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WASHINGTON, May 26 (Reuters) - Reynolds American Inc won U.S. antitrust approval on Tuesday for its deal to buysmaller rival Lorillard in a deal that would combine theNo. 2 and No. 3 U.S. cigarette companies.
The Federal Trade Commission said it would allow the deal togo forward in condition that the companies sell four cigarettebrands - Winston, Kool, Salem and Maverick. They will bepurchased by Imperial Tobacco Group PLC.
Reynolds, which makes Camel and Pall Mall cigarettes, saidin July it would buy Lorillard, which makes Newport, for $27.4billion.
Altria Group, which owns Marlboro, has a 47 percentU.S. market share, followed by Reynolds at 26 percent andLorillard at 14 percent, according to 2013 data from EuromonitorInternational. This is the most recent data available.
The deal presented antitrust enforcers with a conundrum:Their mandate is to prevent higher prices because of mergers,but U.S. public policy aims to make cigarettes more expensive todiscourage smoking.
The FTC has reviewed two other major cigarette mergers inthe past 20 years.
In 2004, it allowed R.J. Reynolds to buy rival Brown &Williamson, without divestitures. An expert familiar with theFTC at the time said at least some commissioners opposed usingagency resources to litigate to keep cigarettes cheap.
In 1994, the commission sued to stop British AmericanTobacco's $1 billion purchase of American Tobacco. The two sideseventually settled, and the merger went forward. (Reporting by Diane Bartz; Editing by Eric Beech)
