FTC Says Pact Legalizes Price-Fixing

Government antitrust regulators said the proposed national tobacco settlement would legalize price-fixing by tobacco companies and potentially add $123 billion to their profits over 25 years. “Hard-core price-fixing would ordinarily be treated criminally in the United States,” Federal Trade Commission Chairman Robert Pitofsky told reporters, discussing a report by his staff. “This exemption as written would allow the tobacco companies to get in a room, sit down, talk to each other and say, ‘Well, what do we think the best price of a pack of cigarettes is and what do we think is the right level of profits for us to earn?’ ” The report said that if tobacco companies take advantage of proposed antitrust exemptions, they could net extra profits of anywhere from $36 billion to $123 billion over the next 25 years. A spokesman for industry negotiators called the report’s calculation of increased profits “highly speculative.”