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Massive Cosmetic Giveaway Part of Anti-Trust Settlement

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New York, NYAt first blush it may seem a bit unorthodox, but a settlement reached a few years ago in a massive anti-trust class action lawsuit is not without precedent. Let's just say there's the potential for a lot of people sporting a whole new look for the New Year after a host of the country's major department store chains will begin handing out millions of dollars worth of free cosmetic products this coming January.

The freebie is worth about $175 million and could benefit millions of shoppers.

CosmeticsThe massive giveaway stems from a class action lawsuit filed in California in 2003 alleging that a collection of well-known department store chains were in collusion with the makers of several brands of cosmetics, in an effort to only sell the products at the manufacturer's suggested retail price. Discounts were never offered, and it was also alleged that special promotions were set up in such a way as to prevent any competition from any of the stores.

The chains named in the lawsuit, Saks Fifth Avenue and Bloomingdales among them, all denied any wrongdoing. However, critics make the point that a manufacture's suggested list price is just that—a suggestion. Retailers have always had the power, and the encouragement of the retail market to undertake discounts in an effort to foster healthy competition.

With all the players allegedly sticking to the same price the reality, critics say, amounted to anti-trust and price-fixing.

The settlement, such as it is, will be available to any and all consumers who purchased specific brands of make-up, moisturizers and fragrance products at the various locations of the stores named in the lawsuit between May 29th 1994 and July 16th 2003.

Macy's, Bloomingdale's, Filene's, Lord & Taylor, Neiman Marcus, Nordstrom, and Saks Fifth Avenue were among the stores named as defendants, along with well-known manufacturers such as Estée Lauder Cos. and L'Oréal USA, among others.

The products being given away starting in about six months is pretty high-end stuff: The product lines include popular fragrances such as CK One, CK Be, Eternity, Chanel No. 5, Black Pearls by Elizabeth Taylor, and Technique Pour Homme cologne, as well as skin and beauty products by M.A.C., Clinique, and Prescriptives.

What adds to the uniqueness of the settlement is the fact that affected consumers do not have to produce receipts (which would be an impossibility for most) or prove they had purchased the items in question beyond simply signing a waiver stating that they had, indeed purchased one, or more of the products within the time window specified.

A website is available for consumers to glean specifics as to when, how and where the distribution will take place (www.cosmeticssettlement.com).

When the settlement was reached a few years ago, it was published to alert consumers as to the status of the class action—but there has been little talk, or publicity surrounding the cosmetics giveaway, until now.

The settlement, as defined by product rather than currency, actually amounts to a bit of a break for the defendants, as it is often less-expensive to distribute product, than pay cash. That said, the defendants agreed to pay $24 million in attorney's fees, together with the entering of a court order that prohibits the various department stores and cosmetics companies from engaging in price-fixing schemes and certain market practices.

At the end of the day, it doesn't matter how you dress it up—price fixing is an unfair practice that violates the anti-trust statutes, and a little blush and mascara only covers the trail for a time—and once the cologne wears off, the stink remains.

However, for those at the receiving end of a few bucks' worth of free cosmetics in January it will be a happier New Year.

They're just getting their discounts, just a few years late…

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