Altria sued by the FTC for (allegedly) colluding with Juul to rule the vape market
Drop the Juul (investment)... Altria is the tobacco-giant behind Marlboro cigarettes. Over the years, it's watched smokers trade tobacco-filled paper for vape-juice-filled metal. So in 2018, it dropped $12.8B for a 35% stake in the undisputed e-cig leader: Juul. That became a major liability as middle-schoolers got hooked on mango-flavored vapes — Altria lost billions. But now, it's got another big Juul-related problem:
- Key Rule of Capitalism: Companies compete against each other to put out the best product at the lowest price (instead of colluding to undercut customers and maximize profits).
- The Federal Trade Commission is like the referee of capitalism. And it's alleging that Altria agreed not to compete with Juul in return for the 35% ownership interest.
- Now the FTC is suing Altria for violating federal anti-trust laws, and could force Altria to undo the $12.8B investment. Altria is "disappointed" with the decision.
Here's the extra fishy part... Two weeks before announcing its investment in Juul, Altria shut down its own e-cig biz. Then it started putting Juul coupons on Marlboro packs, and giving Juul the shelf-space that its (less popular, now dead) Altria e-cigs had. This pretty much killed any other real e-cig competition, according to the FTC. But...
Collusion is kind of hard to prove... Companies know that it's a no-no, so they tend to avoid leaving a paper trail. The FTC believes it has the facts to show that Altria and Juul "turned from competitors into collaborators." But it's unlikely that this "hey, let's collab!" text was sent over iMessage or Insta DM. Altria says the FTC "misunderstood the facts" and that it will defend its Juul investment during the lawsuit — and it might actually win.