Supreme Court Denies Antitrust Appeal to Tobacco Settlement
The Supreme Court yesterday refused to hear an appeal by cigarette wholesalers claiming that the $206 billion national tobacco settlement violates federal antitrust laws, the Wall Street Journal reports (Greenberger, Wall Street Journal, 1/8). On behalf of 900 wholesalers appealing a lower court ruling in favor of defendants Philip Morris, R.J. Reynolds and Brown and Williamson -- three tobacco companies who participated in the settlement -- A.D. Bedell Wholesale Co. and Triangle Candy & Tobacco Co. argued that the agreement "restricts trade and is unconstitutional because Congress did not agree to it." According to the AP/Raleigh News & Observer, the dispute centers around the settlement's "renegade clause," which is intended to prevent cigarette makers from "cutting prices to stop competition." The clause also "discourages" smaller tobacco companies from lowering prices -- thereby gaining customers -- because they will have to pay states reimbursement (AP/Raleigh News & Observer, 1/7).
The wholesalers also argued that the cost of the settlement caused cigarette makers to raise prices, in turn hurting their businesses. Finally, they contended that the case "presents an issue of critical importance to the limits of the encroachment by a group of states upon the powers of the federal government in regulating interstate commerce." But the high court, without comment, rejected the appeal (Wall Street Journal, 1/8). Federal courts have "uniformly rejected" antitrust challenges to the settlement, "concluding that tobacco companies are immune from suits stemming from the deal they hammered out with state attorneys general" (Bloomberg/Los Angeles Times, 1/8). Still, the Journal reports that yesterday's action by the Supreme Court "won't end challenges" to the settlement; lawyers representing the wholesalers have already filed an antitrust suit against the state of Pennsylvania, arguing that smokers have had to pay more for cigarettes since the settlement (Wall Street Journal, 1/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.