Juul and Altria Anticompetitive E-Cigarette Agreement Class Action

This antitrust class action brings suit against what it calls “horizontal competitors”—Altria Group, Inc., Altria Enterprises, LLC, and Juul Labs, Inc.—to eliminate competition by the Altria companies in the e-cigarette market. According to the complaint, this involved Juul and Altria agreeing that Altria would exit the market in exchange for partial ownership of Juul. The complaint calls this a “horizontal allocation of the market[,]” a market it claims Juul was monopolizing.

The class for this action is all persons or entities in the US and its territories who bought e-cigarettes directly from Juul, from October 5, 2018 until the anticompetitive effects of the defendants’ conduct stop.

The complaint’s claim, it says, “is not based on allegations of circumstantial evidence, but is instead based on explicit written agreements among the defendants—the ‘Relationship Agreement’, dated December 20, 2018; the ‘Amended Relationship Agreement’, dated January 28, 2020; and a commitment letter from Altria to Juul, dated October 5, 2018—that contained unequivocal non-compete provisions.”

According to the complaint, “[o]n April 1, 2020, the Federal Trade Commission (‘FTC’) filed an administrative complaint … challenging the lawfulness of both the agreement and the acquisition … and noting that the conduct in question violated Section 1 of the Sherman Act and Section 7 of the Clayton Act.”

Juul’s e-cigarettes consist of a rectangular device with a battery and temperature regulator and a “pod” of nicotine and flavored oil. The complaint alleges, “The system can deliver a nicotine peak in five minutes, which compares favorably with combustible cigarettes.” It is a closed system, in that it cannot be modified. Juul entered the market in 2015 and already had a 75% of it in October 2018.

The Altria Group, formerly known as Philip Morris Companies, Inc., was at one time the leading maker of traditional combustible cigarettes. With the decline of traditional smoking, it sought business in other markets. It began selling e-cigarettes through its subsidiary NuMark in 2013. At one time, it had 16% of the e-cigarette market, but that share declined. A statement from Altria’s CEO in February 2018 claimed, “We aspire to be the U.S. leader in authorized, non-combustible, reduced-risk products.”

When Altria sought to buy into Juul, the complaint says Juul refused to share the market with Altria: “As explained in the FTC Complaint, Juul insisted that a precondition for a purchase of a stake in the company was that the Altria Group exit the market. As the FTC put it … ‘[d]uring negotiations, [Juul] insisted, and Altria recognized, that Altria’s exit from the e-cigarette market was a non-negotiable condition for any deal. When Altria sought to weaken or remove any obligation to exit the market, [Juul] conveyed that any such attempt was completely unacceptable.’”

The complaint adds, “The Altria Group accepted this condition in a letter to Juul dated October 5, 2018 and began dismantling its e-cigarette operations…”

An agreement was signed in December 2018, with Altria gaining a 35% stake in Juul for $12.8 billion.

Article Type: Lawsuit
Topic: Antitrust

Most Recent Case Event

Juul and Altria Anticompetitive E-Cigarette Agreement Complaint

July 1, 2020

This antitrust class action brings suit against what it calls “horizontal competitors”—Altria Group, Inc., Altria Enterprises, LLC, and Juul Labs, Inc.—to eliminate competition by the Altria companies in the e-cigarette market. According to the complaint, this involved Juul and Altria agreeing that Altria would exit the market in exchange for partial ownership of Juul. The complaint calls this a “horizontal allocation of the market[,]” a market it claims Juul was monopolizing.

Juul and Altria Anticompetitive E-Cigarette Agreement Complaint

Case Event History

Juul and Altria Anticompetitive E-Cigarette Agreement Complaint

July 1, 2020

This antitrust class action brings suit against what it calls “horizontal competitors”—Altria Group, Inc., Altria Enterprises, LLC, and Juul Labs, Inc.—to eliminate competition by the Altria companies in the e-cigarette market. According to the complaint, this involved Juul and Altria agreeing that Altria would exit the market in exchange for partial ownership of Juul. The complaint calls this a “horizontal allocation of the market[,]” a market it claims Juul was monopolizing.

Juul and Altria Anticompetitive E-Cigarette Agreement Complaint
Tags: Allocating Customers or Markets, Antitrust