquarters; 21 June 2018.
Participants: JTI, OLAF D.4
II. Backqround
OLAF has called in June 18 for a round of meetings with the three Tobacco Manufacturers with whom the EU
presently has Tobacco Cooperation Agreements. In the specific case of JTI, this is a follow-up meeting to
previous discussion on T&T under the TPD held at the company's request on 4 April 18.
III. Obiective
The purpose of the meeting with JTI was to get some feedback from the company on their views on the
possible effects of the upcoming implementation of the track & trace and security feature requirements under
the EU's Tobacco Products Directive (which will be applicable as of 20 May 2019) on the company's compliance
with the obligations under the existing Agreement.
IV. Issues raised by ]TI
Like in the previous meeting on the subject, JTI stated that the new EU system is disruptive, costly and full of
uncertainties. JTI had already flagged concerns about how lack of access to seizure data under the future TPD
system would prevent them from fully complying with their obligations under the Agreement. OLAF took note
of these concerns.
JTI announced that the company might have problems to run two systems in parallel, one for the markets in
which the TPD rules will be applicable and another one for the remaining markets. For that reason, the
company first stated that they envisage requesting a moratorium with regard to their track and tracing
obligations in third countries under Annex 6. OLAF indicated that that would be very difficult to accept and
enquired about the cost of merely continuing the existing tracking and tracing system for those countries for
the remaining few years that the Agreement would run. JTI then clarified that they had not yet assessed the
cost of continuing tracking and tracing in those countries and would revert on this issue during the second
semester. At the request of OLAF, JTI will send a notification with details on the company's plan and the period
for which they will need extra-time for complying with the new rules.
V. Way forward
OLAF proposed to continue a dialogue on this matter with all the stakeholders.
JTI will conduct an impact assessment on the feasibility of transfer to the new system and will inform OLAF of
results.
7
JTI
Report on the meeting with JTI (pp.1-2)
04/04/2018 Ares(2018)1831336
Note to the file
Subject: Report on the meeting with JTI
I. General information
Venue and date: OLAF Headquarters;
Participants: JTI; OLAF D4:
II. Background
Under the current track and trace system set up in the Agreements with Tobacco manufacturers with the
Commission and MS, the companies carry out a comprehensive T§T system which allows them full control of
the supply chain. The system will not exist any longer with the new rules.
Articles 15 and 16 of the Tobacco Products Directive 2014/40/EU (TPD) provide for EUwide systems of
traceability and security features for tobacco products to address the issue of illicit trade. The systems of
3
traceability and security features must be in place by 20 May 2019 for cigarettes and roll-your-own tobacco
and 20 May 2024 for all other tobacco products.
Under the new traceability system relevant economic operators involved in tobacco trade will be required to
record the movements of these packets throughout the supply chain and transmit the related information to
an independent provider (data storage contracts to be approved by the Commission). The data will then be
made accessible to the authorities of EU countries and to the Commission for enforcement purposes
III. Issues discussed
The meeting was arranged at the request of JTI under article 9.3 of the EU-JTI Cooperation Agreement to raise
the company's concerns on how the upcoming implementation of the track & trace and security feature
requirements under the EU's Tobacco Products Directive could affect the manufacturers' current level of
cooperation with OLAF and Member States.
JTI made a presentation (attached) to draw OLAF's attention on the potential problems the company would
face if the Commission would decide not to give reading access to data in relation to the new track and trace
system in order to fulfil the manufacturers' obligations.
JTI representatives claim that although there is no problem with the wording of the legislation a Commission's
decision on possible access to the main repository has not been made yet. In case they would not have reading
access to the main repository, (leaving aside the high costs of the new system for the company) they would
not be able to comply with their current obligations under the existing Tobacco Cooperation Agreement.
Other issues related to the new legislating on track and trace raised by JTI include their ongoing obligations
with respect to seizures and seizure responses; DTI's future communications with OLAF related to seizures and
OLAF and the Member States potential new processes following seizures and inspections.
IV. Wav forward
OLAF proposed to continue a dialogue on this matter with all the stakeholders.
8
JTI
Certificate of compliance 2016 (p.2)
27/03/2017
Ares(2017)1788107
Tracking & Tracing (T&T) Update:
• JTC has implemented second level tracking in Kyrgyzstan
• JTC invested in pack level tracking for some International Japan Tobacco Trademarks in its
Spain, Canary Islands and Andorra markets, as well as pouch level tracking of some of JTI's roll-your-own
products manufactured in Poland.
• In reference to JTC’s request dated 25 October 2016 and OLAF’s response dated 3 November 2016 regarding
UK consumer facing multipacks and legislation change, JTC produced 76.5 million such cigarettes as of
February 2017 and are expecting to produce 265 million additional cigarettes. After that, JTI expects that the
necessary equipment will be fitted and ready for regular T&T application. This volume represents
approximately 3% of JTC’s total cigarette volume in the UK.
