Customer Douglas J. Reece filed a class action lawsuit against JUUL and Altria on April 7 alleging that anticompetitive agreements between the two companies caused consumers to pay more for e-cigarettes. He claims the defendants restrained competition and violated federal antitrust laws. The suit comes days after the FTC opened a similar investigation.
Altria allegedly purchased a 35 percent stake in JUUL shortly after announcing they were going to stop selling e-cigarettes in 2018. JUUL quickly rose to the top of the e-cigarette market with revenues growing 700 percent in 2017. Altria and JUUL entered their agreement in December of 2018 with Altria giving JUUL $12.8 billion.
“Altria’s investment in JUUL and its exit from the market not only eliminated its existing e-cigarette product but also, through the Non-Compete, halted its ongoing innovation efforts toward developing a new and improved portfolio of products. Thus, consumers lost the benefit of current and future head-to-head competition between Altria and JUUL, and between Altria and other competitors,” the complaint states.
The plaintiff alleges JUUL and Altria’s actions deprived him and the rest of the class of the benefits of competition that antitrust laws are designed to protect. Reece is represented by Salim-Beasley. He is seeking damages for himself and the class, as well as injunctive relief through returning competition to the e-cigarette business. He claims the agreement was not beneficial, citing changes to the agreement in early 2020. “Defendants cannot show the transaction restricting competition resulted in cognizable efficiencies sufficient to outweigh the competitive harm caused by Altria’s agreement to exit the relevant market. Nor can Defendants point to pro-competitive benefits that could not have been achieved through less restrictive means,” Reece alleges.
The Federal Trade Commission filed an administrative complaint against JUUL Labs and Altria Group on April 1, 2020 investigating the same issue. “Based on the evidence I have reviewed, I am concerned that JUUL is involved in a pattern of behavior that poses a danger to the public,” said FTC Commissioner Rohit Chopra, “The impact of reduced competition on products with health and safety risks raises broader concerns. Intense competition between JUUL, Altria, and other players could have set the stage for a less deadly form of tobacco use.” The complaint in the class action lawsuit cites this action from the FTC, saying the FTC’s complaint seeks to restore competition between Altria and JUUL.