Philip Morris USA apparently has decided against playing hardball with the states over a hefty settlement payment due in April, but Reynolds American Inc.'s RJR is hanging tough.
On Friday, Philip Morris, the nation's largest cigarette maker, made its $3.4 billion payment, even though it believes that sum eventually should be reduced to reflect market losses it suffered due to its participation in the 1998 Master Settlement Agreement.
RJR, based in Winston-Salem, N.C., also made its payment Friday but decided not to pay the full amount, company spokesman David Howard said. Howard declined to provide details about the company's payment.
Philip Morris, RJR and Loews Corp.'s Lorillard have sought to cut $1.2 billion from the $6.5 billion due April 17. The companies say a provision in the settlement allows them to reduce payments to the 46 states if they collectively lose market share to so-called "nonparticipating manufacturers" -- or players operating outside the pact.
But the big tobacco companies also must prove that the states did not adequately enforce statutes requiring the outsiders to place funds in escrow accounts in case of future state litigation.
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