BRINGING 'EM TO HEEL; SHOE STORES SAY NINE WEST UNFAIRLY FIXES PRICES.

Byline: Melody Petersen The New York Times

Peter Polites, owner of a Nine West store in New Jersey, slashed the price of a popular, smart-looking women's shoe last winter, knowing he would attract many more customers - and still earn a smooth 60 percent profit on each pair.

But Polites' sale irritated some managers at large department stores down the hall in the Mall at Short Hills. One Nordstrom manager, he said, walked into Polites' small store, picked some shoes off the shelf, looked at the prices, slammed them down and left without a word.

Polites said the Nordstrom manager later explained that the flats that Polites had reduced to $49.99 from $60 were included on a confidential list of styles - known as the ``off-limits list'' - whose prices Nine West Group Inc. rarely, if ever, lets stores mark down.

Polites' low prices also maddened executives at Nine West, the footwear giant that says it sells one out of every five pairs of shoes sold to women in the United States.

Nine West chief executive Vincent Camuto called Polites (pronounced po-LEE-tus) and demanded that he end his sale. When Polites refused, Camuto told him that in that case, ``We can't ship you those shoes.'' Polites taped his phone conversations with Camuto and other Nine West executives because, he said, he felt his store, which sells only Nine West shoes, was threatened.

He and two other owners of small Nine West stores, who have fought with the company over other business issues before, say the incident helped them solve a puzzle they had been piecing together for years.

The answer, according to information gathered by the three store owners, is that for years, Nine West and major department stores in the United States, which sell millions of pairs of the company's shoes, have worked together in an elaborate and secret system that almost guarantees that women, no matter how many stores they shop in, will always find the same prices for most Nine West styles.

The store owners say they have talked to regulators at the Federal Trade Commission, which enforces the antitrust laws, about the pricing practices and have given them copies of the off-limits list, as well as memos by Nine West employees and tapes of phone conversations with Nine West executives.

Joel Bedol, Nine West's general counsel, said, ``We have been cooperating fully with the Federal Trade Commission and intend to continue our cooperation,'' adding that ``we do not anticipate that the preliminary inquiry will result in a material adverse effect on the company.'' He said the company would not comment further on its pricing practices.

According to the store owners' information, the system works like this: Nine West and some department stores agree on minimum prices; Nine West employees patrol all stores to insure that prices are not lowered; if a department store finds another store charging prices below the minimums, it complains to Nine West; and Nine West warns stores that shipments will be delayed or even ended if prices are too low.

If Nine West stopped enforcing the minimums and allowed stores to compete on price, women would almost surely find lower prices, saving as much as $10 or more on many styles. Nine West prices most of its shoes from $50 to $90 a pair.

So are Nine West's pricing practices illegal? That is not clear. Ken Peterson, a lawyer in Wichita, Kan., who represented the three store owners last year, wrote a letter to Nine West in February saying he believed that its practices violated federal antitrust laws. Peterson's letter received no response.

And Peterson warned his clients, who all still have Nine West shoes marked down, not to acquiesce to company demands that they raise prices. If they did, Peterson said, they themselves could be found guilty of conspiring to fix minimum prices.

Herbert Hovenkamp, a University of Iowa law professor who is an antitrust expert, said it is illegal for a distributor and a company that sells its products to agree on minimum retail prices, though it is legal for a distributor to demand that its price list be followed. The federal laws are technical and ambiguous, Hovenkamp said, and they have been weakened over the years by court decisions. He said it was unclear whether Nine West and the department stores were breaking the law.

But whatever the legalities, the details unearthed by the three small-store owners offer a rare glimpse into just how far some retail companies and department stores will go to keep shoppers from finding better prices elsewhere.