FTC Approves Final Order Preserving Competition in U.S. Market for Cigarettes

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that the $27.4 billion merger of tobacco companies Reynolds American Inc. and Lorillard Inc. would likely harm competition in the U.S. market for cigarettes.

Under the order, first announced in May 2015, Reynolds is required to divest to Imperial Tobacco Group four cigarette brands: Winston, Kool, Salem, and Maverick. It also must divest the Lorillard manufacturing facilities in Greensboro, North Carolina, and provide Imperial with the opportunity to hire most of the existing Lorillard management, staff, and salesforce.

The order also appoints a monitor to oversee the divestiture, and it requires the newly merged Reynolds and Lorillard to furnish Imperial with support during the transition, including guaranteed access to retail shelf space for a short period.

The Commission vote approving the final order was 3-2, with Commissioners Julie Brill and Joshua D. Wright voting no. (FTC File No. 1410235; the staff contact is Robert Tovsky, Bureau of Competition, 202-326-2634)                                                                                                          

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.