The six highest-ranked companies are increasingly focusing on monitoring the application of marketing policies and principles. To support this, they are defining internal procedures, ensuring a senior level of authority for marketing compliance, mandating training, and utilizing technology to enhance monitoring capabilities.
Imperial Brands Plc (Imperial)’s US-based subsidiary, Fontem, has looked to bolster its monitoring procedures. In a letter to the FDA, it stated it is strengthening its youth access prevention by: “creating new high-level compliance and regulatory positions, appointing new compliance and product integrity officers, and engaging third-party monitoring to address potential youth access concerns immediately.” The company appointed a Youth Access Prevention Officer to work with the FDA and will: “set up a systematic monitoring, reporting and action plan related to any unauthorized sales of blu products.”
British American Tobacco Plc (BAT) takes preventative measures stating that: “All marketing materials must be formally reviewed and approved by the local Legal & External Affairs (LEX) function. Our Marketing teams and external agencies receive regular training to effectively apply our approach.” In addition to this, the company ensures seniority of review stating: “adherence is monitored through internal audit procedures and overseen by the Group’s Regional Audit and CSR Committees (RACCs) and by the Main Board Audit Committee annually.” For any instance of non- compliance, the company indicates that immediate measures are taken to address them.
Further improvements to monitoring are still required.
For some companies, the number of violations reported has increased, which companies explain as being the result of better practices and reporting, rather than a reflection of the situation worsening.
In 2019, BAT reported five cases of non-compliance in relation to its international marketing principles, which were identified through internal procedures and external reports and allegations. In addition, its subsidiaries reported a total of approximately GBP1.37 million in fines or settlements associated with incidents of non-compliance with laws relating to marketing, labeling or advertising. It is notable that in 2018, BAT had no cases of non-compliance and the company regards the five instances in 2019 as evidence that its procedures and controls are strengthening. However, the fact that external reports and allegations contributed to the company’s reported non-compliance cases implies there may be limitations to its monitoring processes.
In 2019, Philip Morris International Inc (PMI) publicly disclosed for the first-time numbers of reported Marketing Code and GCP violations. It revealed that seven cases of misconduct were substantiated in 2018 and 12 in the first three quarters of 2019. The report notes: “Three of the cases involved supplying a device used with our smoke-free products to a minor as a result of failure to verify age, and one involved sending promotional communications to a minor as a result of failure to verify age. The employee who failed to verify the consumer’s age in each instance was terminated.” The company’s Integrated Report 2019 updated the number of violations for the whole of 2019 to 42. Similar to BAT, PMI attributes the increase to improved monitoring procedures, but this calls into question whether additional violations continue to escape notice, and therefore if further improvements to monitoring are still required. Stakeholders must also wonder about the performance of other companies that do not have comparable monitoring mechanisms in place.