Prime Minister John Key says it is unlikely the Government would face legal action if it goes ahead with plans to ban branding on cigarette packets.
The Government has agreed "in principle" to introduce a plain packaging regime in line with Australia, depending on the outcome of a public consultation process.
A spokesman for tobacco giant Phillip Morris told TVNZ's Q+A programme yesterday that stripping branding from cigarette packets in New Zealand could breach intellectual property rights.
Chris Bishop from Philip Morris New Zealand, which owns the Marlboro brand, said the company would be taking a robust stand against the proposal.
Key told TV ONE's Breakfast today that he has not had any advice that the Government would be subject to legal action.
"I mean none of the FTAs as far as I am aware, it would not make any difference in terms of they could use that angle," he said.
"They can in Australia potentially and they are testing that law over there but not here.
"So to the best of my knowledge we have the sovereign ability to control what's on our shelves and the way we present it."
Bishop said it is "way too early" to say if Philip Morris will sue the Government, because they are only in the consultation phase at this point.
Meanwhile, Australia has pushed ahead with the move, and is being sued by four tobacco companies for breaching international copyrights.
If it loses, the Australian government could pay out billions of dollars in damages, and some fear the same could happen here.
Effect on competition
Bishop said yesterday that taking branding off packaging will not have an impact on how many people smoke.
"There aren't any studies to suggest that plain packaging will work at stopping people from taking up smoking or help them to quit smoking," Bishop said.
"But there is a lot of evidence that it will breach intellectual property treaties and trade treaties that New Zealand is subject to."
Key questioned why Bishop is concerned if he does not think stripping branding will have any effect on smokers.
"If it makes no difference why would they care that we are doing it," Key told Breakfast.
But Bishop said the company's biggest concern is the effect it will have on competition.
"The colours and the logos and the architecture of our brands are not there and our argument is that it is a confiscation of our brands," said Bishop.
"It's about product differentiation and distinguishing our products from our competitors and that is what we are concerned about."
Maori Party Tariana Turia wants to outlaw smoking and make New Zealand smoke-free by 2025.
The open display of cigarette and tobacco packs in all dairies and other shops will be banned from July 23 this year.