Estee Lauder’s Price-Fixing Suit Settled

Cosmetics maker Estee Lauder Cos. Inc. said a settlement has been reached in a California class-action lawsuit that alleged high-end cosmetics makers and department stores conspired to fix prices. Under the settlement, first disclosed in an Estee Lauder filing with the Securities and Exchange Commission, the defendants will give consumers $175 million in free products, an Estee Lauder spokeswoman said. The defendants will also pay plaintiff attorneys’ fees of up to $24 million.

New York-based Estee Lauder said its portion of the settlement includes both cash and noncash items, and will not have a material adverse effect on the company’s financial condition. Estee Lauder said it did not admit any wrongdoing and entered into the settlement solely to avoid protracted, costly litigation. The complaint includes more than 20 defendants. Federated Department Stores, parent of Macy’s and Bloomingdale’s stores, said it was party to the settlement but didn’t expect it to have a material impact on earnings.

The lawsuit was originally filed in California Superior Court in Marin County in 1998. In connection with the settlement, the case will be refiled in U.S. District Court in the Northern District of California on behalf of a nationwide class of consumers of so-called “prestige” cosmetics.