Canada: Three tobacco manufacturers agree to pay the amount claimed in the class action

The lawsuit against Canada's largest tobacco companies is nearing its conclusion after they agreed to pay the amount required to settle the claim. The decades-old trial could redefine industry liability. JTI-Macdonald, Imperial Tobacco Canada and Rothmans, Benson & Hedges will have to settle billions of Canadian dollars claimed by smokers suffering from tobacco-related illnesses and provincial health care institutions that are seeking to recover the money.

The trial began in the late 1990s, when smokers in Quebec decided to launch a class action against tobacco companies, accusing them of misleading consumers about the risks of smoking. In 2015, the Quebec Superior Court ordered the companies to pay C$15 billion in damages to victims, one of the largest penalties in Canadian history. The companies responded by filing for protection under the Companies' Creditors Arrangement Act (CCAA), seeking to delay payment of the amounts they had imposed while they tried to reach an agreement.

An agreement about to be signed

After years of legal negotiations, an agreement is said to be close to being finalized[1]. This aims to compensate affected smokers while putting an end to other legal proceedings initiated by Canadian provinces wishing to obtain reimbursement of health costs related to smoking-related illnesses that they have taken on. The negotiations were long and complex, with tobacco manufacturers seeking to minimize the financial impact of the amount on their businesses while ensuring the continuation of their activities.

As part of the deal, Japan Tobacco, for example, plans to set aside nearly $2.7 billion in provisions for losses.[2]The three companies will continue to pay amounts calculated on the basis of their profits until the amount of the required sum is reached.

Legal experts say the deal will likely include payments over time rather than an upfront lump sum. The terms of the deal may also impose conditions on how the industry will operate in the future, which could influence future regulations and consumer protections. The deal must be presented to and approved by the court's judges.

Historic agreement defines tobacco industry responsibility

The outcome of this trial will play an important role in defining the liability of tobacco manufacturers. Beyond financial compensation, the agreement could influence future regulatory policies and industry practices in Canada and other countries.

Public health experts warn, however, that while the settlement is of historic magnitude, it may not be as effective as it seems. A major concern is whether the phased payments will weaken the financial impact of the settlement, allowing them to continue operating without major disruptions. Health officials also argue that without stricter regulatory measures on marketing, lobbying by manufacturers or preventing the development of new nicotine products, these companies could find ways to offset these financial losses. This would result in stable smoking rates in the country.[3].

©Generation Without Tobacco

AE

[1] Jean-Philippe Nadeau, Tobacco industry: two recalcitrant companies withdraw their objections, Radio Canada, published March 3, 2025, consulted March 4, 2025

[2] Japan Tobacco and others agree to settle Canadian litigation, The Japan Times, published March 3, 2025, accessed March 4, 2025

[3] Tobacco-free generation, Canada: Uncertainty over historic $32.5 billion deal amid manufacturer opposition, published January 31, 2025, accessed March 4, 2025