Antitrust Law Daily Wrap Up, ANTITRUST—S.D.N.Y.: Failure to plausibly allege harm to competition doomed challenge to Epogee acquisition, (Feb 5, 2026)

By Martin A. Steinberg, J.D.

The plaintiffs’ shifting and undefined downstream market theories could not sustain claims under the Sherman Act, Clayton Act, or New York’s Donnelly Act.

The federal court in New York City granted the defendants’ motion to dismiss and denied the plaintiffs’ motion for a preliminary injunction in an antitrust action challenging David Protein’s acquisition of Epogee, the sole producer of the fat alternative esterified propoxylated glycerol (EPG). Plaintiffs OWN Your Hunger LLC, Lighten Up Foods LLC, and Defiant Foods LLC brought the action against the defendants Linus Technology, Inc., doing business as David Protein, Epogee LLC, and David Protein co-founder Peter Rahal. The court held that the plaintiffs failed to plausibly allege harm to competition in the “global market for EPG supply” and failed to plausibly define any cognizable downstream market in which competitive harm purportedly occurred. Applying settled standards under Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, and New York’s Donnelly Act, the court concluded that plaintiffs alleged neither reduced output, higher prices, nor other market-wide anticompetitive effects, and that exclusion of plaintiffs as purchasers did not itself establish injury to competition. For similar reasons, the court found plaintiffs could not show a likelihood of success on the merits and denied injunctive relief, while permitting plaintiffs a limited opportunity to seek leave to amend to cure the identified pleading deficiencies (OWN Your Hunger LLC v. Linus Technology, Inc., No. 1:25-cv-04544-VM-GWG (S.D.N.Y. Feb. 4, 2026)).

Background. The litigation arises from David Protein’s May 9, 2025, acquisition of Epogee, the sole producer of the plant-based fat alternative esterified propoxylated glycerol (EPG), an ingredient used in the plaintiffs’ low-calorie food products. Plaintiffs, manufacturers of low-calorie spreads, sauces, and chocolate products, alleged that prior to the acquisition, both they and David Protein purchased EPG from Epogee, which held patents covering the EPG manufacturing process.

In early 2025, while acquisition negotiations were underway, Epogee notified the plaintiffs that it would not accept new EPG orders due to supply constraints. After the transaction closed, the defendants informed the plaintiffs that they were winding down their accounts and would cease supplying EPG going forward.

Plaintiffs commenced suit in June 2025, asserting federal and state antitrust claims and seeking emergency injunctive relief. The court denied an ex parte temporary restraining order and, after full briefing, denied a renewed TRO, finding that the plaintiffs had not demonstrated a likelihood of success on the merits. Defendants subsequently moved to dismiss the Second Amended Complaint, and the plaintiffs moved for a preliminary injunction compelling continued EPG supply.

Sherman Act § 1 claim. The court held that the plaintiffs failed to plausibly allege an unlawful agreement in restraint of trade because they failed to define the downstream markets, where their theory of harm was centered, a fatal omission. Therefore, the Section 1 claim did not plausibly allege an unreasonable restraint of trade.

Plaintiffs characterized the pre-merger arrangement between Epogee and David Protein as a per se unlawful horizontal market allocation or group boycott, but the court found the alleged conduct was vertical, not horizontal, because Epogee and David operated at different levels of the market as supplier and purchaser of EPG. Vertical refusals to deal and exclusive-dealing arrangements are generally evaluated under the rule of reason and require a showing of actual adverse effects on competition in the relevant market.

Applying that framework, the court concluded the plaintiffs did not allege direct harm to competition in the EPG supply market. The complaint contained no allegations of reduced EPG output, higher prices, or diminished quality. Plaintiffs’ exclusion as purchasers did not constitute reduced output in the economic sense, particularly where the pleadings acknowledged that David Protein used the EPG that otherwise would have been sold to plaintiffs. Instead, their theory focused on downstream effects, asserting that loss of access to EPG forced them to exit or reformulate products and thereby reduced competition in markets for EPG-containing foods. The court held that the allegations concerned downstream markets, not the EPG supply market identified by the plaintiffs as the relevant market.

The court further found the plaintiffs failed to show harm to competition in any downstream market because they never plausibly defined those markets. Their shifting descriptions of downstream markets lacked allegations regarding market boundaries, interchangeability, market participants, or market power. A single allegation that the defendants’ protein bar was priced higher than a competitor's did not plausibly connect the alleged agreement to market-wide anticompetitive effects. Nor did the plaintiffs adequately plead indirect harm arising from market power, because, in the absence of a defined market, the court could not assess the defendants’ ability to lessen competition.

