Master Settlement Agreement
After many years of intense national debate, the major issues regarding cigarette marketing and underage smoking have been comprehensively addressed through a Master Settlement Agreement (MSA) signed Nov. 23, 1998, by the major U.S. tobacco companies and 46 states and a number of U.S. territories. The provisions of that settlement were similar to those in individual settlements previously reached with the other four states (Florida, Minnesota, Mississippi and Texas).
The MSA prohibits taking “… any action, directly or indirectly, to target Youth … in the advertising, promotion or marketing of Tobacco Products, or … any action the primary purpose of which is to initiate, maintain or increase the incidence of Youth smoking …. ”
In addition, the MSA profoundly and permanently changed the way R.J. Reynolds and other cigarette manufacturers can market, advertise and promote our cigarette brands and our industry. It mandates total bans on certain activities and new, severe restrictions on many others.
For example, it specifically bans:
- The use of cartoon images in advertising, promoting, packaging or labeling of cigarettes;
- Billboards, stadium signs, transit signs and other outdoor advertising which advertises tobacco products;
- Tobacco brand-logoed merchandise (such as caps and T-shirts);
- Free-product sampling anywhere except for a facility or enclosed area where the operator ensures that no minors are present;
- Payments for use of tobacco products in movies, TV programs, live recorded performances, videos or video games;
- Use of non-tobacco brand names on tobacco products;
- Licensing of third parties to use or advertise any cigarette brand name in a manner that would constitute a violation of the MSA if done by the participating manufacturer;
- Agreements that prohibit a third party from selling, purchasing or displaying advertising discouraging the use of cigarettes or exposure to second hand smoke; and,
- The use of a cigarette brand name as part of the name of a stadium or arena.
The MSA limits tobacco sponsorships to one per year and prohibits:
- Brand-name sponsorship of events with a significant youth audience;
- Sponsorship of events where the paid participants or contestants are youth;
- Sponsorship of concerts (unless events are age-restricted); and,
- Sponsorship of athletic events between opposing teams in any football, baseball, soccer or hockey league.
With respect to any brand-name sponsorship allowed by the MSA:
- Advertising of the brand-name sponsorship event cannot advertise any cigarette; and,
- No participating manufacturer may refer to a brand-name sponsorship event or to a celebrity or other person in such an event in its advertising of cigarettes.
The MSA requires that:
- Tobacco-industry documents be publicly available through a website paid for by the companies; and,
- Tobacco companies disclose payments to lobbyists and other major donations.
The MSA disbanded the Tobacco Institute, the Council for Tobacco Research and the Council for Indoor Air Research, and provides for regulation and oversight of any new trade organizations. In addition, the MSA restricts participating manufacturers from:
- Supporting diversion of MSA proceeds to any program that is neither tobacco related nor health related;
- Opposing legislation prohibiting the sale of cigarettes in packages less than 20; and,
- Opposing the passage of certain kinds of state and local legislation relating primarily to youth access to tobacco.
Over a 25-year period, the states will receive up to $246 billion from tobacco companies through the MSA and four other individual state settlements that can be used to support anti-smoking efforts. Future annual payments, based upon inflation and cigarette sales, will continue in perpetuity. The MSA provides industry funding specifically earmarked for anti-youth-smoking education programs and a national health research foundation. As part of the $246 billion MSA, the participating tobacco companies agreed to:
- Pay approximately $1.45 billion to the states over five years for the creation and execution of an anti-smoking advertising and public education campaign designed to reduce and prevent teen smoking; and,
- Make contributions of $250 million over 10 years to a research foundation, which will be dedicated to the study of programs to reduce youth smoking, as well as the study of and educational programs to prevent tobacco-related illnesses.
Compliance with the marketing rules and restrictions, as well as all other aspects of the MSA and the four other individual state settlements, is enforced by a court in each state and by each state’s attorney general. Failure to comply with these rules and restrictions can result in broad, court-ordered injunctions and civil penalties. For more information, review the full text of the Master Settlement Agreement.