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Post date: August 10 2004

Department Store Chains And Tableware Makers Settle Major Antitrust Case

Attorney General Spitzer today announced settlements with two leading department store chains and two prominent manufacturers of tableware to resolve allegations that the companies conspired to limit distribution of products sold to consumers.

Under the terms of the settlements, Federated Department Stores, May Department Stores, Lenox, Inc., and Waterford Wedgwood, U.S.A. will pay $2.9 million in civil penalties to the State of New York.

The companies were alleged to have conspired to restrict competition in the sale of Lenox and Waterford products from a national retailer, Bed, Bath & Beyond.

"Companies are not allowed to enter agreements that prevent competitors from offering choices to consumers," Spitzer said. "My office will continue aggressively to pursue unlawful conduct that denies consumers the benefits of greater choice and lower prices, brought about by vigorous competition."

Spitzer's office uncovered evidence that the department store chains engineered a scheme to prevent Bed, Bath & Beyond from expanding into their lucrative tableware market.

In 2001, Bed, Bath & Beyond planned to introduce Lenox and Waterford products as "anchors" for the company's new tableware department, beginning with a test store roll-out in Elmsford, New York and in several other locations across the country. The investigation revealed that Federated and May pressured Lenox and Waterford to pull out of the Bed, Bath & Beyond roll-out. As a result, Bed, Bath & Beyond was unable to offer to consumers tableware supplied by Lenox and Waterford, as it had planned.

The effect of the unlawful arrangement to boycott Bed, Bath & Beyond was to eliminate and suppress competition in the sale of products to consumers in New York and elsewhere. Under the Donnelly Act, the state's antitrust law, civil penalties of up to $1 million may be imposed against corporations, and up to $100,000 against individuals, for anti-competitive activity.

Under the settlement, Federated will pay civil penalties of $900,000 and May will pay $800,000. The manufacturers, Lenox, Inc. and Waterford will pay $700,000 and $500,000, respectively. In addition to the civil monetary penalties, the companies have agreed to prospective relief that will prevent this situation from re-occurring.

Federated owns and operates more than 450 department stores throughout the United States, including their flagship stores, Bloomingdale's and Macy's, located in New York City. May owns and operates more than 430 department stores, including their flagship store Lord & Taylor, located in New York City, and has an additional 680 stores in its bridal group.

Lenox is one of the nation's oldest manufacturers of china and is particularly well-known for its upscale china. Waterford, one of the nation's leading tableware companies, specializes in crystal. Although Lenox and Waterford have individual product areas of strength, the two compete across a range of tableware generally.

The investigation--during which over thirty five witnesses testified--was conducted by Assistant Attorneys General Gary P. Weinstein, Peter D. Bernstein, and Linda J. Gargiulo of the Attorney General's Antitrust Bureau, under the supervision of Bureau Chief Jay L. Himes.


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