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Federal regulators say Utah-based 1-800 Contacts is harming competition in the contact lens market through agreements it has with online rivals that lead to higher consumer prices.

The Federal Trade Commission on Monday said it had filed an administrative complaint against the Draper company over "a web of anti-competitive agreements with rival contact lens sellers that suppress competition in certain online search advertising auctions and that restrict truthful and nonmisleading internet advertising to consumers."

The largest online contact lens seller in the U.S. "strongly disagrees" with the FTC's position on agreements the company says were designed to protect its trademark.

"1-800 Contacts is confident in its legal position and will vigorously defend its intellectual property rights in response to the administrative complaint filed today by the FTC," Cindy Williams, the company's general counsel, said in a statement.

According to the FTC complaint, the company recognized as early as 2003 that it was losing sales to lower-priced products from competitors. In response, the company either filed or threatened lawsuits against competitors, alleging that its trademarks were violated when consumer internet searches that included "1-800 Contacts" also drew advertisements for the Utah company's competitors.

As a result of the lawsuit or threats, the Utah company and 14 rivals entered into agreements that the FTC says eliminated competition in auctions for ads on search engines such as Google and Bing.

The agreements bar 1-800 Contacts and its rivals from bidding for the others' trademarked terms and requires each party to use "negative keywords" that prevent ads from 1-800 Contacts' rivals from appearing when consumer used "1-800 Contacts" as a search term, the agency says.

"The bidding agreements go well beyond prohibiting trademark infringing conduct," the FTC says. "They restrain a broad range of truthful, nonmisleading, and nonconfusing advertising."

One competitor,, prevailed in U.S. District Court for Utah when Judge Clark Waddoups ruled in its favor on most claims. That decision was largely upheld by the 10th Circuit Court of Appeals.

On Monday, Williams said 1-800 Contacts "has a long history of advocating for increased competition and consumer rights," which includes pushing for passage of the Fairness to Contact Lens Consumers Act of 2003 that she said increased convenience and lowered prices.

The company also is involved in lawsuits challenging a state law that lens manufacturers claim was aimed at protecting 1-800 Contacts' grip on the market. The law prohibited "price fixing" by manufacturers that refuse to provide products to retailers that sell below a minimum price set by the lens makers.

U.S. District Judge Dee Benson denied the manufacturers' motions for preliminary injunctions that would have halted enforcement of the law, a decision the companies have appealed.