Washington, DC, July 13, 2000 – The Competitive Enterprise Institute joined two other public interest groups today in urging a federal appellate court to invalidate the nationwide tobacco settlement agreement on constitutional grounds.  In a friend of the court brief filed with the Third Circuit Court of Appeals, CEI, the Cato Institute, and the National Smokers Alliance argued that the agreement violates the Commerce and Compact Clauses of the U.S. Constitution.

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The brief was filed in the appeal of a federal district court ruling in western Pennsylvania, against two small tobacco distributors.  The distributors had brought a civil suit against Philip Morris, RJR, and Brown & Williamson, arguing that the cigarette makers violated antitrust law when they negotiated their 1998 settlement agreement with 46 states.

The settlement includes a number of provisions that restrict competition in the tobacco industry, especially by smaller companies and new entrants that have not signed it.  The court, however, ruled that the cigarette makers were immune from these antitrust charges because the settlement involved government action—namely, the involvement and approval of the 46 state governments.

The friend of the court brief, however, argues that the settlement itself is unconstitutional.  It attempts to regulate cigarette sales on a nationwide basis, and thus intrudes on Congress's power over interstate commerce.  Moreover, as an agreement between the states, the settlement requires congressional approval under the Compact Clause of the Constitution.  It has never received such approval.

CEI General Counsel Sam Kazman stated:  “The tobacco industry was forced to sign this agreement at gunpoint, given that dozens of states had decided to forget due process and go on a treasure hunt instead.  The result is a government-supported cigarette monopoly which serves neither its customers nor the public nor the requirements of the Constitution.”

Copies of the brief are available from CEI.  A legal analysis of the tobacco settlement is available online at http://www.cato.org/pubs/pas/pa-371es.html.

CEI, a non-profit, non-partisan public policy group founded in 1984, is dedicated to the principles of free enterprise and limited government. For more information, please contact Emily McGee, director of media relations, at 202-331-1010, ext. 209 or emcgee@cei.org.