General Tobacco Sues 52 U.S. Attorneys General Over Restraint of Trade and Violation of the U.S. Constitution
2008-10-29 01:19:02 -
- For General Tobacco Melisa Mendez Chantres mmchantres@evclay.com Yeleny Suarez ysuarez@evclay.com 305-261-6222/toll free 877-261-6222 North Carolina based manufacturer and distributor General Tobacco (GT) announced today it is suing 52 attorneys general of the United States and its territories and 19 tobacco companies. GT is asking for treble damages in excess of $1 billion from competitors for allegedly conspiring with the states to set up the Master Settlement Agreement (MSA) so that later market entrants, such as GT, have to pay the states substantially more than certain competitors pay. GT believes the effect of the MSA is to drastically limit future competitors from fair market competition.
GT has paid approximately $470 million to the MSA and an additional $36 million in escrow.
The complaint, filed in U.S. District Court in Louisville, Kentucky, charges the 52 states and territories' attorneys general with violating the Sherman Anti-Trust Act, its constitutional rights under the Equal Protection and Due Process Clauses of the Fourteenth Amendment, the Compact Clause and the Commerce Clause of the U.S. Constitution as well as violation of the Civil Rights Act, Title 42 USC Section1983.
The MSA was created in 1998 by the 46 states, the District of Columbia and five U.S. island territories, along with the mega tobacco companies which then controlled more than 97% of the market. The MSA was structured so that certain companies in the market in 1998 would receive future preferential payment terms while "new members" such as GT would have to pay substantially more than the original preferred members.
J. Ronald Denman, Executive Vice President of General Tobacco compared the MSA's unequal treatment to a cartel. "The structure for the MSA created an impossible business environment for future competitors especially small players such as GT. All we are asking for is a level playing field for everyone," Denman said.
The complaint asks for treble damages under the Sherman Act as well as for an injunction, attorney fees and other relief.
General Tobacco, the sixth largest tobacco company in the nation with approximately $300 million in annual sales, is a full participating member of the Master Settlement Agreement. The company began its operation in 2000 distributing its own cigarette brand, GT One(R). Because of the popularity of this value-priced, excellent quality product, the company now distributes Bronco(R), Silver(R), Vaquero Little Cigars(R), and their new premium menthol cigarette, 32 Degrees(R). As one of the largest tobacco companies in the country, General Tobacco continues to hold a leading position in the value-priced cigarette market. Its mission is to distribute superior quality tobacco products at competitive prices.
Company Also Sues Competitors For More than $1 Billion
