Nine West to Pay $34 Million to Settle FTC Claims

Nine West Group Inc., the nation’s largest supplier of women’s shoes, agreed Monday to pay $34 million to settle federal and state antitrust claims over its pricing policies.

Nine West, a unit of Jones Apparel Group Inc., now will allow retailers to discount its lines of women’s shoes under the settlement with state attorneys general and the Federal Trade Commission, lawyers involved in the case said.

Nine West sells shoes under such brand names as Amalfi, Bandolino, 9 & Co., Calico, Easy Spirit, Evan-Picone, Pappagallo, Capezio, Calvin Klein, Selby and Enzo Angiolini, as well as Nine West.

FTC antitrust enforcers began reviewing the company’s pricing policy in January 1999. Nine West, which makes one out of every five pairs of shoes sold to American women, allegedly threatened to cut off supply to retailers that violated the policy. With department stores agreeing to Nine West’s policy, smaller retailers were forced to go along or risk losing their supply of shoes.

State and federal officials filed suit in federal court in White Plains, N.Y., to challenge the practice.

“As a result of pricing agreements, consumers were denied an open and competitive market for certain Nine West shoes, and paid higher prices,” Washington Atty. Gen. Christine Gregorie said in a statement.

State and federal investigators found that the company prohibited retailers from discounting some of Nine West’s most popular brands, Gregorie said.

Under the settlement, Nine West officials agreed to “refrain from agreements or business practices” that hamper retailers’ shoe-pricing strategies for the next five years, Gregorie said.

The deal with the states requires a payment of $34 million. Of this, no more than $3.5 million will cover attorneys’ fees; the rest will be used to fund women’s health, educational, vocational and safety programs.

“We believe this settlement was clearly in the best interest of our company, avoiding substantial legal expense and management time,” Jones Apparel President Jacki Nemerov said in a statement. “The $34 million will be recorded as additional goodwill relating to the Nine West acquisition and will not impact the company’s earnings expectations.”

Jones Apparel completed its $1.5-billion purchase of Nine West in June 1999. The alleged price fixing occurred between January 1998 and July 1999.

Jones Apparel officials weren’t available to comment on whether the firm is trying to settle separate antitrust suits filed by consumers over the price-fixing allegations.

Shares of Bristol, Pa.-based Jones Apparel fell $1.25 to close at $25.44 on the New York Stock Exchange.