By Unanimous Vote, FTC Closes its Investigation Into Proposed Merger of RJR and Brown & Williamson

Transaction Unlikely to Create or Enhance Market Power or Facilitate its Exercise

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By unanimous vote, the Federal Trade Commission today closed its investigation into the proposed merger of RJ Reynolds Tobacco Holdings, Inc. (RJR) and British American Tobacco p.l.c.’s U.S. subsidiary Brown & Williamson (B&W), and has notified the parties that they may consummate the transaction. In closing the investigation – and in an effort to continue the FTC’s commitment to transparency in its decision-making process – Chairman Timothy J. Muris, along with Commissioners Orson Swindle and Thomas B. Leary, issued a joint statement explaining the decision, with a separate concurring statement issued by Commissioner Mozelle W. Thompson. The vote to close the investigation was 4-0-1, with Commissioner Pamela Jones Harbour recused from the matter.

In their joint statement, the Chairman and two commissioners said that while the RJR/B&W merger would combine two of the larger marketers of cigarettes in the United States, “Based on an intensive investigation . . . we do not believe that the transaction is likely substantially to lessen competition in the U.S. market for cigarettes.” They based this conclusion on the fact that B&W plays an increasingly minor role in the U.S. cigarette market and that there is no market in which – and no brands for which – B&W and RJR are each others’ closest competitors. In addition, according to the statement, there is no other basis for a case using a theory of unilateral effects, and the transaction is unlikely to facilitate or enhance coordinated interaction among the major manufacturers in the U.S. cigarette market. “Accordingly,” they wrote, “we have concluded that this transaction is unlikely to harm consumers.”

“Because in our view this merger is unlikely to lead to substantial lessening of competition in any relevant market, we have closed this investigation,” the Chairman and Commissioners wrote in concluding their statement.

In his concurring statement, Commissioner Mozelle W. Thompson wrote separately to express concerns about the potential susceptibility of the relevant market to coordinated interaction.

Copies of the Commission’s statement and the concurring statement of Commissioner Thompson are available on the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580, Electronic; Telephone (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws, which can be accessed at

(FTC File No.: 041-0017)

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Mitchell J. Katz
Office of Public Affairs