UNITED STATES
Vector-led group files suit over settlement

Cigarette-maker Vector Group has filed a suit against the state of Kentucky for allegedly violating the tobacco industry's landmark 1998 settlement by giving preferential treatment to another tobacco company.

Joined by three other tobacco companies, Vector Thursday asked the court to void an agreement signed last year between Kentucky and Vibo Corp, a Miami cigarette company that does business as General Tobacco, that allowed General Tobacco to participate in the tobacco industry's settlement.
The Vector-led group is alleging that General Tobacco received unauthorised favourable financial terms in its agreement with the states, Vector president and chief executive Ronald Bernstein said.
The Master Settlement Agreement, or MSA, was signed by 46 states and several major tobacco companies in 1998. Since then, more than 40 other companies have joined the multibillion-dollar agreement, which requires members to make payments to the states and agree to a wide range of restrictions, including those governing how the companies promote their products.
General Tobacco was the largest tobacco maker that was not part of the initial agreement. The company sells cheap cigarettes under brands like GT One, Bronco and Silver.
Under its agreement, General Tobacco made a US$ 78 million payment to the states in the MSA. However, it also was allowed to defer some back payments and part of a payment that was due in April. The settlement is expected to be worth US$ 1.7 billion over the next ten years. General Tobacco has sales of about US$ 400 million a year.
According to Mr Bernstein, the ability for General Tobacco to finance part of its payments over time provides it with special treatment that was not available to many other MSA participants.
Vector filed the suit in the Franklin Circuit Court late Thursday afternoon, and was joined by Commonwealth Brands, King Maker Marketing and Sherman's 1400 Broadway NYC, which are all privately held. (pi)

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