FTC files complaint against 1-800 for colluding with rivals to hamper price comparison
09 Aug 2016
US antitrust regulator has filed a complaint against 1-800 Contacts yesterday, alleging that the online contact lens seller colluded with 14 rivals to make price comparison difficult for consumers.
According to the Federal Trade Commission's (FTC) administrative complaint, 1-800 Contacts had reached agreements with 14 other online contact lens retailers that they would not advertise to customers who had searched online for 1-800 Contacts.
On its part, 1-800 Contacts agreed to not advertise to customers who searched for its rivals, whose names were redacted from the complaint.
''1-800 Contacts has aggressively policed the bidding agreements, complaining to competitors when the company has suspected a violation, threatening further litigation, and demanding compliance,'' the complaint said.
The FTC action has not been filed in its district court but to its own administrative court.
"1-800 Contacts strongly disagrees with the Federal Trade Commission's contention that agreements designed to protect its trademark hinder competition," Cindy Williams, general counsel at 1-800-Contacts, told Ad Age in an emailed statement. "1-800 Contacts is confident in its legal position and will vigorously defend its intellectual property rights in response to the administrative complaint filed today by the FTC."
According to the FTC, the agreements cleared the field in some bidding and supressed prices in the process. "As 1-800-Contacts engineered this bid allocation scheme, certain auctions were reserved to 1-800-Contacts alone," it said in its complaint.
According to Kevin Lee, executive chairman of Didit, a full service agency, specialising in search, competitors sometimes struck agreements not to bid on each other's trademarks, Ad Age reported. "In this case, the FTC alleges that the agreements were designed to suppress bidding by colluding on bid prices," he said.
The FTC said in a statement that the alleged agreements "restrict truthful and non-misleading advertising to consumers, constituting an unfair method of competition in violation of federal law."
The government agency claimed 1-800-Contacts was in violation of the FTC Act.
