The U.S. Federal Trade Commission said in an antitrust complaint made public Friday that tobacco giant Altria Group (MO) - Get Report lied two years ago, when it said it exited the e-cigarette market because it wanted to safeguard public health.
Rather, the FTC says, Altria in fall 2018 acted as part of a secret agreement with supposed rival Juul Labs, the e-cigarette titan, Bloomberg reports.
Altria in December 2018 went on to invest $12.8 billion for a 35% stake in Juul.
The FTC filed a lawsuit on Wednesday to reverse Altria’s investment, citing violations of federal antitrust laws.
“Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits,” Ian Conner, director of the agency’s Bureau of Competition, said in a statement.
Juul and Altria denied the FTC’s accusations, Bloomberg reports.
The FTC argued in its complaint that Altria shut down its own e-cigarette brands, MarkTen and Green Smoke, before acquiring its stake in Juul, Bloomberg reports.
The FTC complaint released Friday says Altria withdrew MarkTen to satisfy Juul’s requirement to allow the Altria the investment.
Juul’s “executives made clear their position that Altria could not remain a competitor in the relevant market if there was to be a deal,” the complaint states.
Juul demanded “and Altria recognized, that Altria’s exit from the e-cigarette market was a non-negotiable condition for any deal.”
At last check, Altria shares traded at $36.96, up 2%. The stock has dropped 25% over the past three months.