Sherman Act § 2 claim. The court dismissed plaintiffs’ monopolization and attempted monopolization claims for largely the same reasons that defeated the Section 1 claim, emphasizing that Section 2 likewise requires plausible allegations of harm to competition. Because the plaintiffs did not identify the scope or boundaries of the downstream markets allegedly threatened, the court concluded there was no basis to assess whether defendants’ conduct could lessen or destroy competition. Absent a defined market and allegations of market-wide anticompetitive effects, the plaintiffs failed to state a claim under Section 2 of the Sherman Act.

Plaintiffs principally challenged the defendants’ post-merger refusal to continue supplying EPG, but the court held that the cessation of supply had no anticompetitive effect in the EPG supply market. Even if the defendants were ordered to resume sales, Epogee’s patents and the completed acquisition would leave the defendants with 100 percent control of EPG production, and the plaintiffs did not plausibly allege that the acquisition itself was unlawful or that the refusal to deal reduced output, raised prices, or otherwise harmed competition in that upstream market.

Plaintiffs alternatively framed their claim as “two-tier market monopolization” or monopoly leveraging, asserting that the defendants used monopoly power over EPG supply to monopolize downstream food markets. The court acknowledged that monopoly leveraging is cognizable under Section 2, but held that such a claim requires plausible allegations that defendants used upstream monopoly power to gain a competitive advantage in a distinct downstream market and that there was a dangerous probability of monopolization in that second market. Plaintiffs’ failure to define any downstream market, however, precluded a showing of market power, competitive harm, or a dangerous probability of success.

Clayton Act § 7 claim. The court held that the plaintiffs failed to plausibly allege that David Protein’s acquisition of Epogee was likely to substantially lessen competition or tend to create a monopoly. Applying the burden-shifting framework commonly used in vertical merger cases, the court emphasized that, unlike horizontal mergers, a vertical merger does not eliminate a competitor and is not presumptively anticompetitive; any competitive harm must arise from foreclosure, increased barriers to entry, or similar structural effects.

Plaintiffs argued that the acquisition eliminated all independent sources of EPG supply and transformed an already concentrated market into a monopoly, but the court rejected that theory, explaining that the EPG market was already monopolized by Epogee before the transaction and remained a monopoly after the acquisition, and that a vertical merger between a supplier and a customer does not itself increase market concentration.

Plaintiffs next asserted that the merger produced foreclosure in downstream markets by enabling the defendants to refuse outside EPG sales and extract higher prices for their own products. The court acknowledged that foreclosure of rivals’ access to supply can, in principle, support a vertical merger claim, but reiterated that the Clayton Act protects competition, not competitors, and requires a showing of probable harm to competition in a defined market. Plaintiffs’ theory focused entirely on downstream markets in which David competed, yet they never plausibly defined those markets or alleged how the merger would lessen competition within them. Without market definition, the court could not assess competitive effects, foreclosure significance, or the defendants’ ability to raise prices or restrict output.

The court further noted that the plaintiffs’ allegations were substantially weaker than those advanced in modern vertical merger cases, in which they at least defined the relevant downstream market and provided factual material permitting an evaluation of competitive harm. Here, they provided inconsistent and undeveloped downstream market theories and no plausible allegations linking exclusivity or refusal to supply to a substantial lessening of competition. Accordingly, the court concluded that the plaintiffs failed to state a claim under Section 7 of the Clayton Act.

Donnelly Act claim. The court held that the plaintiffs’ claim under New York’s Donnelly Act failed for the same reasons as their federal antitrust claims. The Donnelly Act requires proof of the same core elements as federal monopolization claims, including identification of a relevant market and allegations that defendants’ conduct restrained competition within that market. Because the plaintiffs did not plead facts showing that the defendants’ conduct restrained competition in a properly defined market, the court concluded the Donnelly Act claim was insufficient and subject to dismissal.

Motion for preliminary injunction. The court denied the plaintiffs’ request for a preliminary injunction compelling the defendants to continue supplying EPG. Applying the governing standard, the court explained that a movant must demonstrate irreparable harm, either a likelihood of success on the merits or sufficiently serious questions going to the merits with the balance of hardships tipping in its favor, and that injunctive relief serves the public interest. The court emphasized that establishing a likelihood of success for preliminary relief requires a substantially stronger showing than is necessary to survive a motion to dismiss. Because, for the same reasons discussed throughout the opinion, the plaintiffs failed to plausibly allege viable antitrust claims or demonstrate harm to competition, they could not show a likelihood of success on the merits or serious questions warranting injunctive relief. The motion for a preliminary injunction was therefore denied.

The Case is No. 1:25-cv-04544-VM-GWG.

Judge: Marrero, V.

Attorneys: Brittany Meyer- Belnap (Hunger LLC) for OWN Your Hunger LLC. Peter L. Simmons (Shriver & Jacobson LLP) for Linus Technology, Inc.

Companies: OWN Your Hunger LLC; Linus Technology, Inc.

Cases: AcquisitionsMergers Antitrust NewYorkNews