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Align Technology (NASDAQ:ALGN) has agreed to pay $27.5M to resolve a lawsuit alleging that the Tempe, Arizona-based clear aligner maker conspired to drive up prices of products marketed by its direct-to-consumer rival, SmileDirectClub (OTC:SDCCQ).
U.S. District Judge Vince Chhabria has yet to ratify the preliminary settlement filed in a San Francisco federal court on Thursday night.
Once finalized, the deal would cover roughly 1.45M SmileDirectClub (OTC:SDCCQ) clients who purchased its DIY clear aligner products between October 22, 2017, and August 18, 2022. In addition, Align (ALGN) agreed to offer each claimant a $300 coupon for Invisalign treatment.
The proposed class action lawsuit alleged that the company violated the Sherman federal antitrust law by agreeing not to enter the DTC market in exchange for profit sharing and a minority stake in SmileDirectClub (OTC:SDCCQ).
The 2016 deal allowed SmileDirectClub (OTC:SDCCQ) to charge more for its products, according to the lawsuit.
Align (ALGN) declined to admit wrongdoing but said it opted for a settlement to avoid the costs and distraction of legal proceedings, Reuters reported, citing court papers.
Last year, SmileDirectClub (OTC:SDCCQ) announced plans to liquidate the company after filing for Chapter 11 bankruptcy in September 2023.
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