Administrative Law Judge Dismisses FTC Challenge of Altria's Stake in Juul

RICHMOND, Va. — An administrative law judge dismissed a complaint by the Federal Trade Commission (FTC) that challenged Altria Group Inc.'s investment in Juul Labs Inc.

Chief Administrative Law Judge D. Michael Chappell made his decision in mid-February following a three-week trial. According to Altria, Chappell found that the evidence failed to sustain the alleged violations.

"We are pleased with this decision and have said all along that our minority investment in Juul does not harm competition and does not violate the antitrust laws," said Murray Garnick, Altria's executive vice president and general counsel.

In April 2020, the FTC filed a complaint alleging that Altria and Juul entered a series of agreements, including Altria’s acquisition of a 35-percent stake in Juul, that eliminated competition in violation of federal antitrust laws.

According to the complaint, this series of agreements involved Altria ceasing to compete in the U.S. market for closed-system electronic cigarettes in return for a substantial ownership interest in Juul, which was the dominant player in that market.

In a release, the commission said Chappell concluded that it failed to demonstrate both the anticompetitive effects of the non-compete provision and a reasonable probability that Altria would have competed in the electronic cigarette market in the near future, through marketing a competing product independently or through collaboration or acquisition.             

According to the FTC, Chappell also noted that:

• Since Altria acquired its stake in Juul, the closed-system e-cigarette market has become more competitive, not less;
• The evidence failed to prove that Altria's removal of its own e-cigarette products from the market substantially harmed competition or is likely to do so in the future; and,
• Its counsel failed to prove that the transaction was a violation of Section 5 of the Federal Trade Commission Act, Section 1 of the Sherman Act or Section 7 of the Clayton Act.

Chappel's initial decision is subject to review by the full FTC, which could appeal.

Richmond-based Altria's wholly owned subsidiaries include Philip Morris USA, U.S. Smokeless Tobacco Co. LLC, John Middleton Co., Sherman Group Holdings LLC and its subsidiaries, Ste. Michelle Wine Estates Ltd. and Philip Morris Capital Corp. Altria holds equity investments in Helix Innovations, Anheuser-Busch InBev SA/NV, Juul Labs Inc. and Cronos Group Inc.