Posted on 07/03/2004 11:46:33 AM PDT by wagglebee
Good news: At long last, an American company has sued New York Attorney General Eliot Spitzer, rather than the other way around. Now here's the bad news: The lawsuit was filed over Spitzer's and his fellow state AGs' alleged failure to make good on their promise to protect an industry cartel. That failure, the suit claims, has facilitated a "huge increase" in the number of "renegade companies" selling "very cheap" products and making unprecedented gains in market share. Welcome to the strange world of tobacco regulation.
The plaintiff in the case against Spitzer is Commonwealth Brands, a Kentucky-based maker of discount-cigarette brands like Malibu, USA Gold, and Sonoma that signed the 1998 tobacco-settlement agreement. Commonwealth charges that Spitzer and other state AGs have failed to collect mandatory-escrow payments from companies that never signed the 1998 tobacco settlement. But this is an adversarial "lawsuit" in name only, for the plaintiffs are in bed with the nominal defendants.
Americans have been led to believe that tobacco companies were punished by the $200-billion-settlement agreement signed with 46 states. But the reality is that state attorneys general and major tobacco companies forged a government-backed tobacco cartel. The states got cash and major tobacco companies got a measure of protection against competition.
Like the "Big Four" companies that originally negotiated and signed the settlement, Commonwealth is required to make annual payments to states based on its share of the U.S. cigarette market. But to ensure that the companies could pay the states and their trial-lawyer cronies hefty "damages" (taxes) without suffering market-share losses, the tobacco settlement obligated the states to enact laws that would "effectively and fully neutralize" lower prices offered by competing, much smaller cigarette manufacturers that had not signed the agreement.
Despite that many non-signatories — officially dubbed Non-Participating Manufacturers, or NPMs — didn't even exist when the major companies were accused of marketing to kids and lying about the health consequences of smoking, the NPMs must still make annual escrow payments to the states. State AGs must "diligently enforce" those terms.
The signatories hoped that escrow-payment obligations would keep competing companies at bay. But things haven't worked out that way. Because NPM payments are based on sales volume (rather than market share) and made only to states where a company's cigarettes are actually sold, some NPMs have been able to offer their products at competitive prices and prosper. Over the five years since state ratification of the "Master Settlement Agreement" (MSA), the "renegade" companies have increased their market share some five-fold, from around 2 percent to somewhere between (the figure is disputed) 8 and 15 percent of the U.S. cigarette market.
Commonwealth and other signatories want this "loophole" closed. They have lobbied state lawmakers across the country to pass "allocable share" laws making NPMs pay hundreds of millions of dollars more to the states, which would drive many NPMs out of business. In Kentucky, Commonwealth's own general counsel sponsored such a bill while wearing his other hat — as a state legislator.
The bottom line is that attorneys general and companies in the MSA both want to sock it to outside competitors and their price-conscious consumers. So they're trying to get a court order to accomplish what the tobacco settlement itself, despite the signatories' clever intention, has failed to achieve.
Such increasingly desperate attempts to salvage the tobacco settlement reveal it as nothing but a rank, state-sponsored cartel — a scheme to limit competition and to fix prices under an umbrella of government protection. It's a bad precedent for a free country, and it shouldn't be allowed to stand.
Absolutely!
ping
Gosh, where have I seen this before (besides everywhere)?
Happy Independence Day to you, too !Good news: At long last, an American company has sued New York Attorney General Eliot Spitzer, rather than the other way around. Now here's the bad news: The lawsuit was filed over Spitzer's and his fellow state AGs' alleged failure to make good on their promise to protect an industry cartel. That failure, the suit claims, has facilitated a "huge increase" in the number of "renegade companies" selling "very cheap" products and making unprecedented gains in market share. Welcome to the strange world of tobacco regulation.
Yes, my hairy little friend. It's called the Free Market system. It's what has made this country great. Anything else, and .... we'll we have a big headache ! Ronald Reagan understood it. And George W. Bush understands it. And so should you !
How does this guy get away with this? If it's not illegal, it sure is unethical. What uncharacteristic behavior from a politician.
Well, you know as well as I do that the lawmakers, once they are voted in, think they sit on the right hand of God and can do anything they damn well please!
Americans have been led to believe that tobacco companies were punished by the $200-billion-settlement agreement signed with 46 states. But the reality is that state attorneys general and major tobacco companies forged a government-backed tobacco cartel. The states got cash and major tobacco companies got a measure of protection against competition.
Boy oh boy, how this article and all articles about the Tobacco Settlement fail to include is: The money from the MSA is paid for by smokers who pay taxes on cigarettes! NOT the Tobacco Company's and NOT the states. It's the SMOKER'S, people!!!
Despite that many non-signatories — officially dubbed Non-Participating Manufacturers, or NPMs — didn't even exist when the major companies were accused of marketing to kids and lying about the health consequences of smoking, the NPMs must still make annual escrow payments to the states. State AGs must "diligently enforce" those terms.
What irks me is: how are they targeting to the kids? Billboards can't advertise cigarettes...........TV ads can't advertise cigarettes............and there are NO cigarette ads in kids magazines. It never fails to amaze me how "they" keep tooting their horn about "advertising to the kids?" I say WHERE?
If someone can show me where kids are being targeted for cigarettes, please oh please tell me! This is a bunch of BS.
And kids can NOT buy from the net unless the parents give them a credit card. And kids can NOT buy cigarettes in a store. ANY store! The clerk would have a death wish if they sold to a teen. Another bunch of BS!
As the farmer hauled another load away...
You could tell by the smell it wasn't hay...
This is no longer government of, for and by the people!!! It's government by tyrannical lawyers and agenda driven, law makin judges with hidden taxes on the smokin serfs!!!
Hey everybody... This is exactly what the Declaration of Independence was all about! Go read it again!!! It's TIME!!!
And if you can't Stuff your own.......grow it!!!!!!!!!
The big companies should just get out of the business.
Never have I ever seen an industry that has done everything in it's power to tick off it's customer base the way the tobacco industry has.
Any smoker that buys products from any of the big 4 deserves the outrageous prices they are paying.
"If someone can show me where kids are being targeted for cigarettes, please oh please tell me! This is a bunch of BS."
The actual organizations at fault for this are the Anti-Smokers spewing their propoganda. The truth.com and other such organizations are marketing cigs quicker than any tobacco company could. The average kid is smart enough to see the lies for what they are and laugh at them while they light one up. I say we should sue them on behalf of the children.
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