Snuffing out competition

Gregory Conley writes:

When the success of America’s largest companies is threatened, they often turn to the government for a helping hand. They have been doing that for at least the past century. In recent years Congress gave more than $1 trillion in bailouts to banks, car companies, and credit lenders in the midst of great financial turmoil. But that kind of generosity isn’t the only way Uncle Sam has helped many of America’s biggest companies maintain market share. Using the growing bureaucracy’s powerful regulations, many corporations have worked hand in hand with government to snuff out competition.

A recent example of this offensive is Big Tobacco’s actions against the thousands of small startups that are helping people quit smoking. Cigarette companies are spending millions of dollars to push product bans, higher taxes, and expensive regulations on their competitors.

The cigarettes sold by Reynolds American Inc. and Altria (formerly Philip Morris) are highly taxed and regulated by the Food and Drug Administration, and over the past several years cigarette consumption has declined more rapidly than forecast by analysts and shareholders. Electronic cigarettes (“e-cigs,” or “vapor products”) have accounted for a significant portion of this reduction. These battery-operated and smokeless devices represent a free-market solution to a grave public-health problem. As alternatives to cigarettes, which kill more than 400,000 people each year, vapor products are far less hazardous.

In this excellent article Conley explains the difference between "cigalikes" developed by big tobacco companies such as Reynolds and Altria, and premium vapor products (PVs).

Reynolds also has urged the FDA to ban all PV and e-liquid products as well as most flavored vapor products. That’s right. A company that made $4.6 billion in profits in 2013, selling products that cause cancer, illness, and disease, asked the FDA to ban the products that are both preferred by consumers and proven to help people quit smoking.

In Big Tobacco’s war on these innovative technology products, it’s not just adult smokers and ex-smokers who will suffer at the hands of misguided regulators and lawmakers. Most of the sales in the $1.5 billion vapor product market are taking place in the more than 5,000 specialty retail outlets (“vape shops”) across the country. These new businesses are occupying what may otherwise be empty storefronts. They are also providing local jobs, paying sales and income taxes, and improving communities by helping reduce the toll from smoking.

Reynolds’s push for more-coercive taxation, burdensome regulations, and even bans on their competitors make sense, as no company wants to see its consumers switch to products it doesn’t sell. Unfortunately, if the FDA and state lawmakers merely accept the agenda being pushed by Reynolds and other large cigarette companies, public health and market freedom will suffer. It’s time lawmakers and bureaucrats realize this and stop trying to protect cigarette companies from consumer choice.

Read more here.