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Reynolds Accuses Philip Morris of Antitrust

From Reuters

R.J. Reynolds Tobacco Co., the nation’s second-largest cigarette maker, Friday sued its chief rival, Philip Morris Cos., accusing it of attempting to monopolize the U.S. retail cigarette market.

In a federal lawsuit filed here, R.J. Reynolds said Philip Morris, maker of the top-selling Marlboro brand, is trying to corner retail space for its cigarettes through exclusive contracts with retailers.

A Philip Morris spokesman said the company had not been served with the lawsuit and could not comment.

In the suit, which seeks unspecified monetary damages, R.J. Reynolds alleged that its rival’s “Retail Leaders” program, which began in October, violates antitrust laws and constitutes a restraint of trade by requiring top-selling retailers to devote virtually all of their display space to Philip Morris products.

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R.J. Reynolds alleged that retailers not signing on with Philip Morris are blocked from receiving “buy-downs,” a discount from the manufacturer. And retailers that do sign on cannot discount rival brands for three months each quarter when Philip Morris brands are discounted.

Philip Morris controls about 48% of the domestic tobacco market, trailed by R.J. Reynolds, a unit of RJR Nabisco Holdings Corp., with about 25%.

The lawsuit also seeks a court order that would keep RJR’s products on the shelves and displays in the stores of retailers signing on with Philip Morris.


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