Ruling on Tobacco Settlement Payments Expected

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Christine Hall, 202.331.2258

Jody Clarke, 202.331.2252

Washington, D.C., March 27, 2005— Billions in future tobacco settlement payments to the states are at stake in an expected ruling today.  An independent economic firm, the Brattle Group, is scheduled to rule on a dispute brought by major tobacco companies. 

The companies have argued that annual payments to 46 states resulting from the 1998 tobacco “Master Settlement Agreement” should be reduced because the majors have lost market share to smaller competitors.

The feud between big tobacco companies and state attorneys general draws attention to the corrupt, inner workings of the $240 billion tobacco deal.  In exchange for receiving billions of dollars in annual payments from the four major tobacco companies, states agreed to pass laws to protect the majors from competition.  However, despite imposing burdensome and unwarranted escrow payments on small companies that were never part of the settlement agreement, some upstarts were nonetheless able to win consumers by offering lower-price cigarettes.  

Under the terms of the settlement, annual payments by the majors could be reduced if the majors lose market share due to the MSA and states have fail to diligently enforce anti-competitive policies against so-called “nonparticipating manufacturers.”

The Competitive Enterprise Institute, a national free market think tank, has a pending lawsuit challenging the constitutionality of the tobacco settlement.

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website at www.cei.org.  For more information about the tobacco Master Settlement Agreement, please visit www.ControlAbuseofPower.org.