E-Cigarette maker Juul was not a favorite of regulators before selling a big chunk of himself to tobacco giant Altria Group, mainly due to his uncertain health risks and his penchant for marketing to children . But this 2018 transaction put Juul in the crosshairs of the Federal Trade Commission, which announced today he would sue the company for violating antitrust law.
Not so long ago, Juul was a relative unknown, and in those Far West days of alternative cigarettes, Altria – better known as the maker of Marlboros and parliaments – was a major player in this space. But as Juul took the lead of the deep pocket rivals with a more elegant design, one of those competitors began to kill his line of vaping products.
“Altria has faced this competitive threat by agreeing not to compete in exchange for a substantial stake in JUUL,” said the FTC. “A few weeks after Altria announced its intention to cease its activities in the sale of electronic cigarettes, Altria and JUUL announced an agreement which made Altria’s main shareholder JUUL, authorized Altria to appoint an observer to the board of directors administration of JUUL and would have enabled Altria to appoint three members of the JUUL Board of Directors after converting its shares into voting securities. “
The 35% stake was worth $ 12.8 billion in nicotine-stained cash, which the agency is now seeking to detach from Juul.
We have contacted Juul for feedback and will update if they respond.