A sweet deal in antitrust case
Free perfume, makeup offered under settlement
Millions of shoppers will be eligible to receive free perfume, cologne, and makeup from the region's biggest department stores in January. The products - including high-end brands such as Chanel, Calvin Klein, and Christian Dior - will be given away to settle claims that department stores and designer brands violated antitrust laws and conspired to fix prices.
The massive give-away is part of an agreement to settle a class-action filed in a California federal court in 2003. Under the terms of the deal, several major department stores will distribute $175 million in free products to consumers who purchased specific brands of makeup, moisturizers, and fragrance products at their stores between May 29, 1994 and July 16, 2003.
The stores named in the lawsuit include Macy's, Bloomingdale's, Filene's, Lord & Taylor, Neiman Marcus, Nordstrom, and Saks Fifth Avenue. Estée Lauder Cos., L'Oréal USA, and other cosmetics companies also were named as defendants. All of the department stores and other firms named in the suit denied any wrongdoing.
The product lines include popular fragrances such as CK One, CK Be, Eternity, Chanel No. 5, Black Pearls by Elizabeth Taylor, and Technique Pour Homme cologne, as well as skin and beauty products by M.A.C., Clinique, and Prescriptives. A complete list is at www.cosmeticssettlement.com. Visitors to the website can register to receive an e-mail alert informing them when the products will be given away. Consumers can also call 1-877-604-5776 and leave their name and mailing address to receive a notification card in the mail.
Those eligible will be able to receive up to $25 in free products on a first-come, first-served, basis from specified department stores. Customers won't need receipts, either - they will only be asked to sign a form stating that they purchased one or more of the products between the specified dates.
"The product will be distributed in January of 2009. I suggest you keep tuned into the website for future information," said Guido Saveri, a California attorney who represented the plaintiffs, in an e-mail to the Globe.
Jeffrey A. LeVee, an attorney from Jones Day, the law firm that represented Macy's Inc. in the case, confirmed that the product distribution will include stores in Massachusetts.
Julia Bentley, a spokeswoman for Saks Fifth Avenue, declined to comment. Representatives from Bloomingdale's and Lord & Taylor could not be reached for comment.
The lawsuit alleged that department stores and cosmetics companies conspired to sell products at the manufacturers' suggested price only - never at a discount. It also alleged that special promotions were coordinated in a way that ensured there would be no competition among stores.
In addition to the $175 million giveaway, the department stores and cosmetics companies agreed to pay up to $24 million in attorney fees, and enter a court order that prohibits them from engaging in price-fixing schemes and certain marketing practices.
The notion of distributing free merchandise to settle a class-action lawsuit is not a new phenomenon, according to William N. Berkowitz, an attorney who co-chairs the Antitrust and Trade Regulation Practice Group at Bingham McCutchen LLP. Berkowitz said offering free products can be a "good and creative way" to settle such legal action.
"It's a great way for plaintiffs' counsel and defense counsel to reach a middle ground," said Berkowitz.
In these cases, consumers receive something of value, and the companies can end up saving money, he said.
"Very often, the cost of providing the product is less than having to pay cash," said Berkowitz, who was not involved in this case.
After the settlement agreement was reached, a legal notice was published in several national magazines and newspapers in 2004. But the case hasn't received much publicity since then.
"Whether many people will actually come in for [the free products], that will be interesting to see," Berkowitz said.
Emily Sweeney can be reached at esweeney@globe.com. 