he Federal Trade Commission (FTC) has announced a lawsuit against 1-800 Contacts, charging the online retailer of contact lenses with allegations of unlawfully orchestrating and maintaining a web of anticompetitive agreements with rival companies.
The FTC alleges 1-800 Contacts entered into bidding agreements with at least 14 competing companies and networks.
These bidding agreements purportedly restrain price competition in Internet search auctions. Additionally, they restrict truthful and non-misleading advertising to consumers, according to the FTC.
This case stems from 1-800 Contacts’ alleged decision to threaten competing companies with lawsuits after learning that, when consumers searched online for “1-800 Contacts,” they would then see advertisements for both 1-800 Contacts and a competing seller
. In almost all cases, these competing companies agreed to sign the purportedly anti-competitive agreements. These agreements usually forced the company to use negative keywords designed to stop search engines from displaying their website when those search terms are used.
The FTC argues these agreements harm consumers by restraining competition and reducing the number of relevant advertisements on the Internet.
The FTC voted 3-0 to issue the administrative complaint.