A Split FTC Accepts Fix-It-First Divestiture Remedy For Cigarette Merger

The Federal Trade Commission ("FTC") accepted on Tuesday from Reynolds American Inc. ("Reynolds") and Lorillard Inc. ("Lorillard"), subject to final approval, a Consent Order settling the agency's significant competitive concerns with Reynolds's proposed $27.4 billion acquisition of Lorillard by requiring the divestiture of four cigarette brands to Imperial Tobacco Group PLC. ("Imperial").¹ The proposed settlement will be subject to public comment through June 25, 2015, after which the FTC will decide whether to make the proposed Consent Order final.

Anticipating heavy antitrust scrutiny for the proposed merger announced last July, Reynolds and Lorillard proactively included a planned divestiture of $7.1 billion in cigarette brands and other assets to U.K.-based Imperial as a "fix-it-first" remedy. After nearly a year investigating the proposed transaction, the FTC voted 3-2 to accept the proposed remedy and permit the transaction to proceed, with Commissioners Brill