The Ministry of Health is investigating the rebates tobacco companies pay retailers to stock their products.

The ministry told the Herald yesterday it would investigate "the issue of tobacco companies providing incentives to retailers to sell and display tobacco".

At Wednesday’s meeting of Parliament’s health select committee, the Association of Convenience Stores told MPs retailers received "standard trade rebates" from tobacco companies.

The ministry said: "Section 28 (2) of the Smoke-free Environments Act (1990) bans any gift or cash rebate as an inducement or reward to any retailer for the purchase, sale, advertising or placement of tobacco products."

The association’s statement to MPs was confirmed by committee chairwoman Sue Kedgley, the Cancer Society’s Action on Smoking and Health (Ash), and the association’s executive director, David Killeen.

But association chairman Bryce Taylor said the society and Ash had taken the presentation out of context.

And in an apparent contradiction of the ministry’s view, Mr Killeen said: "The act does allow normal trade rebates. We are not talking about incentives to put [tobacco products] in particular positions."

He said the rebates tobacco companies paid to retailers were the same as those paid by confectionerysuppliers.

"If you agree to sell so many brands of their product, they give you certain rebates … The rebate is associated with the decision to purchase a particular brand. It’s got nothing to do with display."

He acknowledged that tobacco advertising was not permitted, but said displays were not advertisements.

The committee was hearing submissions on a petition calling for retail tobacco displays to be banned.

The ministry, separately, is considering proposals to ban the displays, add further restrictions short of a ban, or simply enhance education and enforcement of the current law.

Mr Killeen said changes to put tobacco out of customers’ sight would cost $6000 to $8000 at each store and could frustrate shoppers unable to find the brand they wanted quickly.