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NAAG enforces tobacco cartel

Who's serving as muscle to enforce a cartel that costs American consumers billions of dollars a year? Why, the National Association of Attorneys General, that's who. As reported in our Jan. 13 item, the Big Four tobacco companies are starting to lose significant market share to small, regional and foreign cigarette companies that either do not contribute to the MSA (multistate settlement agreement) or do not contribute as much as the majors proportionally. Now AP confirms that NAAG sees this as a big problem and is urging states to pass laws closing the supposed "loophole" (which loophole appears to consist simply of the smaller companies' not having to pay for past sins absent any showing that they've committed such sins). AP also obtained a confidential September memo from NAAG that's a bit of a smoking gun, we'd say, as far as illuminating the true motives behind the plan. The memo "warned states to expect a $2.5 billion decrease in settlement payments due April 15, down from a projected $9.3 billion. It says about $600 million of that decrease, or 25 percent, is the result 'not of a decline in smoking but rather of NPM (nonparticipating manufacturer) sales displacing sales by Participating Manufacturers.' 'NPM sales confer no benefits on the States,' reads the memo.... 'All States have an interest in reducing NPM sales in every State.'" ("Small cigarette makers cut into Big Tobacco's markets, states' pockets", AP/Raleigh News & Observer, Jan. 16). (via Vice Squad).

[cross-posted from Overlawyered, where it ran Jan. 23, 2004]

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.