THE US Supreme Court has rejected a lawsuit brought by the Canadian government against R.J. Reynolds, which sought to recover US$1 billion in taxes and revenues allegedly lost through cigarette smuggling from 1991 to 1997.

Canada claimed R.J. Reynolds created an elaborate plan to flood the country's black market with smuggled cigarettes after Ottawa doubled Canadian tax in 1991. The court's refusal to admit a US anti-racketeering law-based suit was expected to undermine similar cases, such as that brought by the EU.

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