Tobacco settlement — a pinnacle of corporate-government collusion — faces challenge in Supreme Court

Back in 1998, a bunch of clever trial lawyers got together with the biggest tobacco companies and state attorneys general. They figured out how to set up a racket that would:

1) Enrich the lawyers beyond what anyone thought possible,

2) Protect Big Tobacco from competition,

and

3) Provide a new stream of revenue for the states.

It was called the Master Settlement Agreement (MSA), and it was an interstate pact imposing fees on Big Tobacco (purportedly to recover to costs to Medicaid of treating smoking), and basically prohibiting small tobacco companies from growing.

The free-market Competitive Enterprise Institute (where I once served as a journalism fellow) filed a suit, arguing that the pact was unconstitutional. CEI has now filed a brief with the Supreme Court, asking the body to hear the group’s complaint.

The argument, in brief:

CEI’s challenge to the tobacco settlement focuses on the Constitution’s Compact Clause (Article I, Section 10):

“No State shall, without the Consent of Congress …enter into any Agreement or Compact with another State, or with a foreign Power ….”

The Compact Clause was specifically aimed at preventing states from collectively encroaching on federal power or from ganging up on the citizens of other states. The tobacco settlement, a multi-state compact, plainly violates that provision.

A footnote: 1998 was not the last time Big Tobacco used Big Government to kill competition. In 2009 Philip Morris successfully passed, and Barack Obama signed, the Family Smoking Prevention and Tobacco Control Act, which — unlike the 1998 MSA — the other big tobacco companies opposed, calling it the “Marlboro Monopoly Act.”

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