Luxury goods group Waterford Wedgwood has agreed to pay $500,000 (€408,000) as part of a $2.9 million settlement of allegations that it was part of an attempt to block a US retailer from selling its products.

Federated Department Stores - the parent of upmarket US department stores Macy's and Bloomingdales - along with May Department Stores and another manufacturer of tableware were also party to the settlement, New York's Attorney General said yesterday.

Attorney General Mr Eliot Spitzer said Federated and May Department Stores pressured Lenox and Waterford Wedgwood USA not to sell to lower-cost retailer Bed, Bath & Beyond, which was looking to enter the lucrative business.

This caused prices to soar for some designs and patterns that brides prize highly, sources familiar with the case said. It is understood the cost to consumers from the four companies' actions has not been calculated.

Federated, operator of 450 stores, said it agreed to pay $900,000 in civil penalties to New York State to settle restraint of trade charges but did not admit to any wrongdoing.

In a statement, the Cincinnati-based retailer said it settled the charges "in order to avoid the potential of protracted court action" and disruption to its business.

May, based in St Louis, also confirmed that it had settled the charges but a spokeswoman could not confirm the amount, which Mr Spitzer put at $800,000.

"We admit no liability and the suit has been settled to both parties' satisfaction," May spokeswoman Ms Sharon Bateman said.

May owns more than 430 department stores across the US, according to the Attorney General's office, and has an additional 680 bridal stores.

Mr Spitzer said Lenox would pay $700,000 and Waterford $500,000 to settle the charges. A Waterford spokesman confirmed the settlement amount "without admission of liability".

A call to Lenox was not immediately returned.

The four companies have also agreed to reform their business practices to ensure no repeat of the events at the centre of the investigation.

A statement from Mr Spitzer's office said: "In 2001, Bed, Bath & Beyond planned to introduce Lenox and Waterford products as 'anchors' for the company's new tableware department. The investigation revealed that Federated and May pressured Lenox and Waterford to pull out of the Bed, Bath & Beyond initiative."