Replies

"but you're wrong about the money coming out of the shareholders profits.
The only way the tobacco companies would sign off on the MSA was if they could pass the costs of the suit on directly to the consumers."

Everything is paid by the consumers - and tobacco companies can raise the price of their products at any time - Since the tobacco companies will not LOWER their prices now that they are not having to pay this part of the extortion, the money stays with the shareholders.

Everything is paid by the consumers - and tobacco companies can raise the price of their products at any time - Since the tobacco companies will not LOWER their prices now that they are not having to pay this part of the extortion, the money stays with the shareholders.

Many times, when a company is monetarily chastised by the govt, there are stipulations that the monetary cost of the chastisement must come out of the companies profits, shareholder or otherwise, and NOT be passed directly to the consumer thereby leaving the companies profits down.
The tobacco companies negotiated the MSA in such a way that they COULD pass the costs directly to the consumer, thereby leaving the companies profits exactly where they were BEFORE the MSA.
ANY costs that have been accrued for the MSA have come DIRECTLY out of the consumers pockets, not the companies profits.

You're probably right, the tobacco companies will not lower prices now that they don't have to fund the TRUTH^TM advertisements but that will just make the companies profits go up having no affect on the consumers price for the product OR the fact that the consumer is still directly paying the MSA settlement out of their pockets.

Actually, the tobacco cos have already lowered their prices and will do so again once they no longer have to fund ALF. In Virginia, with only a 2.5¢ state levy on cigarettes, the price of premium brands of the big tobacco cos like Marlboro, Camels, and Pall Mall are only in the $15 to $22 range in outlets not subject to city tobacco taxes. That is not significantly different than the non-participatory cos.

They have to in order to compete and preserve market share. Like Just Another Joe identified, the tobacco cos were allowed to pass 100% of the costs of their "settlement" to customers, which added up to about 35¢-40¢ a pack or $3.50-$4.00 a carton. The only way they could do that was for the states to enact laws forcing non-participatory companies to put a corresponding percentage of their profits into escrow accounts for 25 years. The non-participatory cos found a way to get most of their escrow money back, by just doing business in a few states and not going national. New, smaller cos are springing up all over the place, and the big boys are losing considerable market share and profits.