Monday, March 22, 2004

Antitrust News: Money for Nothing

Consider this report by Bruce Schreiner of the Associated Press:

U.S. Smokeless Tobacco Co., the nation's largest maker of smokeless tobacco, has agreed to pay $200 million and forfeit its cigar business to settle an antitrust lawsuit brought by rival Swedish Match North America.

Separately, the subsidiary of UST Inc. also said it had resolved a lawsuit brought by customers who said they were overcharged. The company said it has taken a $40 million charge to fulfill the terms of the agreement, which include awarding coupons for reduced-priced products and paying legal fees.

"We concluded that it was in the best interest of our shareholders to reduce the uncertainty and risk we face by having these lawsuits pending in the courts and are pleased that we can move forward," UST chairman and chief executive Vincent A. Gierer Jr. said in a statement.

The agreement with Swedish Match settles a two-year-old federal lawsuit filed in Owensboro, Ky., alleging that U.S. Smokeless Tobacco, which makes the Skoal and Copenhagen brands, used illegal tactics to suppress competition, raise prices and stifle innovation. Swedish Match makes Timber Wolf snuff among other brands.

In its suit, Swedish Match accused U.S. Smokeless of destroying Swedish Match retail racks, defacing or removing advertising, supplying misleading data to retailers and entering exclusive agreements to keep Swedish Match products out of areas. . .

. . . UST, which is based in Greenwich, Conn., has faced antitrust allegations before.

In 2000, a federal jury in Kentucky ordered UST to pay Conwood Co. $350 million in an antitrust case. Federal antitrust provisions tripled damages in the case, meaning a total award of $1.05 billion.
If U.S. Smokeless Tobacco Co. gave just one percent of the money it has paid in antitrust fines and settlements to the opponents of antitrust, we would have real movement toward the re-examination and ultimately repeal of the antitrust laws--but first, UST's executives would have to be convinced that they were innocent of the charges brought against them. What do you think are the odds of that?

As long as the antitrust bar continues to get rich off antitrust, these laws will remain in place and the businessmen who tacitly support antitrust by their inaction will reap what they so. One billion dollars in antitrust fines is an outrage against the innocent, but not the complacent.

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