Reynolds American Wins Approval to Buy Lorillard Inc

American tobacco major Reynolds American Inc confirmed on Tuesday that the company has won US antitrust approval to buy its smaller rival Lorillard Inc.

The Federal Trade Commission said it would permit the deal to go forward only when the No. 2 and No. 3 US cigarette companies will sell four cigarette brands Winston, Kool, Salem and Maverick.

The above mentioned four brands will be purchased by Imperial Tobacco Group PLC.

Reynolds, the manufacturer of camel and Pall Mall cigarettes, said in a statement in July 2014 that it would buy Lorillard for $27.4 billion.

Reynolds at that time offered that it would sell the four brands to address any antitrust concern as well as Lorillard's Blu e-cig.

Altria Group, owner of Marlboro, has a 47% share in the US market, followed by Reynolds with 26% and Lorillard with 14%, according to a 2013 data from Euromonitor International.

The vote that led to the approval was 3-2. Democrat Julie Brill and Republican Joshua Wright were against its approval. On the other hand, Chairwoman Edith Ramirez, Republican Maureen Ohlhausen and Democrat Terrell McSweeny voted to approve the settlement.

Brill in her dissent argued on the point that the deal meant that the remaining cigarette companies would be able to raise process and also found Imperial very small to compete the giant tobacco companies.

She wrote, "It is no surprise that Reynolds would ... refuse to provide a meaningful divestiture package that would replace the competition lost through its merger with Lorillard".

Wright also argued that the investigation should be closed with no required divestitures since the assets sales were already promised.

The deal left antitrust enforcers in dilemma as their mandate is to prevent higher prices because of mergers, but the US public policy aims to make cigarettes more expensive to discourage smoking.