E-cigarette manufacturer Juul was no favorite of regulators before selling a hefty chunk of itself to tobacco giant Altria Group, owing mainly to its uncertain health risks and penchant for marketing to kids. But that 2018 transaction has put Juul in the crosshairs of the Federal Trade Commission, which announced today it would sue the company for breaking antitrust law.
It wasn’t long ago that Juul was a relative unknown, and in those wild west days of cigarette alternative products, Altria—best known as the maker of Marlboros and Parliaments—was a major player in that space. But as Juul took the top spot from deep-pocketed rivals with a sleeker design, one of those competitors started killing off its vape product line.
“Altria dealt with this competitive threat by agreeing not to compete in return for a substantial ownership interest in JUUL,” the FTC alleges. “Weeks after Altria declared its intention to wind down its e-cigarette business, Altria and JUUL announced an agreement that made Altria JUUL’s largest shareholder, allowed Altria to appoint an observer to JUUL’s Board of Directors, and would have permitted Altria to appoint three members of JUUL’s Board after converting its shares to voting securities.”
That 35-percent ownership stake was worth $12.8 billion in nicotine-stained cash, which the agency now seeks to unwind from Juul.
We’ve reached out to Juul for comment and will update if they respond.