The U.S. Federal Trade Commission (FTC) has dismissed a complaint against Altria Group (NYSE: MO) and Juul Labs regarding Altria’s investment in Juul back in 2018. This news, reported by Reuters, sheds light on the evolving situation between the tobacco giant and the e-cigarette manufacturer.
Altria made headlines in late 2018 when it invested a staggering $12.8 billion for a 35 percent stake in Juul. However, in 2020, the FTC deemed this investment to be a violation of antitrust law. The reason being that Altria acquired a position in Juul instead of continuing to compete directly with the e-cigarette company in the closed-system e-cigarettes market.
To resolve the issue, Altria decided to exchange its entire investment in Juul for a global license to Juul’s heated tobacco intellectual property. Consequently, Altria approached the FTC, requesting them to drop their challenge.
This move came as no surprise considering that Altria had already terminated its stake in Juul. The investment had significantly declined in value due to regulatory scrutiny and ongoing litigation surrounding Juul’s marketing practices. In fact, the U.S. Food and Drug Administration (FDA) had ordered Juul Labs to remove its e-cigarettes from store shelves in June 2022, citing insufficient evidence of their safety. Following Juul’s challenge to this marketing denial order, the FDA agreed to reevaluate the company’s pre-market tobacco product application, recognizing unique scientific issues associated with Juul.
Additionally, Juul Labs recently agreed to settle a two-year investigation by 33 U.S. states, agreeing to pay nearly $440 million in relation to concerns over the marketing of their vaping products, which critics argue contributed to an increase in underage vaping.
Information for this briefing was found via the Tobacco Reporter and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.