Antitrust Law Daily Wrap Up, ANTITRUST—S.D. N.Y.: Online retailer fails to show antitrust injury to support monopolization claims, (Mar 23, 2015)

By Linda O’Brien, J.D., LL.M.

An operator of a country and western retail website failed to demonstrate antitrust injury to pursue monopolization claims against a competitor for allegedly threatening to enforce an exclusive dealing policy with vendors that did business with the operator, the federal district court in New York City has decided. Thus, the defendant’s motion to dismiss the operator’s claims under the Sherman Act was granted (Sell It Social, LLC v. Acumen Brands, Inc., March 20, 2015, Berman, R.).

Background. 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, which market lifestyle-specific apparel, shoes, accessories, and other goods directly to special interest audiences through social media.

Sell It Social launched its website, Country Habit, in April 2014, and entered into contracts with dozens of country and western apparel, accessory, and boot vendors to sell their products through Country Habit. Acumen responded by communicating to vendors in the country and western online market that Sell It Social wrongfully misappropriated Country Outfitter’s website design, imagery, and intellectual property. Sell It Social subsequently filed a complaint against Acumen, alleging that the company’s conduct constituted monopolization and attempted monopolization in violation of Section 2 of the Sherman Act. Sell It Social contended that Acumen’s communications threatened enforcement of a policy of refusing to deal with vendors that did business with Sell It Social. Acumen moved to dismiss the complaint.

Monopolization. The court determined that the plaintiff failed to allege antitrust injury. To plausibly plead antitrust injury, the plaintiff must show that its injury was the type the antitrust laws were intended to prevent and that the injury was attributable to an anticompetitive aspect of the challenged conduct. According to the court, the plaintiff’s sole allegation with respect to “an adverse effect on competition market-wide” was that Acumen’s policy may likely lead to increased prices, reduced innovation, and consumer choice.” The plaintiff provided no facts to support its speculative conclusion.

While Sell It Social alleged an adverse effect on its individual business prospects—loss of business from existing and potential vendors as a result of Acumen’s exclusive dealing policy—this allegation was insufficient to show market-wide anticompetitive harm.

Exclusionary conduct. The plaintiff also failed to allege a substantial foreclosure of competition through Acumen’s exclusive dealing policy. The complaint stated that Acumen’s policy applied only to the plaintiff and did not assert that the policy foreclosed any other competitors from participating in the market. The court noted that, the “elimination of a single competitor standing alone,” did not prove anticompetitive effect. Thus, the plaintiff’s monopolization and attempted monopolization claims were dismissed.

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

Attorneys: Peter Stuart Dawson (Pollock & Maguire, LLC) for Sell It Social, LLC. Aidan John Synnott (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Acumen Brands, Inc.

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

Cases: Antitrust NewYorkNews