DES MOINES. Attorney General Tom Miller said today that Iowa and other states are taking legal action against houseware manufacturer Salton, Inc., alleging antitrust violations in Salton's marketing of its popular line of "George Foreman contact grills."
"We are filing a petition today alleging that Salton coerced independent retailers into fixing the price for the grills and excluding competitors' products," Miller said. "We allege this prevented consumers from being able to buy the popular Salton grills at lower-prices, reduced consumer choice, and illegally hindered competitors."
Miller said Salton has agreed to settle the suit by paying damages and agreeing to a court order prohibiting the company from engaging in similar anti-competitive conduct in the future. The company will be ordered to pay $8 million in damages, if the settlement is approved by the court. The states do not allege any violations on the part of George Foreman himself.
Iowa and 43 other states plus Puerto Rico and the District of Columbia jointly filed the antitrust lawsuit today in Federal District Court in New York City. Formal settlement documents are scheduled to be presented to the court in a few weeks.
Salton's line of George Foreman™ contact grills are popular grills that cook food on both sides at once, much like a waffle iron, and drain off grease. The suit alleged that Salton established an illegal "minimum price policy." When retailers sold at a discount or stocked a competitor's product, Salton suspended the retailer until it fell into line with Salton's policies. "Salton thereby unlawfully fixed prices at which retailers resold the George Foreman grills," the petition said, noting that contact grills have rapidly become one of the most sought-after kitchen appliances in the U.S.
"It is illegal for wholesalers or manufacturers to prohibit independent retailers from setting their own prices or selling similar products made by others," Miller said. The violation is known as "resale price maintenance."
"Resale price maintenance is unfair to retailers, unfair to competitors, and unfair to consumers," Miller said.
Miller noted that states have taken cooperative action in recent years in other cases of illegal resale price maintenance. "We have tackled violations in areas ranging from farm chemical sales to compact disks and women's shoes," Miller said.
"Consumers and other businesses deserve fair competition without powerful manufacturers throwing their weight around," he said.
The settlement, which will be proposed to the court and must be approved by the court, includes the injunction against any future violations, payment of $8 million in damages, and payment of $200,000 for investigative expenses and notice costs. The damage amount is subject to adjustment depending on the number of states signing on to the settlement. One guesstimate is that Iowa may receive about one percent of the settlement, proportional to population, or about $80,000.
Because it is very difficult and costly to identify the many individual consumers and return funds to them, the settlement agreement provides that restitution funds be distributed to charitable entities and/or government agencies for initiatives to improve health care and nutrition. Details about distribution will be determined after the settlement is approved by the court and Salton completes its payments.
Further information on the settlement, including important documents, will be posted on the website of the National Association of Attorneys General (www.naag.org) as it becomes available. Individuals interested in the settlement may check the site for further details.
States and jurisdictions that filed the lawsuit are AK, AZ, AR, CA, CO, CT, DE, FL, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MS, MT, NE, NV, NH, NJ, NY, NC, ND, OH, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, plus DC, PR. New York and Illinois led this multi-state effort.
The principal place of business for Salton, Inc., is Mt. Prospect, Illinois.
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