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US regulator moves against Altria’s investment in Juul

The US competition watchdog has sought to unwind tobacco major Altria’s $12.8 billion (£10.4 billion) investment in leading e-cigarette firm JUUL.

The Federal Trade Commission (FTC) on Wednesday filed an administrative complaint alleging that Altria and JUUL entered a series of agreements, including Altria’s acquisition of a 35 percent stake in JUUL, which “eliminated competition in violation of federal antitrust laws.”


Altria said it will defend FTC Action, saying its minority investment in JUUL is “lawful and does not harm competition.”

“We believe that our investment in JUUL does not harm competition and that the FTC misunderstood the facts,” said Murray Garnick, Altria’s executive vice president and general counsel. “We are disappointed with the FTC’s decision, believe we have a strong defense and will vigorously defend our investment.”

The FTC alleges that Altria dealt with threat posed by JUUL, which has become the leading e-cigarette company in the US by late 2018, by agreeing not to compete in return for a substantial ownership interest in JUUL.

“For several years, Altria and JUUL were competitors in the market for closed-system e-cigarettes. By the end of 2018, Altria orchestrated its exit from the e-cigarette market and became JUUL’s largest investor,” said Ian Conner, director of the bureau of competition at the FTC.

“Altria and JUUL turned from competitors to collaborators by eliminating competition and sharing in JUUL’s profits.”

The deal announced in December 2018 made Altria JUUL’s largest shareholder, allowed Altria to appoint an observer to JUUL’s Board of Directors, and would have permitted Altria to appoint three members of JUUL’s Board after converting its shares to voting securities. It also agreed to not compete with JUUL for six years.

The FTC said its five commissioners unanimously decided to issue the administrative complaint, which marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge. The trial is scheduled to begin on 5 January 2021.

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