US tobacco company Philip Morris International announced on Friday about its plans to shut down its plant in Uruguay after filing a lawsuit due to country's anti-smoking laws.
"The wide availability and presence of illegal products on the market, combined with reduced demand and regulatory and fiscal measures that limit the ability to market our products profitably, have made the plant's operation no longer viable," the company said in a statement.
AdvertisementNicolas Echeverria, general manager of PMI subsidiary Abal Hermanos, said that "extreme" tax and regulatory measures had "shifted market dynamics."
The factory closure will trigger layoffs for 62 workers at the plant.
Abal Hermanos products will now be manufactured at PMI facilities in Argentina, the company said, adding that it would continue selling its products in Uruguay and keep 28 employees there.
In March 2006, Uruguay became the first Latin American country and the fifth nation worldwide to implement a ban on smoking in enclosed public places.
It also enacted some of the world's toughest tobacco laws, requiring large health warnings on packages and banning advertising and the use of multiple products for one brand.
Abal Hermanos, which had an estimated 21.7 percent market share in Uruguay last year, said the measures had forced it to withdraw seven of twelve types of Marlboro cigarettes that represented 40 percent of sales for that brand.
In early 2010, Philip Morris filed a complaint with the International Center for Settlement of Investment Disputes (ICSID) of the World Bank, seeking damages allegedly caused by Uruguay's anti-tobacco measures and claiming they violated a bilateral investment treaty and harmed the company.
The country's Supreme Court later dismissed the constitutional challenge.
Montevideo has since received broad support for its move from the World Health Organization and international NGOs.