Update Feb. 24
Today the Federal Trade Commission (FTC) officially announced Chief Administrative Law Judge D. Michael Chappell's decision to dismiss the FTC antitrust complaint against Altria Group and Juul Labs. The announcement contains a link to the judge's decision---a 270-page document that includes many previously unpublished details about the negotiations between Altria and Juul that led to Altria's investment in the e-cig company.
A judge has ruled that antitrust laws were not violated when Altria Group bought a 35 percent share in Juul Labs in 2018. The decision dismisses claims by the Federal Trade Commission (FTC) that Altria and Juul engaged in anticompetitive practices.
Just before buying into Juul Labs, Altria shut down sales of its own vapor brands MarkTen and Green Smoke. The FTC alleged that Juul made Altria’s investment contingent on first eliminating Altria’s competing products. But Altria said that after spending hundreds of millions of dollars on MarkTen, it was unable to produce a product customers liked, and that—along with regulatory pressures—accounted for the decision to shut down MarkTen.
The preliminary decision by Chief Administrative Law Judge D. Michael Chappell came after a trial held last year. FTC commissioners will vote on whether to appeal the verdict in federal court. Altria announced the ruling Tuesday, noting that a written decision will be publicly available later this month.
“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, executive vice president and general counsel for Altria.
— Alex Norcia (@Alex_Norcia) February 15, 2022
Altria bought a 35 percent share of Juul Labs for $12.8 billion in December 2018. Since that time, the value of Altria’s investment has been written down by the company and now stands at just $1.7 billion. Juul’s valuation has dropped from $38 billion to its current value of less than $5 billion (although different sources disagree on the valuation).
If the judge had ruled for the FTC, Altria would have been forced to “unwind” its Juul Labs investment, potentially recovering just pennies on the dollar. Selling a large chunk of Juul Labs—a private company—might be difficult in the current environment. The company is in the process of fighting hundreds of lawsuits, many of which have been consolidated in a large multi-district litigation (MDL) case that includes various personal injury, illegal marketing, and even racketeering claims against the company and some of its directors.
Aside from legal challenges, Juul also faces the chance that the FDA will not authorize the sales of its products, which are still under review by the agency.