News; Nov 25, 2002 CET

Swedish Match brings competition lawsuit against UST in US

Swedish Match has filed a federal anti-trust complaint in Kentucky against UST. Swedish Match accuses UST of using its near-monopoly status in an improper manner.

In its complaint, Swedish Match calls for a permanent injunction against UST’s continued use of illegal methods to impede competition in the US snuff market and is demanding damages.

SWEDISH MATCH CLAIMS in its complaint that it has suffered damage as a consequence of UST’s actions. Following the introduction of Timber Wolf in the US in 1994, the Group managed to take a 9-percent share of the US snuff market, despite the actions of UST.

»Swedish Match has expanded in the US, but we do not know how much greater this growth would have been without UST’s illegal actions, which were designed to impede competition, « says Bo Aulin, Swedish Match’s General Counsel and Senior Vice President. In 2001, UST’s snuff sales amounted to SEK 15 billion, with a net profit of SEK 4.6 billion. To defend its lucrative market, UST has employed all possible means to force competitors out.

The complaint comes two months after the Sixth Circuit Court of Appeals upheld a ruling in a similar case that UST must pay USD 1.05 billion in damages to Conwood, another competitor in the US moist-snuff market. IN ITS COMPLAINT, Swedish Match cites, among other information, evidence that came to light during Conwood’s successful damage suit against UST;

• Stores exclusively selling UST’s snuff were receiving thousands of dollars in bonuses, while those marketing competing brands were threatened with the withdrawal of UST’s snuff.

• One retail chain signed a marketing agreement with UST in which it was stipulated that competing products were to be placed on the lowest shelves, out of sight of customers.

• UST’s salespersons were awarded bonuses if they succeeded in eliminating competing products from stores. Sales shelves were destroyed and advertising signs were painted over or torn down.

• In some cases, snuff cans were stolen and discarded and UST salespersons placed their own company’s products on shelves reserved for competing products. UST also manipulated sales statistics so that retail chains underestimated the popularity of competing products and reduced their orders accordingly.

»WE HAVE YET TO determine what sum we will be demanding in damages«, says Bo Aulin. »UST’s actions have been directed against all of its competitors and the company has continued to act in this way, despite the verdict in favor of Conwood.«