The sportswear manufacturer, Nike, has agreed to pay $1.5m to settle a lawsuit in the United States over statements it made about working conditions in some of its suppliers' Asian factories.
The merits of each side's case remain untested
Marc Kasky, a San Francisco labour activist, had sued the company five years ago, accusing it of false advertising for claiming it was protecting labour rights at factories that make footwear for Nike.
He alleged that a Nike public relations campaign was misleading about the conditions for its Vietnamese, Chinese and Indonesian workers. Nike denied the allegations.
The money will go to a monitoring group called the Fair Labor Association (FLA) to improve factory conditions and monitoring.
The FLA is a group coalition of companies, including Nike and its competitors Reebok and Adidas, NGOs and universities, which promotes a code of conduct based on international labour standards, monitors labour practices and co-ordinates public reports on factory conditions.
In return, Mr Kasky is to withdraw his lawsuit that accused Nike of false advertising in a publicity campaign designed to refute claims that its products were made in sweatshop conditions.
"The two parties mutually agreed that investments
designed to strengthen workplace monitoring and factory
worker programmes are more desirable than prolonged
litigation," Nike said Friday in a statement announcing
Correspondents say the settlement means that the merits of each side's case remain untested.
Supreme Court ruling
The case revolved around the question of whether Nike subcontractors in Vietnam, China and Indonesia run sweatshops to manufacture its athletic products.
The California Supreme Court had ruled that Mr Kasky could sue Nike on the false advertising claim, prompting the company to ask for a review by the US Supreme Court.
But after hearing oral arguments, the high court refused to tackle the issues and dismissed the case in June, leaving the decision up to California.
Many had hoped the Supreme Court would settle the issue; the case was expected to set precedent.