FILE PHOTO: Federal Commerce Fee seal is seen at a information convention at FTC headquarters in Washington, U.S., July 24, 2019. REUTERS/Yuri Gripas/File Picture
WASHINGTON (Reuters) – U.S. antitrust enforcers are probing Altria Group Inc (MO.N) for probably exerting affect over electronic-cigarette maker Juul Labs Inc earlier than successful approval for an enormous share purchase, Altria mentioned in a authorities submitting on Thursday.
Marlboro maker Altria bought a 35{5048a9ac22a95e6c0a00d427d71a0d7ff263f9d98391fe7073acb5a0aa0a3f48} stake in Juul in December 2018 for $12.eight billion, however the shares are non-voting and the businesses haven’t but obtained antitrust approval for the transaction.
Previous to antitrust approval, it’s unlawful for corporations concerned in mergers or related transactions to coordinate in lots of areas.
Juul mentioned in September it was changing Chief Government Officer Kevin Burns with Ok.C. Crosthwaite, a Philip Morris USA veteran and most not too long ago the chief technique and development officer of Altria. It later employed Joe Murillo, a former head of regulatory affairs at Altria, to take an analogous function at Juul.
Altria mentioned within the submitting that the Federal Commerce Fee, which works with the Justice Division to implement antitrust legislation, had despatched it a civil investigative demand, just like a subpoena.
Investigators had been “in search of info concerning, amongst different issues, Altria’s function within the resignation of JUUL’s former chief government officer and the hiring by JUUL of any present or former Altria director, government or worker,” the submitting mentioned.
Altria additionally mentioned each it and Juul had licensed it answered a lot of the FTC questions concerning the funding, and as of Wednesday there was an settlement the FTC would attain a call on the funding inside 70 days.
With the Juul deal, Altria has set its sights on re-entering the marketplace for vaping within the face of declining smoking charges and cigarette gross sales in the US. It discontinued its vape merchandise in December 2018.
However well being issues, comparable to 37 vaping-related deaths, coupled with an elevated political backlash and regulatory bans following a surge in teenage vaping have clouded Juul’s future. Its valuation has shrunk by greater than a 3rd to roughly $24 billion since Altria purchased its stake in December.
Reporting by Diane Bartz and Anuron Kumar Mitra; Modifying by Tom Brown