Class-action plaintiffs alleged that Philip Morris, Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., and Liggett Group, Inc., had illegally conspired to fix the wholesale prices of cigarettes sold in the United States over a period of several years.
Class-action plaintiffs alleged that Philip Morris, Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Lorillard Tobacco Co., and Liggett Group, Inc., had illegally conspired to fix the wholesale prices of cigarettes sold in the United States over a period of several years. Counsel for Philip Morris retained Cornerstone Research and Professor Kenneth Elzinga of the University of Virginia to assess competition in the cigarette industry and to analyze the plaintiffs’ claims regarding the alleged conspiracy.
Agreeing with Professor Elzinga’s analysis, U.S. District Court Judge J. Owen Forrester granted summary judgment for the defendants.
In his report, Professor Elzinga explained that the retail promotions did not display a pattern consistent with collusion nor did they move in lockstep or parallel fashion. Rather, they showed competition at work. His analysis also showed that changes in the defendants’ market shares contradicted the claim that cigarette prices had been rigged. Professor Elzinga concluded, “Based on my analysis, the plaintiffs’ cartel hypothesis should be rejected as unfounded.” Agreeing with Professor Elzinga’s analysis, U.S. District Court Judge J. Owen Forrester granted summary judgment for the defendants. The Eleventh Circuit upheld the finding.