WINSTON-SALEM, N.C., June 19 (Reuters) - A U.S. appeals court has upheld that the landmark 1998 Master Settlement Agreement between major tobacco companies and most U.S. states did not violate antitrust laws, R.J. Reynolds said on Tuesday.

The Third U.S. Circuit Court of Appeals in Pennsylvania rejected antitrust claims brought by a cigarette wholesaler, who claimed that the $206 billion agreement restrained trade, R.J. Reynolds Tobacco Co., the cigarette-making unit of R.J. Reynolds Tobacco Holdings Inc., said in a statement. The Master Settlement Agreement, or MSA, called for the tobacco companies to pay $206 billion to 46 U.S. states over 25 years and restrict advertising and marketing. The plaintiff sought monetary damages and a permanent injunction of the MSA. A spokeswoman for R.J. Reynolds could not immediately confirm how much money the plaintiffs were seeking. According to the company, wholesaler A.D. Bedell brought the class action on its behalf and on the behalf of 900 other wholesalers against R.J. Reynolds, Philip Morris Cos Inc. and Brown & Williamson Tobacco Corp., a unit of British American Tobacco Plc. A fourth cigarette maker, Loews Corp. unit Lorillard Tobacco Co., and smokeless tobacco maker UST Inc. were also part of the MSA. ``The court held that because the MSA resulted from the settlement of litigation with state governments, it was therefore protected from antitrust attack,'' Darryl Marsch, senior counsel for R.J. Reynolds Tobacco Co., said in a statement. The case was on appeal from the U.S. District Court of the Western District of Pennsylvania, the R.J. Reynolds spokeswoman said. R.J. Reynolds said the rejection of the antitrust claims is consistent with the decisions of the four other federal courts that have considered antitrust attacks on the MSA. ``These successive, consistent decisions make it clear that these suits have no merit,'' Marsch said. Earlier on Tuesday, Justice Department officials said that U.S. Attorney General John Ashcroft has decided to try to settle the federal government's lawsuit against the tobacco industry. The lawsuit was brought in 1999 with the strong support of then-President Clinton. But some Republicans in Congress have sought to cut off funding for the litigation.

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