Philip Morris said its payment would help fight cigarette smuggling and counterfeiting, and Japan Tobacco, maker of Camel and Winston cigarettes, said it wanted to co-operate with authorities in the same way.
Japan Tobacco, the world’s third largest tobacco company, confirmed it had talked to the European Commission over co-operation to fight the illicit trade.
Guy Cote, a Japan Tobacco spokesman, said that until now Brussels-based regulators had rejected his company’s offers to settle all eventual legal disputes and pay money to fight smuggling.
He said he hoped the latest development would enable serious negotiations to be reopened. “Perhaps they wanted to deal with the biggest player first,” Mr Cote told Dow Jones.
The European Commission launched legal action against Philip Morris, Japan Tobacco and RJ Reynolds in 2000, claiming that the companies colluded with smugglers to bring their products into the EU, so avoiding excise duties. That case was rejected by the US courts, but Brussels is now pursuing a related claim against RJ Reynolds for alleged money-laundering.
Michaele Schreyer, the EU budget commissioner, said she hoped the Commission and 10 EU member states would be able to agree a deal with Philip Morris “very soon” to end the legal dispute.
She refused to say whether the litigation against Japan Tobacco had been suspended because talks with the company were continuing.
“We are willing to have discussions with all companies that show they are serious about their fight against this illegal trade,” she said.
The $1bn payment would be the largest amount ever extracted by the EU from a private company, and exceeds the ?497m antitrust fine levied last month against Microsoft.