FYI: B.A.T Industries p.l.c. and its Subsidiary, Brown & Williamson Tobacco Corporation, Have Applied for Approval to Divest Six Brands of Discount Cigarettes to Lorillard Tobacco Company...

For Your Information

B.A.T Industries p.l.c. and its subsidiary, Brown & Williamson Tobacco Corporation, have applied for Federal Trade Commission approval to divest six brands of discount cigarettes to Lorillard Tobacco Company. The brands to be divested are: Montclair, Riviera, Malibu, Bull Durham, Crowns, and Special Tens. The FTC is seeking public comments on the application for 30 days, until Jan. 2, 1996.

B.A.T is based in London, England, and Brown & Williamson is based in Louisville, Kentucky.

Prior approval of the divestitures is required under an April 1995 consent order signed by B.A.T and Brown & Williamson. The order settled FTC charges that B.A.T's acquisition of American Tobacco Company would violate antitrust laws by substantially reducing competition in the U.S. cigarette industry, potentially giving B.A.T and other firms remaining in the market greater ability to collude. The order requires B.A.T to divest to a single purchaser within 12 months the six discount cigarette brands named above (formerly owned by American Tobacco), as well as three American Tobacco full- revenue brands (Tareyton, Silva Thins and Tall), and the American Tobacco manufacturing facility in Reidsville, North Carolina. Under the order, the FTC may permit the acquirer to purchase only the six discount brands if it determines that such divestitures remedy the alleged law violations.

If the required divestitures are not completed as required, the settlement permits the Commission to appoint a trustee who would divest the six American Tobacco discount brands, the Reidsville facility, and Brown & Williamson's Belair full-revenue brand.

B.A.T and Brown & Williamson state in the application that the Reidsville plant and the Tareyton brand were included in the divestiture requirements to give a new entrant in the cigarette manufacturing market the ability to manufacture the discount brands and to "provide cash and to facilitate the new entrant's marketing efforts." According to the application, however, "Lorillard is an established cigarette company with significant network and available cash...[and] its own manufacturing facility in Greensboro," so divestiture of Tareyton and the Reidsville facility to Lorillard is not necessary to help Lorillard achieve the consent order's goal of restoring competition. Therefore, B.A.T and Brown & Williamson have asked the Commission to approve divestiture of only the six discount brands in satisfaction of all of the order's divestiture provisions.

Comments on the application should be addressed to the FTC, Office of the Secretary, 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Copies of the application and the consent order are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202- 326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(FTC Docket No. 9271)

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