Arrow-right Camera

The Spokesman-Review Newspaper The Spokesman-Review

Spokane, Washington  Est. May 19, 1883
Clear Night 33° Clear
News >  Business

Feds seek breakup of Altria-Juul deal on antitrust grounds

UPDATED: Thu., April 2, 2020

Juul products are displayed at a smoke shop in New York on Dec. 20, 2018. The Federal Trade Commission on Wednesday, April 1, 2020, sued to break up the multibillion-dollar partnership between tobacco giant Altria and e-cigarette startup Juul Labs. (Seth Wenig / AP)
Juul products are displayed at a smoke shop in New York on Dec. 20, 2018. The Federal Trade Commission on Wednesday, April 1, 2020, sued to break up the multibillion-dollar partnership between tobacco giant Altria and e-cigarette startup Juul Labs. (Seth Wenig / AP)
By Matthew Perrone Associated Press

WASHINGTON – U.S. business regulators are suing to break up the multibillion-dollar deal between tobacco giant Altria and e-cigarette startup Juul Labs, saying their partnership amounted to an agreement not to compete in the U.S. vaping market.

The action announced late Wednesday by the Federal Trade Commission is the latest legal headwind against Altria’s investment in the embattled vaping company. Juul sales have been sliding for months amid state and federal investigations, lawsuits and flavor restrictions aimed at curbing the recent explosion in teen vaping.

For years, Altria competed in the burgeoning e-cigarette space. But the Richmond, Virginia-based company was quickly overtaken by San Francisco-based Juul, which became the top U.S. vaping brand on the popularity of its small, high-nicotine and fruity flavored e-cigarettes. The company has since pulled all of its flavors except tobacco and menthol.

In late 2018 Altria discontinued its own e-cigarettes and took a 35% stake in Juul.

The complaint announced by the FTC alleges that Altria agreed not to compete against Juul in return for the $13 billion stake in the company.

“Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits,” said Ian Conner, of the FTC’s Bureau of Competition. It was not clear from the agency’s initial statement whether Altria would be required to sell its stake in Juul. If the case goes to trial it would be heard by an administrative law judge in January 2021, the agency said.

Altria said in a statement that the FTC “misunderstood the facts” of its investment in Juul.

“We are disappointed with the FTC’s decision, believe we have a strong defense and will vigorously defend our investment,” said Altria General Counsel Murray Garnick.

Juul did not immediately respond to requests for comment Thursday.

Altria has slashed the value of its investment in Juul to roughly a third of what it initially paid, taking more than $8.5 billion in write-downs since October.

The Spokesman-Review Newspaper

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.

Subscribe to the Coronavirus newsletter

Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.



Annual health and dental insurance enrollment period open now

 (Courtesy Washington Healthplanfinder)
Sponsored

2020 has been a stressful year for myriad reasons.