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• Brazil's top cigarette maker fears blacker market 

Souza Cruz, which is owned by British American Tobacco (London:BATS.L), says 46 billion cigarettes were sold on Brazil's black market in 2002, half the legal market of 97 billion and more than Argentina, Uruguay and Paraguay put together.

Paraguay, where production has multiplied and now churns out about 20 times more cigarettes than the country smokes, is the source of about three quarters of contraband, it says.

Souza Cruz has teamed up with gasoline retailers and the world's No.5 brewer, AmBev (Sao Paolo:AMBV4.SA; NYSE:ABV), which faces similar contraband, tax evasion and falsification problems, to form the Brazilian Institute of Ethical Competition, or ETCO, and push the government to crack down on the black market.

Brazilian authorities say they are stepping up the fight against illegal cigarettes, but the industry says the smugglers and producers who evade taxes have also grown as the margins between the legal and illegal markets widens.

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