FTC judge rules against 1-800 Contacts on antitrust charges

WASHINGTON (Reuters) - A Federal Trade Commission judge has ruled against the online seller 1-800 Contacts, which the agency accused of hammering out deals with rivals that made it harder for consumers to comparison shop, the agency said on Monday.

The FTC accused the company of reaching agreements with 14 other online contact lens retailers which required the companies to refrain from advertising to consumers who had searched online for 1-800 Contacts. 1-800 Contacts, in exchange, agreed to not advertise to people who searched for the rivals’ names.

The agreements hampered price-conscious consumers from finding rival contact lens sellers and checking their costs, the ruling said.

“The evidence in this case demonstrates that the advertising restraints imposed by the challenged agreements cause harm to consumers and competition in the market for the sale of contact lenses online,” wrote Michael Chappell, the FTC administrative law judge who heard the case.

The decision was reached on Oct. 20 but withheld until Monday in order to make redactions. Chappell ordered 1-800 Contacts to end the practice of reaching agreements that limit the advertisements of rivals.

1-800 Contacts General Counsel Cindy Williams said she was disappointed in the initial ruling and the company would appeal to the commission.

“Nothing in the initial ruling, however, changes our view that the settlement agreements are lawful and procompetitive and that the company will ultimately prevail once the administrative process runs its course,” she said.

The deals were reached with Vision Direct, which is owned by Walgreens Boots Alliance Inc; Luxottica Group SpA, which owns LensCrafters and Pearle Vision; and National Vision, among others, according to Chappell’s initial decision.

AEA Investors LP is a major owner of 1-800 Contacts.

The online retailer is the world’s largest contact lens store, according to its website. It also has about 50 percent of the market for online sales of contact lenses, according to the FTC complaint filed in the case.

Reporting by Diane Bartz; Editing by Andrew Hay