uRegulators Settle Charges That Reynolds, Lorillard Merger Would Be Anticompetitiver

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  (MarteaDesignCo)

  A year after the No. 2 and No. 3 cigarette brands in the country first announced they were planning to go all-in on a $27.4 billion merger, regulators have approved an order settling charges that the deal would be anticompetitive for the U.S. cigarette market, paving the way for the merger to move forward.

  The Federal Trade Commission announced today it had approved an order stipulating that betrothed tobacco companies R.J. Reynolds American Inc. – the maker of Camel and Pall Mall – and Lorillard – the maker of Newport cigarettes – divest four cigarette brands to a UK-based company.

  The proposed combination of the two companies would create a formidable rival for current top cigarette company Altria Group, the maker of Marlboro. Altria currently accounts for 46% of the U.S. cigarette market, while Reynolds has about 25% and Lorillard about 12% of the market.

  Back in May, the regulator proposed [PDF] that Imperial Tobacco Group will buy three brands (Salem, Kool and Winston) from Reynolds and Lorillard’s Maverick brand in order to preserve competition.

  Imperial Tobacco Group currently has a competitive presence in about 70 countries, but a relatively small presence in the U.S. By taking over the four brands, the company will be a more substantial competitor for the merged companies and Altria, and become the third-largest cigarette maker in the U.S.

  According to the FTC’s complaint [PDF], the merger raised significant competitive concerns as it had the potential to eliminate current and emergent competition for Reynolds and Lorillard in the U.S. market.

  Additionally, the FTC determined that without divestiture there was a likelihood that the merger would unilaterally raise prices, and that coordinated interaction would occur between Reynolds and Altria.

  In addition to divesting the four cigarette brands, Reynolds must divest to Imperial the Lorillard manufacturing facilities in North Carolina and provide Imperial the opportunity to hire most of the existing management, staff and salesforce.

  The newly-merged companies must also provide Imperial with retail shelf space for a short period of time and provide other operational support during the transition.

  FTC Approves Final Order Preserving Competition in U.S. Market for Cigarettes [The Federal Trade Commission]

  
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by Ashlee Kieler via Consumerist

uInvestors Sue American Express After Loss Of Costco Agreementr

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  (The.Comedian)

  Five months after American Express and Costco announced they would go their separate ways and end their exclusive relationship – essentially allowing members of the warehouse club to use other cards – shareholders for the credit card company have filed a lawsuit claiming it blindsided investors with the loss of the contract.

  The lawsuit [PDF], filed by Plumbers and Steamfitters Local 137 Pension Fund, accuses American Express of failing to reveal how significant the 16-year long contract with Costco had become to the business.

  According to the lawsuit, which seeks class-action status on behalf of all shareholders who bought stock between Oct. 16, 2014 and Feb. 11, 2015, American Express had accelerated its talks with Costco regarding renewal of its exclusive deal that was set to expire in March 2016 without the knowledge of investors.

  “Defendants never disclosed the financial impact of the U.S. Costco co-branding agreement on AmEx’s reported financial results,” the suit states.

  The investors contend that the U.S. Costco co-branding contract was “highly material to AmEx’s business,” representing 8% of the company’s revenues in 2014; 20% of its outstanding loans and 10% of its cards issued worldwide.

  “Because AmEx concealed throughout the class period just how material the U.S. Costco co-branding relationship was to AmEx’s business and financial prospects and thereby overstated the continuing revenue growth prospects of its all-important U.S. Card Services segment,” the lawsuit states.

  In December 2014, the shareholders claim AmEx’s stock traded at artificially inflated prices – reaching a high of $95 per share. Then without notice in February 2015, the company announced it had lost the Costco contract and stocks plummeted to $77.53 per share.

  The lawsuit, which asks for a jury trial, seeks unspecified damages.

  [via Reuters]

  
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by Ashlee Kieler via Consumerist

uJust Because You Find $150K Sitting Around Doesn’t Mean You Get To Keep It, Buy A New Carr

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  (Tracy O)

  One might think that the average adult would be aware that the playground rule of “finders, keepers” doesn’t apply to most situations in life that aren’t scavenger hunts. But one would be wrong, if the police investigating the theft of a bag filled with $150,000 in cash are correct.

