Wednesday, December 22, 2010, 12/22/2010 05:14:00 PM


By Todd

The New York Times is reporting that Starwood Hotels and Resorts has settled its major trade secrets case against Hilton Hotels.

The settlement includes a substantial payment by Hilton to Starwood, according to a source with direct knowledge of the pact.

It subjects Hilton to an injunction, approved by a federal judge, that prohibits the hotel chain from starting any new “luxury and lifestyle” hotels for two years, a major blow for a company that had made this a major growth initiative.

Hilton will also hire two court-appointed monitors — effectively corporate baby-sitters — who will oversee the hotel chain’s compliance with the settlement.

A federal grand jury in Manhattan continues to investigate whether Hilton and its former executives should face criminal charges in connection to the claims, according to the court filing.

“Hilton Worldwide regrets the circumstances surrounding the dispute with Starwood Hotels and Resorts Worldwide and is pleased to bring an end to this prolonged litigation,” Christopher J. Nassetta, Hilton’s chief executive officer, said in a statement.

“Given the facts, we had no choice but to stand up and protect our brands on behalf of our investors, associates, owners and customers,” Frits van Paasschen, Starwood’s chief executive, said in a statement. “This settlement reinforces this protection and restores a level playing field for fair competition.”


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