A number of major cosmetics companies and retailers have settled a lawsuit alleging that they conspired to fix and maintain retail prices. As part of the settlement, the companies have agreed to give away $175 million worth of products.
Defendants in the class-action lawsuit, filed in Marin County California, include Estée Lauder, L’Oreal, Chanel, Christian Dior, Neiman Marcus, Nordstrom and Saks among others.
Sally Susman, a spokesperson for Estée Lauder, said the company denies any wrongdoing and settled to avoid a protracted and costly legal battle.
“The cosmetics industry is one of the most competitive businesses in the world, but we, along with all the other defendants in the case, decided it was in our best interest and our customers best interest to settle the case and move forward with our business,” Susman said.
The company plans to take a pretax charge of $22 million in the quarter ended June 30 to account for the settlement.
The product giveaway would involve specially manufactured products and take place in about a year. Many of the details have yet to be ironed out including deciding who would be eligible for the free products and how to avoid a “stampede” by consumers looking for free products.
“We will seek to do it in a way that is fair and easy to understand,” Susman said.
She said the give away will be advertised in well-read consumer publications, detailed on defendants Web sites, and that an 800 number will be set up to handles inquiries.
A federal judge must approve the settlement. The lawsuit is being refiled in the U.S. District Court for the Northern District of California on behalf of a nationwide class of consumers but the settlement is expected to be binding nationwide, a source close to the case said.
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