Reynolds in Talks to Acquire Lorillard in Merger of Tobacco Rivals

By Anthony Robbins, MD, MPA

So screams a headline in the New York Times business section on July 12, 2014.  Two of the three tobacco companies in the $100 billion US market plan to merge.

Fifty years after the Surgeon General’s first report on Tobacco and Health, the US tobacco industry is working to grow its profits. Will the universal consensus that cigarettes kill have any effect on a government decision whether to intervene in the proposed merger?  The Government usually gets involved when a merger would reduce the number of sellers in the market, possibly reducing competition and raising prices. But does it matter whether society needs the product or whether it damages health. I know of no precedent for invoking health considerations.

Anti-trust laws are likely to be the basis for a government review of the proposed merger. Under anti-trust theory, competition helps consumers by lowering prices... but that hurts consumers of cigarettes.  If competition makes it less expensive for Americans to feed their deadly addictions created by tobacco companies, should the same government that has found cigarettes to be killers decide how to act without considering health, based instead on an assessment of competition and cigarette prices? Surely the two companies who want to merge will claim, as companies always do, that the merger will not result in higher prices.  I suspect they will not mention or be proud that today’s unconscionable level of damage to health will be maintained.

At the very least the Department of Justice’s anti-trust division should request a simple study.  What effect will the merger have on the health of the American population?  The Office of the Surgeon General of US Public Health Service could carry out such a study.  The same data that the two tobacco companies and their opponents will provide to the Anti-trust Division to show that the merger will or will not maintain, raise or lower prices, and thus “benefit” or “harm” consumers can be available to the Surgeon General.  It is not hard to extrapolate from data on projected prices, sales, and use to estimate the health effects.  The public health goal should be to make sure any action proposed by tobacco companies is seen as a way to advance a business that harms people.

Perhaps a faint silver lining is hiding in the merger plans, as both companies are seeking to strengthen their footing in the electronic cigarette business. (Remember, studies have not found e-cigarette vapor to be safe.) How eager are they to transfer America’s collective addiction from the tar-containing and cancer-causing smoke of burning tobacco to the tar-free vapor in e-cigarettes?  Would they agree, as part of a merger approval, to close their tobacco businesses entirely by a date certain?

As we discuss this merger, it will be important to remember that our public health goal is an endgame, where tobacco, that serves no useful purpose, disappears from our environment and society.