A PYMNTS Company

FTC Drops Complaint After Altria’s Juul Exit

 |  July 5, 2023

The U.S. Federal Trade Commission (FTC) announced July 3 that it had dismissed a complaint against cigarette maker Altria Group and e-cigarette manufacturer Juul Labs. The FTC’s action follows Altria’s exit from its stake in Juul last year and was in response to a request from Altria for the FTC to withdraw its challenge of its $12.8 billion investment in Juul.

In 2018, Altria, the maker of Marlboro cigarettes and other tobacco products, invested $12.8 billion in Juul for what was then a 35% stake in the company. According to the FTC, this investment was in violation of antitrust law as it gave Altria control over Juul’s closed system e-cigarettes.

The FTC vacated its earlier decision that ruled in favor of Altria and Juul and ended the antitrust lawsuit. David T. McDonough, a spokesperson for Altria and its wholly-owned subsidiary, Altria Group, stated, “We are pleased by the FTC dropping its complaint.”

Unfortunately, Altria’s investment in Juul is worth much less than it was in 2018, falling from $12.8 billion to $250 million by December 2022. Juul has also faced scrutiny from the U.S. Food and Drug Administration (FDA) with the agency issuing a marketing denial order (MDO) on June 23, 2022 saying Juul had submitted insufficient evidence that its e-cigarettes were “appropriate for the protection of the public health.” The FDA agreed to take another look at Juul’s pre-market tobacco product application after Juul challenged the MDO.

Read more: FTC Sues To Undo Altria’s $12.8B Deal With Juul

This latest legal entanglement is just one of many for Juul. In early September, Juul agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products, which critics have blamed for spurring a surge in underage vaping. Altria also ended its non-compete agreement with Juul in late September.

Altria will pay a further $235 million to settle lawsuits accusing it of contributing to the teen vaping epidemic through its investment in Juul. In a statement Altria explained, “Altria firmly believes that our investments in Juul, a disruptive company in the vapor category, provided our consumers with additional, attractive options for alternatives to cigarettes.”

Although the FTC complaint against Altria and Juul has been dropped, the story is far from over. The FDA’s potential approval of Juul’s pre-market tobacco product application, the billions of dollars in financial settlements and the possibility of many more lawsuits are all factors to consider when looking at this multi-faceted story. The U.S. legal system will continue to be at the center of this ongoing story as we all wait to see what will happen next.