Brooke's Liggett Group Sues RJ Reynolds On Antitrust Grounds; Federal Suit Alleges Illegal Pricing Scheme for Discount Cigarettes.

Business Editors

MIAMI, Fla.--(BUSINESS WIRE)--March 2, 2000

Brooke Group Ltd. (NYSE: BGL) today announced that its Liggett Group tobacco subsidiary has filed a complaint in federal court against RJ Reynolds Tobacco Company ("RJR") (NYSE: RJR) claiming violations of federal antitrust laws, specifically section 1 of the Sherman Act and Sections 4 and 16 of the Clayton Act, and various state laws. Liggett alleges that RJR has entered into illegal pricing arrangements with retailers that cause retailers to raise the price of non-RJR discount cigarettes to the detriment of Liggett, other tobacco manufacturers and consumers.

Specifically, Liggett is challenging RJR's "Every Day Low Pricing" program. Under this program, RJR enters into contracts with cigarette retailers by which retailers receive substantial payments from RJR in exchange for complying with various pricing restrictions. Pursuant to these contracts, retailers promise to ensure that no competitive cigarettes are priced below those of an RJR brand. This resale price floor is accomplished not by lowering the price of RJR products but by raising the prices of competing products, such as Liggett's discount brands. Consumers are therefore forced to pay more for discount brands than they would in a truly competitive pricing environment.

Liggett maintains that RJR's program is an illegal scheme of anticompetitive conduct that impedes the functions of the marketplace by reducing consumer choice, raising prices paid by consumers and foreclosing competition in the manufacture and sale of discount cigarettes throughout the United States.

Brooke is a holding company which owns Liggett Group Inc. and controlling interests in Liggett-Ducat Ltd. and New Valley Corporation.