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GREENSBORO, N.C. -- A federal judge dismissed an antitrust lawsuit accusing tobacco giant Philip Morris of using its retailer plan to squeeze out competitors.
The judgment by U.S. District Judge Frank Bullock said that rather than reducing competition, the program "has induced rivals to compete more vigorously."
R.J. Reynolds Tobacco Co., based in Winston-Salem, N.C., filed suit against Philip Morris in March 1999, saying the company's Retail Leaders program was unfair. Brown and Williamson Tobacco and Lorillard joined the suit later, the Associated Press reported.
The plaintiffs said that the Philip Morris program, which rewards stores that prominently display its brands with generous discounts, requires retailers to devote their prime cigarette display space to Philip Morris products.
The program, the lawsuit said, limited the ability of other tobacco companies to promote their own brands because Philip Morris holds 51 percent of the nation's cigarette market, including the number-one cigarette brand, Marlboro. Store displays are important because they are a key method for tobacco companies to promote their brands in light of advertising and marketing restrictions.
"We are pleased that the court's ruling reaffirmed that our retail merchandising programs foster free competition for the benefit of both retailers and adult smokers," said Denise Keane, senior vice president and general counsel of Philip Morris U.S.A.
RJR Tobacco, the nation's second-leading cigarette maker with a 23.4 percent market share, said in a statement that it is "considering its options for appealing" the ruling.