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Tobacco price fixing charged
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September 17, 1998: 9:16 a.m. ET
Philip Morris and British-American accused of collusion in Latin America
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NEW YORK (CNNfn) - The world's two largest tobacco companies reportedly have been accused of cigarette price fixing in Latin America.
In an industry lawsuit filed by Washington state, Philip Morris and British-American Tobacco are charged with setting prices and dividing market share in Argentina, Venezuela, Costa Rica and other Latin American countries, the Los Angeles Times reports.
Internal documents cited in the lawsuit describe the deals and the involvement of some of the firms' top executives, the report said.
A 1989 memo written by a British-American Tobacco director said the companies' subsidiaries would set prices and divide market shares, relying solely on "verbal agreements" since "there can be nothing in writing in Argentina on the subject," the Times reports.
The agreement in Costa Rica was more elaborate, with details of the amount of TV advertising each firm could buy and which incentives they could offer retailers reportedly spelled out in a February 1992 letter from the head of British American's Costa Rican subsidiary.
A similar price-fixing scheme was arranged in Venezuela, the Times reports, but a price war broke out between the firms' Venezuelan subsidiaries and each ended up smuggling cigarettes into the country through Aruba and Colombia to avoid paying taxes, a 1992 British-American memo said.
The anti-competitive arrangements would be illegal in the United States, but the legality of such actions is less clear in Latin America.
Shares of Philip Morris (MO) closed up 15/16 Wednesday at 45-5/8 on the New York Stock Exchange. 
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