The government’s plans to launch a consultation on plain tobacco packaging by the end of 2011 appear to have stalled.

Fears over the legality of the plans, which would require tobacco manufacturers to remove all distinguishing features from their products, are thought to be behind the delay.

A spokeswoman for the Department of Health told Convenience Store that it needed to “review the evidence and draw up an impact assessment on the costs as well as the additional public health benefits of policy options” before a consultation could be published.

“We must get this right and so before we publish the consultation we must ensure that we have expert legal advice on the trade, competition, EU Single Market and intellectual property rights implications,” she added.

“Only after this work, and gathering views and evidence from public consultation, will we be in a position to know whether it will be possible to proceed and if so, how.”

A source close to the issue said that recent developments in Australia, where tobacco manufacturer Philip Morris Asia Ltd (PMA) has filed a lawsuit against the Australian Government over its plans to introduce plain packaging for all tobacco products by December 2012, could explain the UK Department of Health’s faltering.

PMA is seeking suspension of the legislation, and substantial compensation for the loss of its trademarks and investments. The legal process could take up to three years and damages could potentially run into billions of dollars.

The International Trademark Association believes that the legislation would “seriously encroach” on the rights of trademark owners, and frustrate the ability of trademarks to function properly as a part of free and effective commerce.

Forcing manufacturers to adopt a uniform text style size and colour would also violate some of Australia’s obligations under the Trade-Related Aspects of Intellectual Property Rights Agreement, executive director Alan Drewsen said.

Fears that plain packaging could also lead to an increase in counterfeit product are thought to be concerning the DoH.