BAT loses UK rights to distribute Marlboro

British American Tobacco, the world's second-biggest cigarette maker, yesterday lost the rights to distribute Marlboro cigarettes in the UK after an appeal court decision returned full control of the brand to its owner, Philip Morris of the US.

The Court of Appeal unanimously upheld last year's High Court ruling, which confirmed Philip Morris's right to reclaim from BAT the rights to distribute Marlboro on the grounds that the original distribution and licensing deal had been between the US company and Rothmans.

The court accepted Philip Morris's argument that when BAT bought a stake in Rothmans in 1999, it constituted a change of ownership, triggering a get-out clause from the 25-year distribution deal reached in 1989. The original deal gave Rothmans 65 per cent of a venture set up with Philip Morris to distribute Marlboro in the UK.

A spokesman for Philip Morris said the company was "evaluating its options" and that it had not decided what it was going to do with the UK rights to the Marlboro brand. It is possible that the US company will still choose to continue the partnership with BAT, which allows cross selling of products in the UK.

BAT said it would not be appealing to the House of Lords. Shares in the company climbed 3p to 537p yesterday after initially losing nearly 10p on the ruling.