Target offers to settle claim over 'fake' make-up

Embattled retailer Target has all but run up the white flag and offered to settle its court battle with US cosmetics company Estee Lauder over its sale last year of allegedly counterfeit MAC make-up.

In the Federal Court on Tuesday Target made an offer to Make-Up Art Cosmetics, a subsidiary owned by Estee Lauder, to settle the case brought against it when it was discovered that Target was selling what was claimed to be fake MAC products.

In documents issued in court, Target has offered to hand over all promotional, marketing and advertising material related to its sale of MAC still in its possession.

Target has also promised not to infringe any of MAC's trademarks by importing, distributing, advertising or offering for sale any goods bearing the cosmetics company's name. It will account to MAC for the profits it made last year when it offered for sale MAC make-up at up to a 40 per cent discount to normal prices, including interest, and has offered to pay MAC's costs of the court proceedings.

However, Target has not admitted guilt nor accepted that its MAC cosmetics were indeed counterfeit.

It is believed Estee Lauder is eager for Target to admit the products it sold were fake, and its refusal to do so might lead it to reject Target's settlement proposal.

Estee Lauder is especially concerned about reputational damage flowing from what it viewed as poor-quality cosmetics sold falsely under the MAC trademark.

It is understood one MAC product range sold by Target last year was sold as having sunscreen protection but in fact had none, or very little.

The damaging court battle against Target, one of Australia's biggest retailers, was triggered in September when Target was forced to strip its shelves of MAC - Australia's biggest-selling prestige cosmetics range - after Estee Lauder claimed the make-up was fake.

Target, owned by Wesfarmers, sourced the MAC range from a number of Australian importers and wholesalers. Under the offer made to Estee Lauder in court, Target promised not to source products from these companies.