A Year Later, FTC is Still Investigating Altria Before Allowing Purchase of Juul
In December 2018, Altria, the largest U.S. tobacco company, paid $12.8 billion for a 35% stake in in e-cigarette startup Juul Labs Inc. Two weeks before announcing the deal, Altria closed its e-cigarette business. It’s investment remains in limbo more than a year after the deal was made as federal antitrust officials are continuing to investigate and probe the company going as far as to study their use of shelf space in stores. As part of the purchase, Altria agreed to put Juul coupons on cigarette packs, send Juul promotions to its mailing list of cigarette smokers and give Juul the shelf space that Altria’s MarkTen e-cigarettes had occupied.
After scrutiny from regulators Juul voluntarily stop the sales of its sweet and fruity-flavored refill pods, which are popular among teenagers. The company is trying to repair its damaged relationship with regulators who blamed the company for a surge in underage vaping in the U.S. The Federal Trade Commission and Altria and Juul agreed in October agreed not to complete some aspects of the deal until at least early January, pending signoff from the agency. Until the review is complete, Altria can’t convert its nonvoting shares to voting shares, appoint representatives to Juul’s board or count Juul’s earnings toward its own earnings.
As the e-cigarette market boomed with competitors vying for space, Altria followed, spending about $100 million on the effort in 2018. Altria offered retailers cash and display fixtures in exchange for a commitment that its e-cigarettes would occupy prime shelf space for at least two years.
In the antitrust review, the FTC also has sought information from Altria on its role in the September resignation of Juul Chief Executive Kevin Burns and the appointment of his successor, Altria executive K.C. Crosthwaite, according to Altria.