Consumer Hits 1-800 Contacts with Antitrust Class Action

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An antitrust class action has been filed in Pennsylvania against 1-800 Contacts, Inc. claiming the self-proclaimed “world’s largest contacts lens store” used anticompetitive, deceptive and fraudulent means to “suppress competition for, and artificially inflate the price of, online contact lenses.” The complaint outlines accusations that, as early as 2003, 1-800 Contacts entered into a series of clandestine, bilateral agreements with other online contact lens retailers. These agreements, the lawsuit claims, pertained to ad space sold by major search engines that can be bought through a computerized auction system, with winning bids receiving more favorable placements in users’ search result pages.

These bidding agreements manifested because, in or around 2004, 1-800 Contacts began suing its rivals over baseless trademark infringement claims. According to the plaintiff, “Through these bilateral agreements, 1-800 Contacts and its direct competitors affirmatively agreed to refrain from competing against one another in certain online search advertising auctions.” The defendant made deals with at least 14 other online contact lens retailers, the complaint claims. The lawsuits almost always settled quickly, with most of the other online contacts retailers allegedly being coerced into agreeing to not compete in online ad auctions. As described in the complaint, “rivals generally acquiesced to 1-800 Contacts demands in order to avoid prolonged and costly litigation.”

“As a result,” the plaintiff alleges, “consumers searching to purchase contact lenses online have less options presented to them,” which allowed the defendants to charge higher-than-usual prices.