Two companies settle antitrust lawsuit involving Utah-based 1-800 Contacts

Two contact lens sellers have agreed to settle an antitrust lawsuit against them for $7 million and to cooperate against Utah-based 1-800 Contacts and other remaining defendants.

Arlington Contact Lens Service Inc. and National Vision Inc. reached the settlement in an antitrust lawsuit filed in federal court in Salt Lake City. The Draper company and three others are still facing allegations of anticompetitive conduct that harmed consumers.

A complaint filed in May, which consolidated claims in eight lawsuits, alleges that beginning in 2004, 1-800 Contacts entered into agreements that restricted other lens sellers from bidding against each other at keyword search advertising auctions, and required them to use certain “negative keywords,” which block advertisements from showing up in response to certain search terms.

The lawsuit alleges violations of the Sherman Antitrust Act, which prohibits companies from entering into agreements that restrict marketplace competition.The companies that settled agreed to produce evidence that could be used against the remaining defendants, according to a motion filed Monday.

Scott Gant, an attorney based in Washington, D.C., who is representing consumers, said the $7 million settlement is likely substantially less than it could have been if the two companies had gone to trial and lost.

“Damages in these cases are typically tens of millions and hundreds of millions of dollars,” he said, adding that under antitrust laws, such damages are automatically tripled.

As part of the motion to approve the settlement, Peter Clarkson, founder and CEO of Arlington Contact Lens Service, said in a declaration that his company only signed an agreement after 1-800 Contacts “threatened expensive and protracted trademark litigation related to keyword advertising” and that the company felt coerced into signing.

The Utah company did not immediately respond to a request Tuesday afternoon for a comment. But it has a pending motion to dismiss the lawsuit, in which it argues that most of the allegations were filed after the four-year statue of limitations deadline had passed.

The lawsuits sprung from an administrative complaint filed against 1-800 Contacts by the Federal Trade Commission in 2016, based on the same types of allegations in the lawsuits. That action remains pending before an administrative law judge following a trial.