The Federal Trade Commission is seeking to unwind Altria’s $12 billion investment in Juul Labs, saying the deal was aimed at eliminating competition in the e-cigarette market.

In an administrative complaint filed on Wednesday, the FTC said the December 2018 deal, which gave Marlboro maker Altria a 35% stake in Juul, amounted to an unreasonable restraint of trade and substantially lessened competition in violation of antitrust laws.

Altria’s Mark-Ten e-cigarette was at one time the second most popular in the market but by late 2018, the FTC said, Juul had “vaulted past the industry leaders Altria and Reynolds to become the leading e-cigarette company in the country.”

According to the commission, Altria agreed to discontinue MarkTen in return for a substantial stake in Juul  and used its marketing muscle as a tobacco giant to secure better shelf space for Juul products at stores around the country.

“Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits,” Ian Conner, director of the FTC’s Bureau of Competition, said in a news release.

Since making the Juul investment, Altria has written down its value to only $4.2 billion as Juul has faced litigation and heightened regulatory scrutiny over its contribution to a surge in teenage vaping. Because the deal had yet to receive antitrust clearance, Altria had been unable to appoint representatives to Juul’s board.

“Altria is Juul’s largest investor, and a forced divestiture would raise substantial questions for the e-cigarette maker’s future,” Reuters said, adding, “Although the Juul investment has become a disappointing one for Altria, the cigarette maker would be left searching for alternative products.”

The investment was a bet by Altria that Juul could play a major role in offsetting declining cigarette sales. In January, the company projected U.S. cigarette sales would decline 4% to 6% this year.

Juul has stopped selling popular flavors such as mango and mint in the U.S. amid pressure from regulators and lawmakers and shed hundreds of workers as it retooled under new management.

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