Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Specialty boutique unable to show competitor possessed market power, (Jul 6, 2015)

By Linda O’Brien, J.D., LL.M.

In an antitrust action against the operators of Peaches Boutique, one of the Chicago area's largest retail suppliers of homecoming and prom dresses, rival Hannah’s Boutique, Inc. could not show that Peaches possessed market power, which was required to pursue its antitrust claims, the federal district court in Chicago has ruled. Therefore, Peaches’ motion for summary judgment was granted (Hannah’s Boutique, Inc. v. Surdej, July 2, 2015, St. Eve, A.).

Opening in 2009, Hannah’s is a specialty boutique retailer that sells prom and homecoming dresses. From 2009 to 2012, rival specialty boutique Peaches requested that certain designers of women’s fashion apparel not supply their dresses to competing boutiques, including Hannah’s. In April 2013, Hannah’s filed suit against the operators of Peaches, alleging, in part, monopolization, refusal to deal, and unreasonable restraint of trade, in violation of Section 1 of the Sherman Act and Illinois Antitrust Act. In August 2013, Peaches’ motion to dismiss to failure to show antitrust injury was denied. After Hannah’s motion to bar certain opinions of Peaches’ expert was denied, Peaches moved for summary judgment and to bar the opinions of Hannah’s economic expert.

Restraint of trade. The court found that there was no evidence of a horizontal agreement between certain dress designers to boycott Hannah’s. Hannah’s argued that Peaches caused the dress designers to enter into a horizontal agreement to boycott Hannah’s and other competing boutique retailers. First, there was no direct evidence of a horizontal agreement among the designers to boycott Hannah’s. Second, although Peaches contacted many of the designers and requested they not supply dresses to competing retail boutiques, Peaches received a variety of responses, and those responses did not indicated that all of the designers reached an agreement among each other. Third, Hannah’s presented no evidence that any of the designers sought assurances from other designers to limit their sales to Peaches. Instead, the evidence showed that the designers individually evaluated the decision whether or not to grant Peaches some measure of exclusivity.

Market power. Following to the Seventh Circuit decision in Republic Tobacco Co. v. North Atlantic Trading Co., Inc., 381 F.3d 717 (2004), the court determined that, for Hannah to use direct evidence of anticompetitive effects to show Peaches possessed market power, Hannah’s must show both the “rough contours” of the relevant market and that Peaches possessed “substantial market share.” Hannah’s argument that it was unable to calculate Peaches’ market share in the absence of publicly-available data was rejected. The court noted that Peaches’ expert estimated the company’s market share using several different methods based on publicly available data. Although it was undisputed that Peaches had a large store, that fact alone did not establish a significant market share because there were 56 specialty retailers in addition to Hannah’s and Peaches that sold prom dresses in the Chicago market.

Expert opinion. Finally, the opinion of Hannah’s economic expert was barred, since the expert did not make an initial showing that Peaches possessed a substantial share of the relevant market. According to the court, Hannah conceded that it could not show that Peaches possessed a substantial market share because it could not calculate it. Hannah’s expert testified that she could not conduct a market share analysis, since there was no reliable data to calculate market share even if a market share analysis was warranted. Since there was no initial showing that Peaches possessed a substantial share of the relevant market and its expert’s opinion was barred, Hannah’s had no expert evidence to affirmatively establish that Peaches possessed market power.

The case is No. 1:15-cv-05186.

Attorneys: Steven Michael Laduzinsky (Laduzinsky & Associates, PC) for Hannah's Boutique, Inc. Eric Daniel Anderson (Staub Anderson Green LLC) for Roy Surdej.

Companies: Hannah’s Boutique, Inc.; Peaches Boutique

Cases: Antitrust IllinoisNews