Philip Morris may have breached Lithuania's advertising rules with new smoking device

By Andrius Sytas

VILNIUS (Reuters) - Lithuania's tobacco regulator believes Philip Morris's new electronic smoking device should be subject to the same advertising restrictions as tobacco, potentially dealing a blow to a product the company has touted as the future of smoking.

Although the tobacco giant only risks a fine of up to 2,896 euros ($3,560) if it is found guilty of breaching Lithuanian advertising law, the case could have far-reaching consequences if it prompts regulators elsewhere to follow suit.

The Lithuanian watchdog is challenging Philip Morris International Inc's assertion that its iQOS device is an electronic product, and so should not be regulated like tobacco.

"After a six-month investigation, we could suspect that advertising of the iQOS device constitutes a possible indirect advertising of tobacco products, because this device can only be used to smoke tobacco products," Jurgis Kazlauskas, tobacco and alcohol control chief at the regulator, told Reuters.

The device, part of a $3 billion-plus investment by Philip Morris in new-generation smoking platforms, is designed to heat tobacco to a high enough temperature to create a vapour but not smoke. The firm says it is a novel device, different from other e-cigarettes that are often already subject to regulations.

Kazlauskas said Philip Morris had been notified of its possible violation of Lithuanian advertising law, and that the regulator was expected to issue its final ruling in a month.

Philip Morris spokesman told Reuters the company intended to challenge the findings.

"We believe that our activities comply with the applicable regulations and look forward to further discussing our views with the regulator within the pending proceedings," he said in a written statement to Reuters.

The iQOS has been promoted extensively in Lithuania, and has stores on the main streets of its largest towns.

The tobacco product used in the iQOS heating device, also sold by Philip Morris but branded as Heets, is already a subject to advertising restrictions similar to regular cigarettes.

Earlier this month, ten U.S. senators called on the Food and Drug Administration (FDA) to reject Philip Morris's application to market the iQOS as less risky than cigarettes.

They cited a Reuters report in December that detailed shortcomings in the training and professionalism of some of the lead investigators in the clinical trials submitted to the FDA by Philip Morris, the maker of Marlboro cigarettes.

($1 = 0.8123 euros)

(Reporting by Andrius Sytas; Editing by Johan Ahlander and Mark Potter)