General Tobacco Challenges MSA

Source from:  tobaccoreporter.com Oct 28, 2008 10/29/2008

General Tobacco of Mayodan, North Carolina, USA, is suing 52 attorneys general of the United States and its territories and 19 tobacco companies. GT is asking for treble damages in excess of $1 billion from competitors for allegedly conspiring with the states to set up the Master Settlement Agreement (MSA) so that later market entrants, such as GT, have to pay the states substantially more than certain competitors pay. GT believes the effect of the MSA is to drastically limit future competitors from fair market competition. GT has paid approximately $470 million to the MSA and an additional $36 million in escrow. The MSA was created in 1998 by the 46 states, the District of Columbia and five U.S. island territories, along with the tobacco companies that controlled more than 97 percent of the market at the time The MSA was structured so that certain companies in the market in 1998 would receive future preferential payment terms while "new members" such as GT would have to pay substantially more than the original preferred members. J. Ronald Denman, executive vice president of GT compared the MSA's unequal treatment to a cartel. "The structure for the MSA created an impossible business environment for future competitors especially small players such as GT. All we are asking for is a level playing field for everyone," Denman said. Enditem