  Authorities say a man picked up the bag, which was left outside a New Jersey business by ATM workers on Monday, and took the money home, reports the Associated Press.

  Not content to simply rest on a pile of cash, police say he took some of that money and bought an SUV with it a few hours after the find. His time with the new Chevrolet Tahoe was short-lived, as police arrested him on Wednesday as one of two suspects they believe made off with the bag of moolah.

  Police said a white van caught on surveillance video pulling up to the loot had a passenger who hopped out to grab the cash. That same van was seen in another video where the suspects allegedly stole tires from an auto repair business.

  The suspect was arrested after police found the van. He said he was driving it and admitted that an SUV — valued at about $46,000 and found nearby — had been bought soon after the grab. He was charged with theft of mislaid property, or what we will call violating the “anti-finders keepers law.”

  Police issued a warrant for the arrest of the van’s passenger, who is also wanted for a probation violation.

  Cops: Man buys car after taking $150,000 left by ATM workers [Associated Press]

  
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by Mary Beth Quirk via Consumerist

uUnited Airlines CEO: Checked Bag Fees Are Here To Stay, Just Part Of Doing Businessr

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  (Adam Fagen)

  Despite Southwest Airlines’ recent admission that charging for bags would be a financially irresponsible policy change, it doesn’t appear that other airlines feel the same way.

  Reuters reports that United Airlines, for one, has no plans to stop charging check bag fees, no matter what other airlines do.

  The airline’s CEO Jeff Smisek defended the fees, noting that some passengers have “difficulty recognizing that we’re now a business.”

  “They criticize us if we charge for more legroom. Let me tell you though: that’s what businesses do,” he said during an industry lunch on Thursday.

  Smisek said that customers should expect checked bag fees to be based on a sliding scale, like extras offered by other businesses.

  “If you want more data on your data plan so you can watch faster, better cat videos, you call AT&T, and they’re happy to increase your data plan,” he said. “And they charge you for it. That’s what businesses do.”

  Airline checked bag fees, which range from $15 to more than $25, have become an important source of revenue for many carriers. According to the U.S. Department of Transportation, the first three months of 2015 saw airlines collecting more than $864 million in revenue from the fees.

  Despite those proceeds, Southwest said earlier this week that it isn’t doing so bad without the added fees. The company’s net income increased nearly $143 million over the past year.

  Of course, hefty fees for checked bags could soon be a thing of the past, as legislators recently introduced the Baggage Fee Fairness Act of 2015 that would limit checked-baggage charges to just $4.50/bag.

  United Airlines CEO: Checked bag fees are here to stay [Reuters]

  
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by Ashlee Kieler via Consumerist

uConverse Blows Up New Chuck Taylor Shoes To Show What’s Differentr

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• Maybe you saw a photo of Converse’s new version of their classic Chuck Taylor All-Stars and wondered what the big deal is. “So they changed the eyelet color,” you say. “What’s the difference?” To appease people like you, Converse virtually exploded one of their new shoes so you can see what’s inside.

  Since we routinely call out bad ads, here we’re calling out a good one for once. It would be interesting to see this YouTube spot aired as a TV commercial: for once, a shoe ad that isn’t about branding or lifestyle or the athlete it’s named after, but just what’s inside the shoe.

  (via Adweek)

  
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by Laura Northrup via Consumerist

uN.J. Police Officer Smashes Window To Save Child Trapped Inside Hot Minivanr

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  (via NBC News)

  If we’re going to hear stories of children being left in hot cars, we’re at least glad to report on those that end well. That includes the report of a New Jersey sheriff’s officer who bashed open a minivan window to free a child who was locked inside it as it sat parked at a Costco supermarket.

  Witnesses said the crying two-year-old was drenched in sweat when a Bergen County police officer broke open one of the van’s windows, reports NBC News (warning: link has video that autoplays).

