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Terry Goddard Announces Tobacco Settlement Giving State $790,000

(Phoenix, Ariz. – Dec. 22, 2006) Attorney General Terry Goddard today announced asettlement with Scandinavian Tobacco Co. and a subsidiary cigarette manufacturer, Houseof Prince, that resolves a dispute over enforcement of the 1998 Master SettlementAgreement (MSA). Arizona will receive more than $790,000 of the $53.6 million nationwidesettlement.

“This settlement preserves the MSA’s integrity and resolves a long-standing dispute withthese companies,” Goddard said. “The MSA is primarily a public health agreement. Asadvocates for the public interest, we believe it is important to enforce all provisions of theMSA to help reduce tobacco use and protect consumers from its deadly consequences.”

The MSA requires tobacco manufacturers that signed the agreement to make annualpayments to the states, in part to compensate for billions of dollars in health care costsassociated with treating tobacco-related diseases under state Medicaid programs. House of Prince, which is Denmark’s only cigarette manufacturer, is a Participating Manufacturerunder the MSA.

The settlement resolved a three-year court dispute over whether cigarettes manufacturedby Scandinavian Tobacco and sold in the United States from 1999-2003 were subject to theMSA’s payment requirements and other obligations. No cigarettes manufactured byScandinavian Tobacco have been sold in the United States since 2003.

The State of California filed a lawsuit in 2003 to force House of Prince to make MSApayments for Scandinavian Tobacco’s cigarettes. After California won preliminary legalrulings, House of Prince entered into settlement discussions that produced this agreement.

In addition to its payment provisions, the MSA created a broad array of restrictions on theadvertising, marketing and promotion of cigarettes. For example, it prohibits the targeting ofyouth in cigarette advertising. It also restricts outdoor advertising of cigarettes, theadvertising of cigarettes in public transit facilities and the use of cigarette brand names onmerchandise.