The Washington Post
Friday , November 3, 2000 ; Page E04

Smoke Signals In Cigar Lawsuit?

By Steven Pearlstein
Washington Post Staff Writer

Now that U.S. food and medicine have begun flowing to Cuba for the first time in 40 years, it may be only a matter of time before Cuban cigars begin flowing back the
other way.

That's what the folks at General Cigar figure, anyway. Yesterday, they filed a federal antitrust suit against Altadis U.S.A., alleging that their arch rival had threatened to
deny future supplies of premium Cuban cigars to retailers that don't buy more of Altadis's Dominican and Honduran brands today.

The suit comes just weeks after Altadis's Madrid-based parent company paid $477 million for a 50 percent stake in Corporacion Habanos, the Cuban government's
leading cigar maker, whose brands include Cohiba, Montecristo and Partagas.

Should the U.S. embargo against importation of Cuban cigars ever be lifted, the alliance between Altadis and the Cuban government could put New York-based General
Cigar at a competitive disadvantage in the premium end of the cigar market. A growing number of members of Congress have come out in favor of a lifting of the

In its suit, filed in U.S. District Court for the Southern District of Florida, General alleges that Consolidated salesmen told retailers at a recent trade show that only
customers who increase their purchases of current offerings will qualify to purchase Cuban premium cigars when the embargo is lifted. As a result of such illegal "tying"
tactics, General alleged, it has already lost valuable shelf space in cigar stores around the country.

An executive at Altadis in Fort Lauderdale, Fla., said yesterday that the company would not comment until it had seen a copy of the complaint.

In its suit, General alleges that as a result of Altadis's near-exclusive distribution arrangement with Habanos, there was now a "dangerous probability" that it would obtain
monopoly power in the market for premium cigars.

"We believe it is unfair competition for Altadis to use its arrangement with the communist Cuban monopoly to force retailers to comply with their requirements,"
General's chairman, Edgar M. Cullman Sr., said in a written statement.

General is exclusive marketer of the non-Cuban cigars sold under the Macanudo, Punch and other labels in the United States. Earlier this year, control of the company
was purchased by Stockholm-based Swedish Match Corp.

Altadis accounts for about 25 percent of the American cigar market after its purchase of the old Consolidated Cigar Co. last year from Ronald Perelman and public
shareholders. Although its roots lie with the popularly priced domestic brands such as Dutch Masters, El Producto and Antonio y Cleopatra, its recent growth has been
fueled by sales of imported premium cigars such as Te-Amo, Royal Jamaican, Don Diego, Montecruz and H. Upmann.

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