Reebok Agrees to Pay $9.5 Million to Settle Charges of Price Fixing : Retail: FTC trumpets proposed settlement as example of newly aggressive antitrust stance. Funds would go to states.

Reebok International and its Rockport subsidiary agreed Thursday to pay $9.5 million to settle charges that the world’s second-largest shoe company fixed prices and penalized retailers who discounted its shoes.

Most of the funds from the agreement with the Federal Trade Commission and the nation’s 50 attorneys general are earmarked for sprucing up public athletic facilities and providing athletic equipment to “deserving organizations.”

California will get the biggest share of the proposed settlement, about $919,000, which will be used to refurbish athletic facilities in urban areas.

“By conspiring to fix the prices of its products, Reebok violated our basic belief in fair play, and forced customers to pay millions of dollars more for their products,” New York Atty. Gen. Dennis C. Vacco said.

Vacco’s office took a lead role in investigating Reebok’s 1993 policy of requiring retailers to advertise and sell shoes at certain prices. Regulators charged that Reebok and Rockport conspired with retailers to set minimum retail prices and enforced those prices by refusing to supply dealers who violated the agreement.

The settlement is subject to a second FTC vote after a 60-day period to allow for public comment.

FTC officials trumpeted the proposed settlement as evidence of a more aggressive policy on price fixing. It is the fourth retail price fixing case brought by the FTC in the 1990s, following a decade when no such cases were filed. In 1993, federal and state officials cooperated in a price fixing case against Keds Corp., which paid $5.7 million.

“Unlike the antitrust policies pursued on the federal level in the ‘80s, which virtually abandoned price fixing, this is an example that FTC and the (Justice Department) antitrust division are committed to vigorous enforcement,” said William Baer, director of the FTC’s bureau of competition.

Reebok, which is based in Stoughton, Mass., denied that it violated any antitrust laws and contended that regulators “failed . . . to establish any evidence of wrongdoing by Reebok and Rockport.”

Reebok said it settled to avoid “the considerable expense of protracted litigation” and because it was able to target the funds “to the types of endeavors with which Reebok has been involved for many years.”

As part of the settlement, Reebok agreed not to violate antitrust law in the future and said it will notify retailers that they are free to charge any price they want.

The pricing policy is not common in the industry because it doesn’t work very well, said John Horan, publisher of the Sporting Goods Intelligence newsletter.

“The truth is that the marketplace rejected their pricing policy long before the FTC got involved,” Horan said.

About 3 million pairs of Reebok and Rockport shoes affected by the pricing policy were sold in the United States during 1993. About $8 million of the settlement would be distributed among the states because of the difficulty of determining who bought the shoes in 1993.

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Bloomberg Business News contributed to this story.