Walgreens has agreed to settle a class-action antitrust lawsuit centered on search ad campaigns, according to court papers filed Tuesday.
Financial details have not yet been disclosed.
The settlement will resolve allegations that Walgreens (along with Vision Direct, now owned by Walgreens) violated antitrust law by entering into agreements with 1-800 Contacts to restrict search advertising.
Walgreens and 13 other contact lens retailers allegedly entered into the agreements between 2004 and 2013. The companies -- some of which have since consolidated -- did so in response to legal threats by 1-800 Contacts, which claimed its trademark was infringed when rivals used its brand name to trigger search ads.
The Federal Trade Commission ruled 4-1 last year that the pacts to restrict search ads were illegal. Chairman Joe Simons said in a written opinion that the agreements may have deprived consumers of the ability to compare brands.
“When information is withheld from consumers, it frustrates their ability to compare the prices and offerings of competitors,” Simons wrote. “This is as true today, when consumers search for goods online, as it was when people shopped open-air markets for vegetables every evening.”
1-800 Contacts is now appealing that ruling to the 2nd Circuit. The contact retailer contends its deals with rivals were valid, and that it shouldn't be subject to an antitrust prosecution for settling trademark claims.
In August of 2016, shortly after the FTC initiated proceedings against 1-800 Contacts, consumers brought a class-action antitrust lawsuit against the retailer, as well as the rivals that agreed to restrict search ads in response to legal threats.
If Walgreen's settlement is finalized, all of those rivals will have resolved the allegations. National Vision agreed to a $7 million settlement in 2017, while Luxxotica recently agreed to a $5.9 million settlement.
1-800 Contacts still faces class-action antitrust claims brought by consumers. The matter is pending before U.S. District Court Judge Tena Campbell in the Central District of Utah.
Last year, Campbell rejected 1-800 Contacts' arguments that the lawsuit should be dismissed before trial. The company said the allegations in the class-action complaint, even if true, wouldn't show how the settlement agreements led to price increases.
Campbell ruled that the consumers didn't need to provide an expert economic analysis in order to move forward with their claims.
The contact lens seller also unsuccessfully argued that any claims stemming from a settlement agreement occurring before August of 2012 were barred by a four-year statute of limitations. Campbell also rejected that argument, noting that the search pacts were subject to non-disclosure agreements, which could suggest the companies were attempting to conceal wrongdoing. If so, the typical statute of limitations would not apply, she said.
Federal courts have not definitively resolved questions surrounding the use of trademarks in search advertising. Google and Yahoo 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.