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Attorney General Baker Announces $160 Million Settlement Reached with Tobacco Companies

PRESS ADVISORY

Attorney General Baker Announces $160 Million Settlement Reached with Tobacco Companies

June 18, 2003

(Atlanta) Attorney General Thurbert Baker announced today that the state will receive $2,049,472.01 from tobacco companies in a settlement of pending disputes over payments due under the Master Settlement Agreement. The bulk of that money will come from Brown & Williamson, the nation's third largest tobacco manufacturer. The 1998 Master Settlement Agreement required all of the major tobacco companies to pay $206 billion to the states over the first 25 years of the agreement. The payment to the state comes as part of a new, global settlement reached today that calls for a $160 million payment to be made by most of the nation’s tobacco manufacturers to the 52 states and jurisdictions that benefit from the settlement. "Today's agreement shows that we will insist on full payment from each and every tobacco maker due under the terms of the Master Settlement Agreement," Attorney General Baker said. "There are a number of programs in our state vital to the interests of Georgia citizens that depend on the funds obtained through the Master Settlement Agreement, and I'm pleased that we were able to ensure delivery of these funds in this time of budgetary concern." The agreement resolves Brown & Williamson's failure to make payments to the states for the cigarettes it manufactured for Star Tobacco, Inc., a company that refused to join the settlement. The National Association of Attorneys General had sued Brown & Williamson over the failure to make these payments last December. As part of the settlement, all major tobacco manufacturers agreed they will take responsibility for cigarettes they manufacture for other companies. The settlement also avoids complex disputes over whether the 1998 settlement was a "significant factor" in causing the market share of the companies that signed it to decline during the first four years of the agreement. That issue had threatened to drag on into years of costly litigation. Instead, the settlement avoids claims from the tobacco companies to offset payments due under the Master Settlement Agreement that might have reached as high as $1 billion. Vermont Attorney General William H. Sorrell, chair of the Tobacco Committee of the National Association of Attorneys General, added that the settlement shows that the states will fight to hold the tobacco companies to the terms of the Master Settlement Agreement. Today’s agreement will also prevent the tobacco companies from resorting to indirect means to subvert the intent and avoid the provisions of the Master Settlement Agreement. "This settlement affirms the basic concept that signatories to the Master Settlement Agreement are responsible for all the cigarettes they manufacture,” Attorney General Baker concluded. “Manufacturers cannot enter into questionable arrangements with companies outside the agreement designed to minimize their contractual obligations under the MSA." Attorney General Sorrell agreed, stating, "This is a good settlement because it provides not only payment for cigarettes manufactured in the past but also establishes clear ground rules for the future."