Align Technology Agrees to $27.5M Settlement Over Antitrust Lawsuit

Align Technology, the company behind the Invisalign clear aligner system, has reached a preliminary agreement to pay $27.5 million to settle an antitrust lawsuit that accused the firm of conspiring to inflate prices of its products by collaborating with SmileDirectClub, its direct-to-consumer (DTC) competitor. According to Seeking Alpha, the proposed settlement was filed in a San Francisco federal court on Thursday, though it has not yet been approved by U.S. District Judge Vince Chhabria.

If the settlement is approved, it will benefit approximately 1.45 million SmileDirectClub customers who purchased its DIY clear aligner products between October 22, 2017, and August 18, 2022. As part of the agreement, Align Technology has also agreed to offer each affected customer a $300 coupon for Invisalign treatment.

The lawsuit, which escalated into a proposed class action, accused Align of violating federal antitrust laws by conspiring to keep prices high. The core of the allegation was that Align had agreed not to enter the DTC market in exchange for a profit-sharing deal and a minority stake in SmileDirectClub. This 2016 agreement, according to the lawsuit, allowed SmileDirectClub to charge higher prices for its aligner products.

While Align Technology has not admitted to any wrongdoing, the company stated that it chose to settle the case to avoid the costs and distractions associated with prolonged litigation. Seeking Alpha, referencing court documents, reported that Align’s decision was driven by practical considerations rather than an admission of guilt.

The lawsuit and settlement come at a turbulent time for SmileDirectClub, which announced last year that it would be liquidating after filing for Chapter 11 bankruptcy in September 2023.

The settlement, once finalized, is expected to bring closure to a significant legal challenge for Align Technology, though it also casts a spotlight on competitive practices within the growing clear aligner market.