Jump to full article: Associated Press (AP), 2005-05-13
Author: STEPHANIE STOUGHTON AP Business Writer
Intro: The nation's largest cigarette makers are questioning past payments they made to states as part of a $206 billion settlement over health care costs.
Philip Morris USA, R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. have said the landmark 1998 settlement forced them to raise prices, contributing to a proliferation of low-cost competitors who took market share - a provision of the settlement. Because the major players lost market share, they want to know whether last year's payments should be adjusted.
The companies' requests come as state legislation is targeting cigarette makers operating outside the agreement. Most of the settlement's 46 states have passed measures that essentially force the smaller companies - mostly discounters and regional players - to raise their prices.
Confidential documents obtained by The Associated Press show that Liggett Group Inc. and Commonwealth Brands Inc. - which later joined the agreement - challenged more than $45 million of their payments due April 15. Both said in letters to the settlement's auditor that the deal allows them certain adjustments if nonparticipating manufacturers increase their market share.
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