Target offers to settle claim over 'fake' 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.
Frequently Asked Questions about this Article…
The court case was brought after Estee Lauder claimed Target sold allegedly counterfeit MAC cosmetics. Target was forced to strip MAC products from its shelves when the issue was discovered and Estee Lauder launched legal action in the Federal Court.
Target offered to hand over all promotional, marketing and advertising material related to its sale of MAC that it still holds; to account to MAC for the profits it made from those sales (including interest); to pay MAC’s court costs; and to stop importing, distributing, advertising or offering for sale any goods bearing MAC’s trademarks.
No. Target’s settlement offer does not include an admission of guilt and it has not accepted that the MAC cosmetics it sold were counterfeit.
According to the article, Estee Lauder is believed to want Target to admit the products were fake. Because Target refuses to admit that, Estee Lauder may reject the settlement. Estee Lauder is also particularly concerned about reputational damage from poor‑quality cosmetics sold under the MAC trademark.
Target offered to account to MAC for the profits it made from the disputed MAC sales last year (sales that included discounts of up to 40% off normal prices), to include interest on those amounts, and to pay MAC’s costs of the court proceedings.
The article highlights legal costs, potential payments of profits and court costs, and reputational damage to Target — all of which can affect sales and margins. Target, owned by Wesfarmers, was publicly involved in a damaging court battle after removing MAC from shelves, which investors may view as a business and brand‑risk issue.
Target promised not to import, distribute, advertise or offer for sale goods bearing MAC’s name and, under its court offer, said it would not source MAC products from the Australian importers and wholesalers it previously used.
Estee Lauder raised reputational concerns and the article notes one MAC product range sold by Target was represented as having sunscreen protection but in fact had little or none. That alleged quality issue is one reason Estee Lauder views the sales as damaging and pursued legal action.
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