The Federal Trade Commission today announced it will ask a federal district court to issue a preliminary injunction to prevent Swedish Match AB's proposed $165 million acquisition of brands and other assets of National Tobacco Company, L.P. The FTC alleges that the proposed acquisition would violate federal antitrust laws by lessening competition in the loose leaf chewing tobacco market and increase Swedish Match's market share to about 60 percent of sales, and leaving a market in which two companies would control more than 90 percent of sales. Swedish Match, which sells under the "Red Man" and other brands, and National Tobacco, which sells under the "Beech Nut" and other brands, are today the first and third largest sellers in the U.S. loose leaf chewing tobacco market.
"The proposed acquisition of National Tobacco's chewing tobacco brands by Swedish Match violates the antitrust laws. An anticompetitive price increase would simply transfer money from consumers to the pockets of this tobacco company. It is important that firms not be able to exploit their customers by eliminating competition through merger or acquisition," said Richard G. Parker, Director of the FTC's Bureau of Competition.
Swedish Match is headquartered in Stockholm, Sweden; its U.S. subsidiary is based in Richmond, Virginia. National Tobacco is one of two wholly-owned subsidiaries of North Atlantic Trading Company, Inc., which is headquartered in New York City. Thomas Helms Jr., ultimately controls National Tobacco, through North Atlantic Trading Co.
According to the FTC, the proposed transaction would reduce the number of major competitors in the U.S. loose leaf market to two and create a new company with a 60 percent market share. The acquisition would allow Swedish Match to increase prices unilaterally, and would increase the likelihood of coordination among the firms remaining in the market.
A preliminary injunction would prevent the merger from going forward pending the issuance of an administrative complaint by the Commission, and until an administrative complaint is either dismissed by the FTC, or an administrative order blocking the acquisition is set aside by a reviewing court. If the court grants the FTC's motion for a preliminary injunction, the Commission will have 20 days to determine whether to issue an administrative complaint. The administrative complaint would mark the beginning of the administrative trial process.
The Commission vote to authorize the filing of a preliminary injunction was 5-0.
Copies of the preliminary injunction motion will be available upon filing in federal District Court from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Office of Public Affairs
Richard G. Parker or Richard Liebeskind
Bureau of Competition
202-326-2574 or 202-326-2441
(FTC File No. 001-0120)