FTC to Ask Court to Block Sale of American Tobacco

WASHINGTON —  The Federal Trade Commission said Thursday that it would seek a temporary federal court order to bar the British firm BAT Industries from acquiring American Tobacco Co. from American Brands Inc.

It said the planned $1-billion acquisition could substantially reduce competition in the U.S. market, resulting in higher cigarette prices.

American Brands announced the planned sale last April.

The FTC said it would ask the court to stop the sale until the conclusion of an administrative trial and any appeals.

BAT owns Brown & Williamson Tobacco Co., based in Louisville, Ky., maker of Kool cigarettes and other brands. Stamford, Conn.-based American Tobacco’s brands include Carlton, Pall Mall and Lucky Strike.

American’s announced sale of its tobacco interests comes as anti-smoking sentiment is growing and new laws restricting smoking are being put on the books.

Cigarette sales volumes are falling. Tobacco sales generated most of the company’s sales and profits last year.

Other conglomerates are also weighing sales of their tobacco interests or moving them into separate corporate units.

The FTC said it would argue in court that the U.S. cigarette market is highly concentrated and largely shielded from new entrants and that a takeover would remove one of six major cigarette makers.