In Price-Fixing Settlement, Retailers to Give Away $175M in Cosmetics

[WSJ_law_blog]

Fancy some Vera Wang Princess Body Polish? How about a bottle of Lovely Sarah Jessica Parker Shower Gel? Primordiale Skin Defence by Lancome?

Starting next week, reports BusinessWeek, several big retailers, including Macy’s and Nordstrom, will give away $175 million worth of free high-end cosmetics as part of a class-action settlement alleging that the stores planned to fix prices.

The offer is part of an agreement to settle a suit filed in 2003 in a California federal court that alleged the stores tried to limit sales and scale back on the amount of cosmetics in their inventory, keeping both prices and competition high. The department stores — which also include Bergdorf Goodman, Bergner’s, Bloomingdale’s, Boston Store, Carson Pirie Scott, Dillard’s, Gottschalks, Herberger’s, Neiman Marcus, Parisian, Saks Fifth Avenue, and Younkers — have denied any wrongdoing.

The products will be available starting Jan. 20. A class member will be eligible to receive one free cosmetics product from one of the manufacturer defendants from which he or she purchased department store cosmetics during the class period, May 29, 1994 through July 16, 2003. Click here for the list of giveaways.

LB’ers: In the past, these kind of ’settlements’ have raised questions over the value of class actions. After all, how many class members will actually redeem their award? As for the lawyers, are they paid with cosmetics, too? What say you?

It’s not just about how many consumers will redeem their rewards — though many no doubt will, in these less-than-flush times, take the opportunity to do so. It’s about deterring wrongful conduct and getting something meaningful back to consumers — not merely a dollars-off coupon, but something of more tangible value.

Maybe those providing anonymous comments here are not aware how unlawful collusion distorts markets and damages consumers. Maybe they’re making light of this case because they deem cosmetics to be a frivolous product. The product involved makes no difference; a serious violation of antitrust law likely occurred.

Let’s say the airlines colluded on limiting flights into one another’s routes so that they could keep seat capacity down and prices up. As a consumer, would you scoff at the opportunity to get a free ticket as compensation, or would you rather risk lengthy litigation and the possibility of airline bankruptcies and not getting anything?

These retailers used illegal collusion like collagen to plump up their profits. You can put lipstick on these pigs, but they’re still pigs.

Next time I am the “beneficiary” of a class action lawsuit where a 20% off coupon rather than cash back, I will hire another class-action attorney to sue the original attorneys for not acting in the best interest of their clients. I would think that if I get a nominal discount coupon for being “wronged” and they get millions for their services . . .

HSF — I doubt anyone disagrees with the concerns about collusion. The joke here is that (a) the lawyers got money, not perfume; (b) the consumers get perfume not necessarily of their choosing; (c) the companies are paying in products they selected presumably because they’re less expensive or no longer desirable.

If we really wanted to punish the companies for wrongdoing, then the lawyers would seek a cash payment, even if the cash goes to a fund for reconstructive surgery for crime victims or something.

How much are the attorneys getting?
Is $175 million an absolute amount that must be forfeited in cash above the redeemed amount, or a maximum (up to) amount? That’s so often the charade.

Last document I saw ran the legal fees for the various involved attorneys at $30 million. I saw the actual document as part of the scanned docket but I can't seem to locate the link again.

I'm obviously in the wrong line of work.

Me again... I adjusted my googling... and the news is that the settlement approves up to $24 million to be paid up and I did a gross rounding error (oops).

There's the link, some discourse, and some scanned legal docs.

Debbie Schlussel