ALBERTSON'S IS RECALLING SEBASTIAN HAIR SPRAY

MATTHEW W. EVANS

BOISE, Idaho -- Albertson's told SN last week that it has sold genuine Sebastian hair care products for approximately 10 years and has never knowingly sold any counterfeit products.

Several ongoing lawsuits between Albertson's here and Sebastian International, Woodland Hills, Calif., the salon-goods manufacturer, have brought the supermarket chain under attack for allegedly obtaining and selling counterfeit cans of Sebastian Shaper hair spray.

While vehemently denying that it is knowingly selling counterfeit goods, the food-retailing giant is taking no chances. It has instituted a nationwide recall of all products bearing batch codes that Sebastian alleges are associated with "counterfeit" cans of Shaper hair spray. The recall will enable Albertson's to conduct further investigation and product testing and to eliminate any risk that improperly labeled goods might be sold on its shelves, said Mike Read, Albertson's company spokesman.

"We are investigating whether there is any truth to Sebastian's allegations about cans made in Italy, but voluntarily have instituted a recall to remove any doubt while the investigation continues. One thing is certain -- Albertson's has no part in any counterfeiting scheme," Read said.

In addition to the seizure of 384,000 counterfeit Sebastian Shaper hair-spray cans, valued at $4.3 million at retail, by Italian police in Milan last year, there are an additional 370,000 counterfeit cans believed to be in the United States, the manufacturer said.

In a press statement, Sebastian alleges that Albertson's and other "unofficial retailers ... continue to obtain and sell the counterfeit products," despite warnings by the manufacturer. Drug chains Phar Mor, Youngstown, Ohio, and Drug Emporium, Powell, Ohio, were also named in the statement. These retailers could not be reached for comment as of press time.

On Feb. 5, 1999, Albertson's sued Sebastian in federal court in Phoenix, claiming that Albertson's practice of buying and selling genuine Sebastian products on the open market is lawful and consistent with free-market principles.

A year later, Sebastian countersued Albertson's, charging the retailer with selling counterfeit goods.

"Only after Sebastian failed to secure dismissal of that lawsuit, did it institute a baseless action against Albertson's for involvement in a so-called 'counterfeiting conspiracy.' Sebastian's statement that Albertson's is part of a 'conspiracy to launder counterfeit products' is both false and indicative of an attempt to avoid the merits of Albertson's claims and to defame Albertson's," Read said.

Albertson's had filed state and federal antitrust claims against Sebastian, Mark Riedel, vice president and general counsel for Sebastian, told SN, because the retailer "objected to our system of distribution." Riedel described the system of distribution for Sebastian products as "professional, salon-only."

"Sebastian is a concerned company trying to protect its brand and channel of trade. We intend to hold everyone involved in the counterfeiting operation accountable," Riedel said in the statement.

The United States Customs has formed an interagency task force with the Department of Justice and the Food and Drug Administration to further investigate the whereabouts of the remaining counterfeit Sebastian products, according to the manufacturer. The company anticipates arrests and is prepared to take action against those who have performed illegal acts at that time, it said.

Sebastian has developed a holographic label that it affixes to the back of authentic cans, the company said. Launched three years ago, the label is part of a tracking system and if so-called Sebastian products do not have the holographic tracking label, they are fake, according to the company.

About a month before the Sebastian countersuit was filed in early February, the supplier announced that more than 350,000 cans bearing the trademarked labeling of Sebastian's packaging producer were received from Italy with a phony version of the Shaper formula. They contained a "cheap and altered imitation" of the formula, and were "prone to clogging," the company said. The cans were reportedly shipped to the United States in May of last year and sold to Albertson's between June and October.

"Sebastian has wrongly attempted to transform its holographic antidiversion 'sticker' into a surrogate for proof of counterfeiting. Diverted goods are not counterfeit goods. Diversion is a legal and commonplace practice that helps ensure the efficient distribution of quality goods," said the Albertson's spokesman.