Tobacco Memos Show Overseas Price Fixing

Philip Morris and British-American Tobacco, the world’s two biggest tobacco companies, secretly joined forces to fix cigarette prices and divide markets in Argentina, Venezuela and other Latin American countries, according to internal documents that explicitly describe the deals and the involvement of some of the firms’ most senior executives.

In Argentina, the companies’ subsidiaries set prices and allocated market shares, relying on “verbal agreements” because “there can be nothing in writing in Argentina on the subject,” said a 1989 memo by a BATCo director.

In Costa Rica, their accord even dictated the amount of TV advertising each firm could buy and what incentives they could offer retailers to promote their brands, according to a February 1992 letter from the head of BATCo’s Costa Rican subsidiary.

Another price-fixing agreement covered Venezuela, but when a price war broke out between the firms’ Venezuelan affiliates, each began smuggling cigarettes into the country through Aruba and Colombia to avoid paying taxes, a 1992 BATCo memo said.

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