Paper Analyzes Impacts of Cigarette and E-Cigarette Deal
August 11, 2020, Faculty, Health Management and Policy, Tobacco
Members of the University of Michigan and Georgetown University’s Center for the Assessment of Tobacco Regulation (CAsToR) recently published a new commentary analyzing the Federal Trade Commission’s attempt to stop a deal between Altria, the largest US cigarette company, and the leading vaping company, Juul Labs. Published in Tobacco Regulatory Science, the paper evaluates the December 2018 offer from Altria for a 35% share of Juul Labs, which would give Altria market power in the growing e-cigarette industry and ultimately control of the broader nicotine delivery product market.
In the last six years, cigarette companies have found themselves facing growing competition from e-cigarette companies. In response, Altria purchased a large stake in Juul Labs in direct reaction to the loss in profits from customers switching from cigarettes to e-cigarettes. The authors argue that the FTC should stop the merger of the leading American cigarette manufacturer and the largest American e-cigarette manufacturer in order to prevent Big Tobacco from exercising sweeping control of the entire market for nicotine other than regulated nicotine medications.
“If allowed to stand, the merger will enable Altria to control a vast swath of the total US market for cigarettes, smokeless tobacco, and other nicotine-delivery products, including e-cigarettes and heated tobacco products,” said David Levy, lead author of the paper and principal investigator for CAsToR at Georgetown University. “This could severely damage competition and the growth of the market for less hazardous vaping and other emerging products.”
In addition to industry and market power, the authors also underscore the importance to public health of product competition for adult smokers who may wish to use non-combustible nicotine-containing products. The primary goal of tobacco control is ending deadly combustible tobacco use, which is responsible for approximately half a million deaths per year in the US (and 7 million worldwide) and nearly 30% of all cancer deaths in the US.
“We predict that if the merger is approved, Altria’s unprecedented control over the market will suffocate competition and severely limit the options available for millions of adult smokers to wean themselves from cigarettes, which remain the leading cause of premature death in our society, and limit the number of less harmful non-combustible nicotine-containing products,” said Cliff Douglas, director of the University of Michigan Tobacco Research Network and adjunct professor at the University of Michigan School of Public Health.
While Food and Drug Administration-approved medications can provide an effective way for adults to quit smoking, many smokers have tried to quit repeatedly and have not been successful. For those adult smokers who are unable or unwilling to quit smoking in that manner, other options should be made available to enable them to stop smoking and substantially reduce the high toll of cigarette use in the US. Concentrating control over many of these products in the hands of Big Tobacco, which has a vested interest in reducing competition and prolonging the highly profitable market for combustible cigarettes, “threatens to destroy this potential and cause great harm to the public health of our nation,” Douglas said.
Read the full analysis in Tobacco Regulatory Science.