UST Must Pay $1.05 Billion in Antitrust Case

UST Inc., the No. 1 chewing tobacco seller, was ordered by a federal judge to pay $1.05 billion to competitor Conwood Co. for violating antitrust laws in promoting its Skoal and Copenhagen moist snuff brands. A federal court jury in Paducah, Ky., awarded Conwood $350 million, and U.S. District Judge Thomas Russell trebled the damages under antitrust law. UST said it will try to persuade Russell to throw out the verdict and will appeal if that bid fails. Conwood, which makes Kodiak snuff, sued in April 1998, claiming UST employees vandalized or removed Conwood’s display racks in stores and tried to keep merchants from offering Conwood’s snuff in areas where it’s most popular. UST holds about 80% of the smokeless tobacco market; Conwood, a closely held company based in Memphis, Tenn., holds about 13%. The company temporarily halted its stock buyback program after the verdict, said Bonnie Herzog, an analyst with Credit Suisse First Boston. UST has been popular with investors because of the program and because the smokeless tobacco company doesn’t face the same legal threats as cigarette sellers, Herzog said. The company declined to comment on whether it would stop buying back shares. After a delay in trading, UST shares fell $2.94, or 11%, to close at $16.44, on the New York Stock Exchange.