CANBERRA (Reuters) - Tough anti-smoking laws banning brand labels passed their last major legislative hurdle in Australia on Thursday and immediately faced the threat of court action from tobacco companies worried the move could spread and hurt sales elsewhere.
The upper house of parliament agreed on new laws that from December next year will force cigarettes to be sold in plain olive packets, with no mention of the brand. They would continue to show graphic images of the harm smoking can cause.
"Big tobacco has been fuming since day one that this is a law that they don't want introduced. They want to keep selling their deadly products, and we want to reduce their market. So we are destined to disagree," Health Minister Nicola Roxon told reporters.
"But we are not going to be bullied into not taking this action, just because tobacco companies say they might fight it in the courts. We are ready for that if they take legal action."
The Senate vote is the last major hurdle for the new rules, although they must now be rubber stamped by parliament's lower house in two weeks.
The laws are being closely watched by governments considering similar moves in Europe, Canada and New Zealand, and have angered tobacco companies which plan to challenge the decision. Some countries are threatening to take Australia to the World Trade Organization (WTO).
The Himalayan nation of Bhutan banned the sale of tobacco outright earlier this year.
Tobacco giants British American Tobacco, Britain's Imperial Tobacco and Philip Morris have all threatened to go to court and seek billions in compensation, arguing that the new rules restrict their trademark and intellectual property rights.
"We are disappointed that this bill has been passed - despite there being no apparent evidence this move will make any difference to public health," British American Tobacco Australia said in a statement.
"British American Tobacco Australia has always said that it wanted to avoid having to go to court but, if pushed to do so, it will take all appropriate legal measures to defend its intellectual property, valuable brands and right to compete as a legitimate business selling a legal product."
The governments of Dominican Republic, Nicaragua and Ukraine have also lobbied against Australia's laws and threatened a WTO challenge.
British American Tobacco spokesman Scott McIntyre said the laws would create a black market for tobacco, which would force down prices and see more people take up smoking.
"In years to come, plain packaging will be remembered as the legislation which wasted billions of taxpayer's dollars, caused uncontrollable growth in organised gang activity on the black market and increased smoking rates in young people," he said.
Australia already has graphic health warnings on cigarette packets, along with 41 other countries which have mandated smoking health warnings. The new packaging rules start in December 2012.
The World Health Organization in 2005 urged countries to consider plain packaging, and estimated more than 1 billion are regular smokers, 80 percent of them in poor countries.
Analysts say tobacco companies are worried that plain packaging could spread to important emerging markets like Brazil, Russia and Indonesia, and threaten growth there.
Legal experts said challenges would likely fail.
"In my opinion, the tobacco industry's threat of litigation is largely vexatious," said Matthew Rimmer, associate professor of law at the Australian National University.
He said WTO action would also likely fail, as its 1994 intellectual property rights agreement gives governments the right to pass laws to protect public health.
Australia already bans tobacco advertising, smoking in public buildings and the public display of cigarettes in shops. In some states, it is illegal to smoke in a car if a child is a passenger.
Australia wants to cut the number of people who smoke from around 15 percent of the population to 10 percent by 2018. Health authorities say smoking kills 15,000 Australians each year with social and health costs of around $32 billion.
Australia's tobacco market generated total revenues of around $10 billion in 2009, up from A$8.3 billion in 2008, although smoking generally has been in decline. Around 22 billion cigarettes are sold in the country each year.
Reporting by James Grubel; Editing by Nick Macfie