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Current issue      FRONT PAGES       news U.S. makers agree to record US$250 billion payout to states WASHINGTON, D.C.-- U.S. cigarette makers on November 14 agreed to pay out $250 billion over the next 25 years to end the worst of the litigation they face. If finally agreed, the settlement will be by far the biggest by any industry in corporate history. The deal was struck between the big cigarette manufacturers and the states suing them for the cost of treating smoking-related illnesses. The settlement is a slimmed-down version of a tougher deal announced in June 1997 when the tobacco companies agreed to pay out $368 billion. That deal was scuttled when Congress refused to grant any future lawsuit immunity to the industry and wanted to increase the payout substantially. The new settlement also bans advertisements in places where youngsters would be likely to see them. This includes nearly all outdoor advertising and restrictions on sports sponsorship. A national foundation to reduce teen smoking will be established at a cost of $25 million a year over 10 years, and $1.45 billion will be paid over five years to set up a public education fund that will campaign against smoking. The pay-outs to the states - to be divided among them according to population and smoking costs incurred - will start with a payment of $2.4 billion backdated to last month, rising to $9 billion by 2018 and continuing at that level. The payments will be divided among the cigarette makers according to market share.

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© Copyright 1999 By Lockwood Trade Journal Co., Inc.