European Union Sues RJR and Phillip Morris for Smuggling Involvement

The European Union filed a civil case in the U.S. District Court for the Eastern District of New York against tobacco companies Philip Morris(MO Quote) and RJ Reynolds(RJR Quote), alleging they are involved in smuggling cigarettes into the 15-nation European Union.

The European Commission, which oversees legislative issues for the EU, said it was seeking an injunction to prevent further smuggling, as well as financial compensation for losses it says were suffered from unpaid customs duties and value-added taxes.

Although it was not disclosed how much the EU is seeking in compensation, officials alleged the EU lost into the billions of euros because of cigarette smuggling.

Philip Morris was lately trading down $1.13 to $33.88 on the electronic brokerage Instinet in preopen action. RJR wasn't among the 20 most active stocks in Instinet's preopen trading session.