Contact Lens Seller Agrees To $7 Million Settlement Over Search Ads

Contact lens retailer National Vision will pay $7 million to settle antitrust allegations centered on search ad campaigns, court papers reveal.

The company will also cooperate with lawyers for consumers who are suing other contact lens companies for allegedly violating antitrust laws by agreeing to restrict the keywords they purchased to trigger pay-per-click ads on search engines. The monetary details of the settlement were disclosed this week in papers filed with U.S. District Court Judge Tena Campbell in the Central District of Utah.

National Vision, Arlington Contact Lens Service (now owned by National Vision), and a dozen other contact lens retailers allegedly entered into the keyword agreements in response to legal threats by 1-800 Contacts -- which faces both a class-action antitrust lawsuit by consumers and prosecution by the Federal Trade Commission.

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Between 2004 and 2013, 1-800 Contacts either sued or threatened to sue at least 15 competitors for allegedly infringing trademark by purchasing the keyword "1-800Contacts" as a trigger for pay-per-click search ads, according to the FTC. Only Lens.com fought the lawsuit, which ended in a ruling largely in Lens.com's favor.

The FTC says the agreements to restrict keyword advertising harmed search engines by distorting their ad auctions and reducing the quality of the search results. The agency also says the agreements resulted in higher prices for consumers, arguing that 1-800 Contacts charges more than other online contact lens retailers, but that consumers stop searching and accept 1-800 Contacts' price when that company is the only advertiser in the search results.

The FTC action against 1-800 Contacts is still pending before an administrative law judge.

The class-action centers on the same allegations as the FTC's complaint, but the consumers also sued other retailers, including National Vision, Vision Direct, Walgreens and Luxottica. Companies other than National Vision (and Arlington Contact Lens Service) are fighting the allegations.

The settlement agreement with National Vision calls for the company to provide a host of material to the consumers' lawyers, including all documents that were given to the FTC.

"This cooperation will provide important evidence in support of plaintiffs’ claims," class counsel argues in a motion seeking preliminary approval of the settlement. " Courts have recognized that such cooperation -- particularly at this stage in a complex matter -- confers substantial and meaningful benefits to the class and weighs in favor of approval."

1-800 Contacts' general counsel Cindy Williams previously said the suits against the company "have no merit whatsoever."

Federal courts haven't definitively resolved questions surrounding the use of trademarks in search advertising. Google and Yahoo have prevailed in several lawsuits alleging that they wrongly allowed a trademarked term to trigger pay-per-click ads, as have several advertisers. But judges have allowed other lawsuits over the question to proceed.

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