Reynolds American gets approval from FTC to buy Rival Lorillard

Reynolds American

Reynolds American gets approval from FTC to buy Rival Lorillard

On Tuesday, Reynolds American, one of the biggest cigarette makers won U.S antitrust to buy smaller portion of rival Lorillard with a contract, which would merge the No. 2 and No. 3 U.S. cigarette companies.

The Federal Trade Commission stated that it would allow the mergers to go forward on a condition that the cigarette companies sell four cigarette brands, including Kool, Winston, Maverick and Salem, and it will be purchased by Imperial Tobacco.

In July, 2014, Reynolds American, which makes Pall Mall and Camel cigarettes, said that it would acquire Lorillard that makes Newport, for $27.4 billion. At that moment, the company claimed to sell the four brands to deal with any antitrust concern, as well as Lorillard’s Blue-cig. Albeit, Blue-cig was not listed in the final agreement with the Federal Trade Commission, but its sales was expected to go further.

According to 2013’s data from Euromonitor Int., Altria that owns Marlboro -has U.S market share of 47 per cent, followed by Reynolds at 26 per cent, and Lorillard at 14 per cent. The vote to endorse the deal was settled in 3:2 ratios with Democrat Julie Brill and Republican Joshua Wright dissenting.

The approval was voted by Republican Maureen Ohlhausen and Democrat Terrell McSweeny- Chairwoman Edith Ramirez for the settlement of the deal. In her opposition, Brill argued that the deal was meant for remaining cigarette companies would be able to hike prices, and in that Imperial Tobacco was weak to beat real competition.

The deal offered antitrust enforcers with a muddle: their consent is to obstruct higher prices, due to mergers, but U.S public policy intends to make cigarette to be more expensive in order to discourage smoking.

The Federal Trade Commission has examined two other largest cigarette mergers in the past 20 years.

R.J Reynolds was allowed to acquire rival Brown & Williamson without penalties in the year, 2004. An expert familiar with the FTC, at that moment had revealed that at least a few commissioners opposed using agency resources to litigate to keep cigarettes cheap.

In 1994, FTC commission sued to prevent British American Tobacco’s $1 billion purchase of American Tobacco. The two parties finally settled, and the merger went forward with their deal.

Carrie Ann
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Facebook

Leave a Reply

Your email address will not be published.

Recent Posts

What Do We Do About Imposter Syndrome?

What Do We Do About Imposter Syndrome?

Accomplished comedienne and writer Tina Fey has described the imposter phenomenon as oscillating between extreme self-doubt and egomania.
16 hours ago
Electric Vehicle Maker Polestar SPAC Goes Public on Nasdaq

Electric Vehicle Maker Polestar SPAC Goes Public on Nasdaq

Experts believe that although EV stocks initially benefited from the optimism prevalent in the market, supply chain issues and high prices have put a dampener on demand for electri
3 days ago
NASA Set To Unveil The Deepest Image Of The Universe

NASA Set To Unveil The Deepest Image Of The Universe

Thomas Zurbuchen revealed that seeing the deepest image of the universe for the first time will be akin to witnessing nature “giving up secrets that have been there for many, man
4 days ago
SEC Fines Ernst & Young $100 Million Over CPA Cheating Scandal

SEC Fines Ernst & Young $100 Million Over CPA Cheating Scandal

The SEC said that EY had earlier been intimated about the potential of staff cheating on accountant exams by an employee. Furthermore, even after an internal EY investigation confi
4 days ago
A Google Analytics Ban Sweeps Across the EU

A Google Analytics Ban Sweeps Across the EU

The decision came after careful consideration of several complaints by the Austrian NGO noyb. The NGO filed nearly 101 complaints with all EU data protection authorities.
4 days ago
It’s Time. To Ban TikTok, Says US FCC Commissioner

It’s Time. To Ban TikTok, Says US FCC Commissioner

For years, TikTok has continued to assure authorities that data collected from US users is stored in the US, and not China as many believe. A recent Buzzfeed report set fire to the
5 days ago