Geneva, March 27, 2017
9
BAT
Annual Compliance letter BAT 2019 (p.5) 19/07/2019
Ares(2019)4753092
Subject:
British American Tobacco 2019 Annual Compliance Letter
2. Track and Trace technology implementation
All three tranches of Track and Trace implementation have been completed successfully. All countries covered
by the EUCA Track and Trace requirements are now fully compliant. BAT continue to enhance Track and Track
system in countries covered by EUCA.
i. Russia - we implemented pack level Track and Trace system which has been operational since June 2019;
ii. Ukraine - we implemented Subsequent Customer Tracking in 35 depos of our biggest customer Tedis. This
system has been operational since March 2019. We are currently in the process of upgrading the existing
system from outer to pack level. This functionality will go-live in September 2019. In addition, we are planning
to cover the remainder of customer universe with Subsequent
4
Customer Tracking by the yearend, which currently represents approximately 20% of the trade universe.
iii. Moldova - we are in the process of implementing Track and Trace system at pack level which will be
operational as of September 2019.
iv. UAE - we introduced pack level Track and Trace system which has been operational since January 2019.
TPD 2019 Track and Trace requirements and now fully satisfied as of May 2019.
10 BAT Issues related to the annual letter of compliance (p.3) 01/08/2018 Ares(2018)4084574;
1 August 2018
Subject: Issues related to the annual letter of compliance and recent acquisitions by the British
American Tobacco group (BAT)
REF: OLAF's letter with reference Ares(2017)6020153 of 8 December 2017 and subsequent correspondence
including BAT's letter of 24 May 2018 and OLAF's letter of 26 June 2018
BAT is working with ELD to devise a simplified process which is compliant with EUCA and the requirements of
the Tobacco Products Directive 2014/40/EU. BAT is developing and testing a suitable track and trace (T&T)
solution and is on course for a full T&T solution to be in place by May 2019.
11 BAT Issues related to the annual letter of compliance and recent acquisition by BAT (p.3) 24/05/2018
Ares(2018)
24 May 2018
Subject: Issues related to the annual letter of compliance and recent acquisitions by the British
American Tobacco group (BAT)
BAT's prior Single First Purchaser distribution model in Bulgaria
By way of update, following the acquisition BAT is now supplying to two First Purchasers in
Bulgaria, though these distribution arrangements are not finally confirmed and may be subject to change in
future. We are currently in the process of implementing a full track and trace (T&T) solution which will be
compliant with the requirements of the Tobacco Products Directive 2014/40/EU in Bulgaria. Due to the
complexities of the local environment and capacity issues, we expect implementation to require a year and it
will be completed by May 2019.
12 ITL
Certificate of Compliance 2019 (p.2)
02/09/2019
Ares(2019)5585203
Imperial Tobacco Limited - Certificate of Compliance
2. Tracking and Tracing Protocols
Our Tracking and Tracing
(“T&T”) implementation programme has been developed in full accordance with the
Agreement. However, its functionality has been impacted by the additional requirements of the EUTPD II.
The simultaneous introduction by EUTPD II of T&T requirements and security features in conjunction with the
many open questions at Member State level about Unique Identifier
(“UID”) providers or authentication
elements had a significant impact on our processes. This was compounded further by machine changes to
enable the repositioning of tax banderols to accommodate the moving of the combined health warning by 20
May 2019.
The final technical specifications of the EU Database were only communicated on 26 April. These technical
details included significant changes to the way the unit level Unique Identifier
(“UI”) will be delivered and
which deviate from our reasonable expectations based on Art. 8 and 9 (3) of the Commission Implementing
Regulation (EU) 2018/574.
In two letters to DG SANTE, we raised concerns that 10 calendar days between 10 and 19 May 2019 may not
be enough to enable the complete registration of manufacturers and all downstream Economic Operators and
their facilities. These concerns have proved to be justified, as the registration of our own facilities and
machines was only completed on 16 May. Despite starting the process on our side as soon as possible, we
have been facing technical issues in the interplay between several ID Issuers and the Secondary Repository.
5
Overall, these factors constituted a substantial challenge for our factory operations. The Agreement has been
significantly disrupted by the EUTPD II and the geographical incompatibility of T&T elements as these new
requirements divert significantly from our original solution. We were tasked to double the IT architecture and
data repositories: one repository for EUTPD and a second database for the rest of the world. Different
solutions depending on the region and the migration to the new architecture has taken significant effort and
time. The geographical incompatibility creates a challenge on the way forward because any investment on our
side will be wasted as soon as local requirements
(“FCTC”) come into place.
Despite the major effort required, we continue to do everything necessary to stabilise the solution
and remain compliant.
13 ITL
Report on the meeting with ITL (p.2)
27/03/2019
Ares(2019)2493776
Note for the file
Subject: Report on the meeting with Imperial Tobacco Limited
(ITL).
Venue and date: Brussels, OLAF room 03/109 at 11.30 hours on 27 March 2019.
