FTC Seeks To Undo Altria's $12.8B Juul Investment, Says It Violated Antitrust Laws

The United States Federal Trade Commission on Wednesday said that it had filed an administrative complaint against the $12.8 billion investment of Altria Group Inc. MO in e-cigarette maker Juul Labs Inc.

What Happened

The investment, along with the associated agreements, violated the federal antitrust laws, according to FTC.

Altria had invested in Juul and acquired a 35% stake in exchange for signing an agreement that said it wouldn't compete with the latter for six years.

"For several years, Altria and JUUL were competitors in the market for closed-system e-cigarettes. By the end of 2018, Altria orchestrated its exit from the e-cigarette market and became JUUL's largest investor," FTC Director of the Bureau of Competition Ian Conner said in a statement.

"Altria and JUUL turned from competitors to collaborators by eliminating competition and sharing in JUUL's profits."

According to FTC, Altria, already well-known for its Marlboro line of cigarettes, offered significant competition to Juul's products with its MarkTen e-cigarettes initially, acquiring the second-largest market share for vapes.

When Juul stormed past Altria and Reynolds in market share in late 2018, Altria cut the competition through the investment.

Price Action

Altria's shares closed 2.74% lower at $37.61 on Wednesday. The shares traded another 0.58% lower at $37.39 in the after-hours session.