Cigarette maker Reynolds American's proposal to purchase smaller rival Lorillard Inc presents antitrust regulators with a conundrum: Their mandate is to prevent higher prices because of mergers, but U.S. public policy aims to make cigarettes more expensive to discourage smoking.Reynolds, the No. 2 U.S. cigarette maker, said in July it would buy No. 3 Lorillard for $27.4 billion.Altria Group, which owns Marlboro, has a 49 percent U.S. market share, followed by Reynolds at 26 percent and Lorillard at 14 percent. The deal would leave 90 percent of U.S. cigarettes made by two companies, a very concentrated market.Market share is "clearly up in the problem area," said Herbert Hovenkamp, law professor at the University of Iowa.
Lorillard, Inc. (Lorillard), through its subsidiaries, is engaged in the manufacture and sale of cigarettes and electronic cigarettes. Shares of LO traded higher by 0.31% or $0.19/share to $61.22. In the past year, the shares have traded as low as $46.48 and as high as $67.46. On average, 2245400 shares of LO exchange hands on a given day and today's volume is recorded at 1101828.
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