Participants
ITL representatives:
Commission representatives: OLAF Unit D4
Tracking and Tracing
Concerning the adjustment of the anti-fraud cooperation agreement to the new legal framework established
by the EU's new track and trace rules, OLAF underlined that track and trace requirements under applicable
Union law will be deemed to be fully compliant with the track and trace requirements under the agreements.
OLAF plans to update the cooperating manufactures in June about adjustments to the seizure notification
process.
14 ITL
Letter from OLAF to ITL (p.1)
14/03/2019 Ares(2019) 1699528
Concerning the provisions of the Tobacco Products Directive which will be applicable as of 20 May 2019, I wish
to point out that the EU-ITL Cooperation Agreement does not contemplate an early termination of the type
you suggest. On the contrary, the EU-ITL Agreement is a binding set of arrangements to be respected by the
parties over the course of its twentyyear term.
The EU tobacco agreements are subject to applicable law and any specific legal obligation in relation to the
new track and trace requirements would supersede any similar agreemen provisions. Accordingly, full
compliance with any new track and trace requirements under applicable Union law will be deemed to be fully
compliant with the track and trace requirements under the agreements.
15 ITL Letter from ITL: Functioning of the EU AIT Agreement (pp.1-2) 16/01/2019 Ares(2019)297465
Functioning of the EU AIT Agreement
EUTPD
The EUTPD II T&T rules have superseded the main obligations under the Agreement and authorities will have
full visibility of the supply chain for cigarettes and fine cut tobacco from the manufacturer to the retail level in
the EU as well as visibility to the EU borders for tobacco products manufactured in the EU and destined for
export. EUTPD 11 has to a large extent invalidated our investment into case trace technology, even though our
T&T system under the Agreement delivered all relevant information with regard to seized products. The new
regime leads to additional significant investment, high administrative burden and duplication of efforts which
negate the spirit of cooperation and trust envisaged by the Agreement.
This point is further illustrated by not allowing us access to our own supply chain data, which will potentially
impact our ability to work collaboratively with the EU Commission and the Member States to tackle illicit
trade. We acknowledge that you made some suggestions during our meeting on 18 October 2018 on how to
address this point. However, until such time as we have official confirmation of a sufficient level of access and
a fast and unbureaucratic process, it will be impossible for us to fulfil our information obligations with regard
to seized tobacco products covered by both the Agreement and EUTPD 11 and manufactured after 19 May
2019.
6
As we discussed, your proposal could potentially go some way to mitigating the material risk that we do not
have sufficient and/or timely access to data, but it does not address the fundamental point that EUTPD II T&T
requirements essentially make the terms of the Agreement redundant as regards T&T. T&T is at the core of the
Agreement and so we did not agree with, nor appreciate, the point made at the Annual Compliance meeting
that "we
simply have to live with this". Once again, this is not in the spirit of cooperation, nor with working in
collaboration both efficiently and effectively in the complex and demanding challenges of fighting illicit trade
16 ITL
ITL's Certificate of Compliance (p.2)
10/09/2018 Ares(2018)4783735
2. Tracking and Tracing Protocols
Our Tracking and Tracing (
"T&T") implementation programme has been developed in full accordance with the
Agreement. However, its functionality will be significantly impacted by the additional requirements of the
EUTPD II. These requirements need to be implemented in a very short space of time.
The simultaneous introduction by EUTPD II of T&T requirements and security features in conjunction with the
many open questions at Member State level about Unique Identifier (
"UID") providers or security features
severely impacts on our processes. This is compounded by further machine changes to enable the
repositioning of tax banderols to the side of cigarette packs when the combined health warning on the back of
pack moves upwards by 20 May 2019.
These factors amount to a substantial challenge for our factory operations. We are focusing all our efforts to
secure the delivery of the T&T and security feature requirements by 20 May 2019. Full implementation will
start this October and last until May 2019. During this time, some disruption of the normal service of our own
T&T programme can be expected. This will also affect the data capture during the transition phase while there
is still stock in the market of products manufactured prior to 20 May 2019.
17 ITL
Report on the meeting with ITL (pp.1-2)
07/09/2017 Ares(2017)4491562
Note to the file
Subject:
Report on the meeting with Imperial Tobacco Limited (ITL).
Venue and date: Brussels, OLAF meeting room 11/003 at 11.00 hours on 7 September
17.
Participants: ITL representatives; Commission representatives: OLAF
Presentation and introductory remarks.
The meeting was organised at the request of ITL to discuss recent developments in the implementation of the
EU-ITL Cooperation Agreement.
Tracking and Tracing
OLAF recalled that the Tracking and Tracing issue in the context of the Tobacco Products Directive (TPD), is in
the remit of DG SANTE and cannot be discussed in the present context. OLAF also recalled that the EU ITL
Agreement contained a clause giving precedence for rules of European or national law over any provision of
the Agreement. This clause would also apply with respect to tracking and tracing. It was too early to discuss
this issue now but at some point the two sides would need to come to a view whether any updates were
required to the implementation of the EU ITL Agreement in the light of legislative developments on tracking
and tracing in the EU.
7