The Federal Trade Commission (FTC) is suing tobacco giant Altria and e-cigarette powerhouse Juul to undo a $12.8 billion deal that allegedly violated federal antitrust laws.
The FTC alleges that Altria ducked out of the e-cigarette market in exchange for acquiring a 35% majority stake in Juul in 2018. Altria owns cigarette companies like Marlboro and Copenhagen.
“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, in an FTC statement. “Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits.”
Juul received $12.8 billion in the shareholder deal and allegedly agreed that the companies wouldn’t compete against each other for at least six years.
The FTC lawsuit is looking to undo the partnership between Juul and Altria, but a substantial fine could also be on the table under the U.S.’s Sherman Act. An administrative trial is scheduled to begin in January 2021.
Digital Trends reached out to Juul and Altria to comment on the lawsuit. We will update this story when we hear back.
While Juul has been hit with lawsuits before, this is the first time the company has dealt with antitrust laws.
Other current lawsuits against the e-cigarette company include a lawsuit over its marketing practices towards minors from Massachusetts Attorney General Maura Healey as well as a separate lawsuit over deceptive and misleading marketing tactics from New York Attorney General Letitia James.
An FTC investigation that started last August is continuing to look into Juul’s hiring of influencers to promote its e-cigarette products and whether influencers were used to attract minors.
Federal authorities also began a criminal investigation into the company in September, and the Food and Drug Administration (FDA) is conducting its own investigation into Juul’s practices as well.
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