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Fashion Nova beats smaller rival as anti-competitive claims emerge in fashion




Fashion Nova defeated an antitrust and monopolization lawsuit filed against it by a smaller rival, which accused a fast-paced fashion retailer of engaging in a conspiracy to stifle the growth of its competitors. This is what aspiring online retailer Honey Bum claimed when it filed a lawsuit against Fashion Nova in California federal court in December 2020, claiming the company had organized a group boycott with more a dozen vendors she shares with Honey Bum to unexpectedly cancel and / or decline. fulfill existing Honey Bum purchase orders and reject new orders on the grounds that they pose a threat to Fashion Novas’ profit margins.

After asking the court to dismiss Honey Bums ‘Section 2 monopolization claim of the Sherman Act in March 2021 in light of Honey Bums’ failure to establish that Fashion Nova maintains market power over a relevant market, the court granted Fashion Novas the motion for summary judgment on Jan. 6 and dismissed the remainder of the case.

In what constitutes the gist of his order, Judge Gary Klausner of the U.S. District Court for the Central District of California dismissed Honey Bums’ rust-proof claim under Section 1 of the Sherman Act, which prohibits contracting and / or conspiracies to hamper trade. To make his claim, Judge Klausner held that Honey Bum had to demonstrate the existence of an agreement that constitutes an unreasonable restriction on trade, but did not do so sufficiently.

In the summary judgment motion she filed last year, Honey Bum alleged that Fashion Nova broke the law by lobbying[ing] various sellers to refuse to sell to Honey Bum, causing the sellers to then collude to stop doing business with Honey Bum, thus creating a three-part conspiracy consisting of a dominant buyer, competing distributors and a horizontal agreement between these competing distributors. Honey Bum argued this arrangement was unreasonable in itself, thus avoiding having to establish an anti-competitive effect.

Unfortunately for Honey Bum, Justice Klausner notes that the Supreme Court has ruled that the group boycotts are only unreasonable in itself when it comes to horizontal agreements between direct competitors, which is not what happened here. According to Judge Klausner, Honey Bums provides evidence of these so-called horizontal deals, namely emails showing that between August 2017 and May 2019 some sellers told Fashion Nova that they would no longer do business with Honey Bum, the guarantees they would have respected would only create a real dispute as the sellers reached a horizontal agreement.

Further, the court concluded that a reasonable jury could not infer that there was an agreement between the individual sellers to boycott Honey Bum, and that Honey Bum had not ruled out the possibility that the sellers acted independently. . In fact, Judge Klausner said the evidence actually supports an opposing conclusion that each vendor independently accepted the threats Fashion Nova inflicted on them individually.

Although the court acknowledged that Fashion Nova created parallel behavior by sellers to boycott Honey Bum by forcing them into vertical deals with [it], and that such behavior may be anti-competitive and possibly even violate antitrust laws, this does not suggest that the sellers illegally agreed to restrict competition, which Honey Bum had to demonstrate to substantiate its antitrust claim. on a in itself based.

The court also sided with Fashion Nova on Honey Bums’ claims of tortious interference and therefore granted Fashion Novas the full summary judgment motion.

In its complaint last year, Honey Bum argued that due to the critical nature of maintaining a local supply chain in order to quickly produce clothing to meet the specific needs of a retailer under from the fast fashion retail model (sometimes within days), it has been damaged, potentially to the tune of millions of dollars, by Fashion Novas’ monopolistic and anti-competitive tactics. More than that, Honey Bum, who argued that her entry into the fast online fashion market would have helped diversify customers, increase outlets, and reduce reliance on Fashion Nova, has claimed that Fashion Novas was conspiring and / or contracting to impose trade restrictions through agreements. with various vendors has hurt the fast Los Angeles fashion market in general.

Other anti-competition claims

Recent allegations of competition in the retail space are not limited to Fashion Nova … under the leadership of President LinaKhan, and the European Union. Chanel is currently facing anti-competitive counterclaims filed against it under the Sherman and Donnelly Acts by The RealReal, which argued in response to the lawsuit Chanel brought against it that the French luxury goods brand attempted. , acquired and maintained monopoly power in the relevant markets, namely, the markets for premium handbags and valuable handbags through an ongoing program to hamper the growth and development of competitors resale companies like TRR that threaten Chanel’s dominance.

Chanel has since opposed such antitrust claims, saying that, among other things, the market share figures alleged by the TRR (which range from 30 to 50%) are insufficient in law to establish a true monopolization claim, and even if they were, Chanel states that it is quite implausible that [it] even has a 30 percent market share in a market that includes not only all relevant handbag vendors such as Gucci, Prada, Hermes, Louis Vuitton, Givenchy, Ferragamo, Balenciaga, Cline, Burberry, Christian Dior, Saint Laurent, Valentino, Fendi, Versace and Coach, to name a few, but also all resellers of such handbags nationwide.

In a motion to dismiss still pending, Chanel seeks to have TRR’s competition-based counterclaims dismissed.

Yet in a few affirmative defenses she has filed in response to the trademark infringement and dilution action filed against her two years ago by Dr. Martens owner AirWair, Shein claims the shoe company is aiming actively to limit legitimate competition for Dr. Martens. famous boost by claiming increasingly extensive rights by virtue of its limited registrations and so-called common law rights.

In particular, Zoetop argued in its October 2021 response that AirWair alleges a violation in cases where Zoetop failed to use all of the critical elements of [Dr. Martens] relevant [boot design] trademark, such as in cases where Zoetop brands have used non-yellow stitching as opposed to AirWairs famous yellow stitching or where Zoetop products have a single color sole when AirWairs rights extend to boots with two-tone soles. At the same time, Zoetop claims that AirWair has attempted to use its purported brands and trade dress too broadly for anti-competitive purposes to drive competitors out of the market.

This case is still pending in federal court in California.

The case is Honey Bum, LLC v Fashion Nova, Inc., 2: 20-cv-11233 (CDCal.)




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