Tobacco Challenge Rejected

WASHINGTON -- The Supreme Court turned away an appeal by A.D. Bedell Wholesale Co. and Triangle Candy & Tobacco Co., who had challenged the $206 billion settlement signed four years ago by the tobacco industry and 46 states.

The wholesalers claimed the landmark accord violated federal antitrust laws, allowing major tobacco companies like Philip Morris Cos. and R.J. Reynolds Tobacco Holdings Inc. to gain higher profits from higher cigarette prices, Dow Jones reported.

A federal appeals court in Philadelphia dismissed the lawsuit in June, concluding that the cigarette makers were shielded from antitrust claims.

The class action suit, filed in 1999 by Bedell Wholesale Co. and Triangle Candy, alleged that provisions of the 1998 settlement illegally stymied competition. They noted that cigarette makers immediately raised prices by 45 cents a pack, even though analysts said the settlement could have been funded by a 19-cent price hike. Additional price increases followed, the report said.

The suit named Philip Morris, R.J. Reynolds and British American Tobacco PLC's Brown & Williamson Tobacco Corp. Wholesalers said the settlement created a cartel that has allowed tobacco companies to overcharge "by billions of dollars annually."

The three cigarette makers said the lower court ruling was correct and didn't merit Supreme Court review. Other courts have rejected similar challenges to the settlement, they pointed out.