The tobacco companies currently facing federal racketeering prosecution got a break the other day. Government prosecutors eschewed the advice of their own expert witness and asked for only a $10 billion, five-year smoking-cessation program from the tobacco companies -- down significantly from that witness' call for a $130 billion program to be conducted over 25 years.
The companies involved include Altria
So far, this case has gone reasonably well for the tobacco industry. Back in February, an appeals court stripped away the government's request to wring $280 billion out of the industry as a repayment of "ill-gotten gains." What's more, considering the comments of the judge in the case, it seems the industry might get through this trial largely unscathed.
While prosecutors still want a nationwide smoking-cessation program, restrictions on marketing, and court-appointed monitoring, it's unclear how much of that they will get. Not only did the judge seem very uncomfortable with the notion of ongoing judicial monitoring, but this $10 billion request also might violate an appeals court ruling that requires all remedies from the racketeering case to be oriented toward preventing future misconduct instead of punishing past actions.
For the biggest of the bunch, Altria, this is good news on many fronts. First, it should largely bring an end to government efforts to extract money from tobacco companies -- initiatives that have been going on for more than a decade. What's more, the monetary amounts under consideration are nearly trivial and could be recouped with only a modest per-pack price increase.
Also positive for Altria, the resolution of this case and a more certain outlook regarding damages should permit the company to go ahead with its plans to shed the rest of the Kraft
I'm sure I'll get plenty of email attacking me for saying anything nice about the tobacco industry, but I'm glad these prosecutions and persecutions are almost over. After all, the tobacco companies thrive among a host of companies pursuing business models with less than sterling social outcomes -- alcohol and gambling, to name a few. Whether death comes from smoking, alcohol abuse, or obesity -- it all results in the same end, doesn't it?
For more on the tobacco industry:
- Quit Smoking, Get Rich
- Altria Breaks New Ground
- Smoke Across the Water
- The Uncle Buck Plan in Full Effect
And if you do smoke, please visit our Quitting Smoking discussion board. You'll be glad you did.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).