Altria can keep its stake in Juul after FTC’s antitrust complaint against it was dismissed in court.
An administrative law judge ruled that Altria Group Inc. did not violate federal antitrust laws when it bought a 35% stake in Juul Labs Inc. in 2018.
The US Federal Trade Commission (FTC) sued Altria two years ago to unwind the deal. At the time, FTC said that the deal was bad for competition. It alleged that Altria and Juul entered a series of agreements that eliminated competition in violation of federal antitrust laws. According to the complaint, this series of agreements involved Altria ceasing to compete in the US market for closed-system electronic cigarettes in return for a substantial ownership interest in Juul, by far the dominant player in that market. “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.
Chief administrative law judge D. Michael Chappell concluded that FTC failed to demonstrate both the anticompetitive effects of the non-compete provision, and a reasonable probability that Altria would have competed in the e-cigarette market in the near future, through marketing a competing product independently, or through collaboration or acquisition.
Judge Chappell also noted that since Altria acquired its stake in Juul, the closed-system e-cigarette market has become more competitive, not less; that the evidence failed to prove that Altria’s removal of its own e-cigarette products from the market substantially harmed competition or is likely to do so in the future; and that FTC failed to prove that the transaction was a violation of Section 5 of the Federal Trade Commission Act, Section 1 of the Sherman Act, or Section 7 of the Clayton Act.
Murray Garnick, Altria’s executive vice president and general counsel, said, “We are pleased with this decision and have said all along that our minority investment in Juul does not harm competition and does not violate the antitrust laws.”
Judge Chappell’s dismissal of the case is a preliminary decision and could be appealed by FTC.