Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Operator of country and western retail website allegedly disparaged, conspired to refuse to deal with competitor, (May 21, 2014)

By Linda O’Brien, J.D., LL.M.

The operator of an online retail website that sells country and western goods allegedly engaged in a anticompetitive conduct and restraint of trade by disseminating to existing and prospective vendors false statements regarding a competitor’s integrity and business practices and conspiring with certain vendors to refuse to deal with the competitor, according to a complaint filed in the federal district court of New York City (Sell It Social, LLC d/b/a/ Country Habit v. Acumen Brands, Inc. d/b/a Country Outfitter, May 14, 2014).

Acumen Brands operates a number of commercial websites, including Country Outfitter, a retail website for the sale of men’s and women’s country and western boots, apparel, and accessories. Acumen purchases products from various vendors and houses the products in its warehouse. Sell It Social was organized in March 2013 and operates two online retail websites, Country Habit and Rebel Circus, that market lifestyle specific apparel, shoes, accessories, and other goods directly to special interest audiences through social media. Sell It Social websites accept customer orders and transfer the orders and shipment details to the vendor for shipment to customers.

The complaint states that Sell It Social’s first retail website, Rebel Circus, became profitable in its first fiscal year by capitalizing on Sell It Social’s strategy of marketing through various social media platforms. Following the success of Rebel Circus, Sell It Social launched its second website, Country Habit, in April 2014. Sell It Social entered into contracts with dozens of country and western apparel, accessory, and boot vendors to sell their products through Country Habit.

Sell It Social’s principal met with an Acumen marketing executive at a trade show and, under the guise of exploring common business goals, the Acumen executive learned information about Sell It Social’s plan to launch Country Habit, its marketing strategy, social media audiences, timetable and projections for Country Habit, and success of the Rebel Circus website. Threatened by Sell It Social’s successful track record as a lifestyle-targeted online retailer and using information gained from the trade show meeting, Acumen began a campaign to disparage Country Habit and Sell It Social with the intent of disrupting its business and restraining competition to maintain Acumen’s dominant market position, according to the complaint.

The complaint alleges that, in furtherance of its campaign to destroy Sell It Social and Country Habit, Acumen communicated false and misleading statements to vendors in the country and western online market that Sell It Social wrongfully misappropriated Country Outfitter’s website design, imagery, and intellectual property. The communication was intended to convey to vendors that if they did business through the Country Habit website, they would not be permitted to sell their products on Country Outfitter.

Since the dissemination of the disparaging communication, many vendors have terminated their agreements with Sell It Social to sell their products on the Country Habit website, vendors that previously expressed an interest to sell their products on Country Habit were no longer interested in doing so, and other vendors that agreed to sell their merchandise on Country Habit have not signed contracts or supplied products. Additionally, several key boot vendors have terminated their agreements with Sell It Social, delayed authorizing Country Habit to market their boots for sale, or withheld their products from the Country Habit website, the complaint alleged.

As a result of Acumen’s anticompetitive conduct, Sell It Social has been damaged through a loss of business from existing vendors that had agreed to sell their products on Country Habit, potential vendors in the country and western online retail market, and investors that would grow and develop the Country Habit website, the plaintiff claimed.

Sell It Social asserts claims for intentional interference with prospective business advantage, intentional interference with contract, defamation, commercial disparagement, unfair competition, and violations of Sections 1 and 2 of the Sherman Act. The action seeks compensatory and treble damages, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 1:14-cv-03491-RMB.

Attorneys: Peter S. Dawson (Pollock & Maguire, LLP) for Sell It Social, LLC.

Companies: Sell It Social, LLC; Acumen Brands, Inc.

News: Antitrust NewYorkNews