Filed: June 25, 2003

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 02-1595

(CA-99-185-1, CA-99-207-1, CA-99-232-1)

R. J. Reynolds Tobacco Co., et al.,

Plaintiffs - Appellants,

versus

Philip Morris USA, Inc.,

Defendant - Appellee.

O R D E R

The court amends its opinion filed June 24, 2003, as follows:

On page 2, section 1, line 1 -- counsel’s name is corrected to

read “Ronald Stuart Rolfe.”

For the Court - By Direction

/s/ Patricia S. Connor 

 Clerk 
UNPUBLISHED 

UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 

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RJ REYNOLDS TOBACCO COMPANY;

LORILLARD TOBACCO COMPANY;

BROWN & WILLIAMSON TOBACCO

CORPORATION, No. 02-1595 

 Plaintiffs-Appellants,

 v.

PHILIP MORRIS USA, INCORPORATED,

 Defendant-Appellee.

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Appeal from the United States District Court 

for the Middle District of North Carolina, at Durham. 

Frank W. Bullock, Jr., District Judge. 

(CA-99-185-1, CA-99-207-1, CA-99-232-1) 

Argued: April 2, 2003 

Decided: June 24, 2003 

Before WIDENER and MICHAEL, Circuit Judges, 

and Richard L. WILLIAMS, Senior United States District Judge for

the Eastern District of Virginia, sitting by designation. 

____________________________________________________________

Affirmed by unpublished per curiam opinion.

____________________________________________________________

COUNSEL 

ARGUED: Richard Melvyn Cooper, WILLIAMS & CONNOLLY,

L.L.P., Washington, D.C.; James Thomas Williams, Jr., BROOKS,

PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P.,
Greensboro, North Carolina; Ronald Stuart Rolfe, CRAVATH,

SWAINE & MOORE, New York, New York, for Appellants. David

Boies, BOIES, SCHILLER & FLEXNER, L.L.P., Washington, D.C.,

for Appellee. ON BRIEF: Steven R. Kuney, WILLIAMS & CONNOLLY, L.L.P., Washington, D.C.; Jennifer K. Van Zant, BROOKS,

PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P.,

Greensboro, North Carolina; David Greenwald, CRAVATH,

SWAINE & MOORE, New York, New York; Norwood Robinson,

Michael L. Robinson, Kevin L. Miller, ROBINSON & LAWING,

L.L.P., Winston-Salem, North Carolina; Irving Scher, August T. Horvath, WEIL, GOTSHAL & MANGES, L.L.P., New York, New York;

Randolph S. Sherman, Mark S. Popofsky, KAYE SCHOLER, L.L.P.,

New York, New York; Daniel R. Taylor, Mark A. Stafford, KILPATRICK STOCKTON, L.L.P., Winston-Salem, North Carolina, for

Appellants. Jonathan D. Schiller, Robert Silver, Stuart Singer,

Michael A. Brille, Carl Nichols, BOIES, SCHILLER & FLEXNER,

L.L.P., Washington, D.C.; Larry B. Sitton, Gregory G. Holland,

SMITH MOORE, L.L.P., Greensboro, North Carolina; Jerome I.

Chapman, ARNOLD & PORTER, Washington, D.C., for Appellee.

____________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

____________________________________________________________

OPINION 

PER CURIAM:

 The plaintiffs, R.J. Reynolds Tobacco Company, Lorillard Tobacco

Company, and Brown & Williamson Tobacco Corporation, sued

Philip Morris Incorporated in U.S. District Court for the Middle District of North Carolina for alleged violations of sections 1 and 2 of the

Sherman Act, 15 U.S.C. §§ 1 and 2; North Carolina General Statutes

§§ 75-1, 75-1.1, 75-2, and 75-2.1; and North Carolina common law

prohibiting unfair competition. The plaintiffs, who are cigarette manufacturers competing with Philip Morris, base their case on a retail

marketing program called "Retail Leaders" that Philip Morris started

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in 1998. Under Retail Leaders, Philip Morris provides discounts to

retailers on its popular Marlboro brand in exchange for the most

advantageous display and signage space in retail establishments. This

arrangement, the plaintiffs say, restricts the flow of information to

consumers, limits the plaintiffs' abilities to promote their products,

insulates Philip Morris from effective competition, and results in

higher cigarette prices.

 The district court, after considering an exhaustive record that

includes extensive data and information about sales, trends, and conditions in the cigarette market for over two decades, granted (in a

thorough opinion) Philip Morris's motion for summary judgment as

to all of the plaintiffs' claims. See R.J. Reynolds Tobacco Co. v.

Philip Morris Inc., 199 F. Supp. 2d 362 (M.D.N.C. 2002). The district

court concluded that in the period "since [Philip Morris] implemented

its challenged Retail Leaders program [in 1998], the cigarette market

in the United States remains highly competitive, as evidenced by the

general stability of market shares in the light of long-term trends, the

profitability of the Plaintiffs, and the ongoing entry and increasing

market share of new manufacturers." Id. at 397. We affirm the grant

of summary judgment to Philip Morris, and we do so on the reasoning

of the district court with one exception. With respect to the plaintiffs'

claim under section 1 of the Sherman Act, we decline to conclude, as

did the district court, that Philip Morris lacks market power. We

agree, however, with the rest of the district court's analysis of the section 1 claim. Assuming for the sake of argument that Philip Morris

has market power, the plaintiffs did not show that Retail Leaders substantially forecloses competition in the relevant market. See id. at

386-93. Accordingly, as the district court ultimately determined, the

plaintiffs' section 1 claim fails. On the remaining issues, we affirm on

the reasoning of the district court without any modification.

 The judgment of the district court is affirmed.

AFFIRMED 

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