  Passersby worried about the girl in the van parked in Costco parking late had gathered on the scene, with at least two people attempting to push down a window that had been cracked open a few inches. In a video taped during the rescue, you can hear the child crying inside the car.

  “I’m telling the girl, ‘Don’t cry, we’re gonna get you out,'” one of the men who tried to get into the van told NBC News. “She was drenched in sweat and crying constantly.”

  Bystanders wondered if the parents were shopping, expressing disbelief that they would’ve left the toddler behind.

  Moments after an officer carries the small girl in her arms away from the van, with her hair matted to her forehead with sweat, the toddler’s mother shows up with a shopping cart and another child.

  “You left her in the car!” the officer holding the crying girl says. The mother apologizes, but the officer replies, “No ‘Sorry!’ She could have died!”

  The child’s mother was arrested for child endangerment and released with a desk ticket. The little girl was taken to a local hospital and then turned over to her father, according to the sheriff’s office.

  Though it’s unclear how long the girl was inside the van, temperatures can rise dangerously high in a matter of minutes. Remember: Leaving a child in a hot car for any length of time is unsafe, so please, please do not do it.

  WATCH: Sweat-Soaked, Wailing Toddler Rescued from Hot Minivan in Costco Parking Lot [NBC News]

  
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by Mary Beth Quirk via Consumerist

uTwo For-Profit Schools Must Pay Students $2.3M Over Unfair Practicesr

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  (MeneerDijk)

  Hundreds of former students at Kaplan Career Institute and Lincoln Technical Institute in Massachusetts will receive redress from the for-profit colleges after the schools settled charges they engaged in unfair practices with the state’s Attorney General’s office.

  The Boston Globe reports that Kaplan Higher Education LLC and Lincoln Educational Services Inc. have agreed to pay millions of dollars to students in order to resolve claims the companies used unfair recruiting tactics and inflated job placement numbers to lure students into enrolling at the colleges.

  “We allege these for-profit schools lured hopeful students into enrolling in their vocational programs by promising certain careers, but only left them with substantial debt,” Attorney General Maura Healey said. “Students trying to better their lives through education are instead being left financially ruined. These settlements will provide the relief these students deserve and prevent deceptive practices that put taxpayer dollars at risk.”

  The settlements are the result of an Attorney General’s Office investigation that looked at dozens of schools operated by the companies and found, among other things, that the schools falsely reported a 70% job placement rates for graduates.

  According to the AG’s office, Kaplan Higher Education, which owned the now-shuttered Kaplan Career Institute schools in Massachusetts, used job listings that were publicly available resources and did not offer any independent services or programs for its students’ job searches.

  The company will pay eligible graduates of its medical vocational programs a total of $1.375 million. The Globe reports that the office first opened its investigation into the Kenmore Square school four years ago.

  A spokesperson for Kaplan tells the Globe that the school “emphatically maintains that its actions were compliant and in the best interests of students, who were well-served by the institution.”

  The company says they agreed to the settlement because of litigation costs, and was not found to have engaged in any wrongdoing.

  As for Lincoln Technical Institute, the school’s parent company will pay eligible graduates of its criminal justice program at its Somerville and Lowell campuses $850,000 and will forgive $165,00 worth of private student loans the students took out.

  The AG’s office reports that its investigation into the program found that students were unable to find work in law enforcement or private security after graduation.

  The school was also found to include unrelated jobs, such as general retail positions, in its placement data, the Globe reports.

  According to the AG’s investigation, the school allegedly told recruiters to pressure prospective students to attend the school by establishing unhappiness, creating urgency and to “bring out the pain.” They were also allegedly told to contact students at least seven times within the first three days to convince them to enroll.

  In a statement to the Globe, Lincoln Educational Services says the investigation into the school started in 2008, at a time when employment opportunities were limited for all students.

  The company contends that for-profit schools are held to higher standards than other traditional universities, despite their differing student bodies.

  “Full disclosure and transparency require a level playing field,” the statement said. “We look forward to the day that all post-secondary institutions … are held to the same standards.”

  Two for-profit colleges settle lawsuit with attorney general for $2.3 million [The Boston Globe]

  
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by Ashlee Kieler via Consumerist