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Tag: Juul Labs

  • Juul to Pay Washington State $22.5 Million for Youth Vaping

    Juul to Pay Washington State $22.5 Million for Youth Vaping

    Photo: steheap

    Juul Labs has agreed to pay Washington State $22.5 million to settle claims that it unlawfully targeted underage consumers with deceptive advertisements.

    “Juul put profits before people,” Washington Attorney General Bob Ferguson said on April 13 in a statement. “The company fueled a staggering rise in vaping among teens.”

    Among other complaints, Washington State argued that Juul failed to disclose clearly that its products contain nicotine. For more than 20 months, from August 2016 until April 2018, it “unlawfully sold hundreds of thousands of vaping products to Washington consumers,” the state’s attorneys wrote in their complaint.

    As part of the settlement, Juul committed to reforms, including stopping all advertising that appeal to youth and ending most social media promotion in the settlement, according to Bloomberg.

    “This settlement is another step in our ongoing effort to reset our company and resolve issues from the past,” the company said in a statement. “We support the Washington state attorney general’s plan to deploy resources to address underage use, such as future monitoring and enforcement.”

    The deal is the latest in a series of settlements of youth vaping-related court cases brought by U.S. states.

    In November 2021, Juul agreed to pay $14.5 million and change its business practices as part of an agreement with Arizona. In June 2021, it settled a similar case brought by North Carolina for $40 million.

    Juul Labs continues to face similar suits from several states, including New York and California.

  • ITC Bars Unauthorized Juul-Compatible Pods

    ITC Bars Unauthorized Juul-Compatible Pods

    Photo: JHVEPhoto

    The U.S. International Trade Commission (ITC) has issued a general exclusion order barring the importation of any unauthorized cartridges compatible with the Juul System that infringe Juul Labs patented product designs, including compatible flavored pods and refillable pods.

    This ruling follows a filing by Juul Labs submitted to the ITC on July 10, 2020, that sought a general exclusion order directed at all importers of unauthorized cartridges that copy Juul Labs’ patented pod designs without authorization.

    “Today’s ITC ruling represents a major victory against manufacturers of illicit vapor products who seek to bypass regulations and undermine efforts to create a more responsible marketplace for the category,” said Wayne Sobon, vice president, intellectual property at Juul Labs, in a statement.

    “In addition to targeting the importation of all infringing products, regardless of the brand, this sweeping action will provide the additional public benefit of helping rid the market of unauthorized Juul-compatible products that can be modified by the user, such as empty and refillable pods.”

  • FTC Complaint Against Altria’s Investment in Juul Dismissed

    FTC Complaint Against Altria’s Investment in Juul Dismissed

    Photo: Aerial Mike

    A U.S. Administrative Law Judge has dismissed the Federal Trade Commission’s (FTC) claims against Altria and Juul Labs arising out of Altria’s 2018 minority investment in Juul. Following a three-week trial, the judge found that the evidence failed to sustain the alleged violations.

    The judge’s decision is subject to review by the FTC. Any decision by the FTC may be appealed to any U.S. Court of Appeals.

    “We are pleased with this decision and have said all along that our minority investment in JUUL does not harm competition and does not violate the antitrust laws,” said Murray Garnick, executive vice president and general counsel of Altria, in a statement

    In April 2020, the FTC issued an administrative complaint against Altria and Juul alleging that Altria’s 35 percent investment in Juul and the associated agreements constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Antitrust Act of 1890 and Section 5 of the Federal Trade Commission Act of 1914, and substantially lessened competition in violation of Section 7 of the Clayton Antitrust Act.

    A public version of the decision is expected to be made available late this month.

  • Morgan Stanley: Antitrust Loss May be Win for Altria

    Morgan Stanley: Antitrust Loss May be Win for Altria

    Photo: Andriy Blokhin

    The Federal Trade Commission (FTC) may issue its initial decision in the Altria Group/Juul Labs antitrust case by Feb. 17, according to Morgan Stanley. The investment bank expects the FTC to instruct Altria to divest its stake in the e-cigarette manufacturer.

    While Morgan Stanley expects the market to react negatively if the FTC finds that Altria’s investment violates antitrust law, it sees little downside to Altria from an adverse ruling.

    Altria would likely appeal the decision, which could result in a multiyear legal process, first with the full Commission and then at the U.S. Court of Appeals. Altria would be able to retain its stake in Juul during this process.

    What’s more, Juul’s impaired valuation—the company was worth $1.7 billion in the fourth quarter of 2021, down from $12.8 billion—underscores Juul’s tempered growth prospects.

    Also, continuing the legal process leaves open the possibility that the companies can reach a favorable settlement.

    Alternatively, if Altria does not contest the FTC’s decision and sells its stake in Juul, it would benefit from crystallizing its loss on the original investment, according to Morgan Stanley, and could apply the tax shield to offset capital gains elsewhere

    The case dates to April 2020, when the FTC filed an administrative complaint against the companies, alleging that Altria’s investment in Juul violates federal antitrust laws and seeking to unwind Altria’s investment.

    The case has been before the administrative law judge since June 2021, with Altria and Juul defending their relationship and presenting extensive evidence and witnesses in support of maintaining Altria’s investment.

    The administrative law judge’s initial deadline to decide was Dec. 22, 2021, but the judge filed an extension twice due to the complexity of the issues and extensive amount of materials in the case.