June 11, 2001

Re: Cigarette and Smokeless Tobacco Reports Request for Public Comment

Dear Mr. Berman:

On behalf of Philip Morris Incorporated, we submit this letter in response to the Request for Comments published by the Commission in the Federal Register on April 10, 2001, with respect to the Commission’s annual reports to Congress on domestic sales and advertising and promotion expenditures for cigarettes. As you know, Philip Morris is a cigarette manufacturer and has been providing the information requested by the Commission for these reports every year since the time of the first report in 1967.

Philip Morris takes no position on whether the Commission should or should not discontinue the annual collection and publication of data on cigarette sales, advertising and promotion, pursuant to Federal Reports Elimination and Sunset Act of 1995. Although compilation and reporting of data in the form requested by the Commission requires Philip Morris to expend significant resources each year, Philip Morris is prepared to continue to provide such data if the Commission concludes that it is necessary.

If the Commission were to determine that the collection and reporting of data from cigarette manufacturers should continue in some form, however, we respectfully suggest that the Commission should thereafter consider revising the categories of reportable expenditures on which it collects data. The sixteen categories of reportable expenditures in the Commission’s annual requests for data have remained unchanged for many years. In contrast, the cigarette marketplace is dynamic and has experienced a number of changes over time.

Perhaps the best example of changes in the marketplace that has affected cigarette manufacturers’ advertising and marketing practices is the Master Settlement Agreement ("MSA") that many cigarette manufacturers entered into in 1998 with forty-six States and which is incorporated into Court orders throughout the country. The Commission ’s long-unchanged specifications of reportable expenditures include a number of categories that are largely, if not totally, mooted by the MSA, such as outdoor and public transportation advertising. Moreover, the annual reports to Congress prepared by the Commission after receipt of manufacturers’ reports do not reflect the dramatic change in the way cigarettes are advertised and promoted since the MSA was signed.

If the Commission concludes that some form of reporting should continue, we would be happy to meet with the staff to provide whatever cooperation we can to assist in the development of reporting categories that are more in line with current marketing practices.

Sincerely,

Denise F. Keane