Japan Tobacco Maker to Pay $400 Million

Japan Tobacco International has agreed to pay EU governments $400 million over the next 15 years to combat the sale of illegal and counterfeit cigarettes, the European Commission announced Friday.

Siim Kallas, the EU commissioner responsible for fighting fraud, called the agreement "a major step" in the battle against contraband and counterfeit cigarettes, whose sale cost European governments dearly in unpaid taxes.

Japan Tobacco International, the world's third largest international tobacco maker, sells more than 400 billion cigarettes a year.

EU officials say cigarette makers worldwide are often lax in combatting the illegal distribution and sales of their cigarettes. They see the cooperation agreement with Japan Tobacco International as a model for other cigarette companies

Under the agreement, which shields JTI from lawsuits stemming from past cigarette seizures in Europe, Japan Tobacco International committed to do more to prevent smuggling of "genuine Japan Tobacco cigarettes" in Europe and develop packaging that can be tracked and traced during distribution.