Summary
Altria Group, Inc. (MO) disclosed in an 8-K filing on April 1, 2020, that the U.S. Federal Trade Commission (FTC) issued an Administrative Complaint on March 31, 2020. The complaint alleges that Altria and JUUL Labs, Inc. (JUUL) engaged in anti-competitive practices through a series of agreements, most notably Altria's acquisition of a 35% stake in JUUL. The FTC's action, stemming from violations of antitrust laws including the Sherman Act and Clayton Act, could lead to significant remedies. Potential remedies sought by the FTC include the divestiture of Altria's JUUL equity stake, rescission of the purchase, voiding of related agreements, and prohibitions on board interlocks between Altria and JUUL. While the FTC has not sought to prevent Altria from converting its non-voting JUUL shares to voting shares, Altria is considering this option. This regulatory challenge poses a material risk to Altria's investment in JUUL and its broader business strategy.
Key Highlights
- 1FTC issued an Administrative Complaint against Altria and JUUL Labs on March 31, 2020.
- 2The complaint alleges anti-competitive conduct related to Altria's 35% acquisition of JUUL.
- 3Violations cited include the Sherman Act, FTC Act, and Clayton Act.
- 4Potential FTC remedies include divestiture of Altria's JUUL stake or rescission of the purchase.
- 5Agreements between Altria and JUUL related to the transaction could be voided.
- 6The FTC could prohibit cross-board memberships between Altria and JUUL executives.
- 7Altria is considering converting its non-voting JUUL shares to voting shares, as not preliminarily enjoined by the FTC.