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7 October 2024

Illinois Federal Court Denies Alcohol Distributors' Motion To Dismiss Online Competitor's Complaint For Alleged Violations Of State And Federal Antitrust And Unfair Competition Laws

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An Illinois federal court recently denied a motion by Southern Glazer Wine and Spirits, LLC and Republic National Distributing Company, LLC (RNDC) to dismiss various claims...
United States Illinois Antitrust/Competition Law

An Illinois federal court recently denied a motion by Southern Glazer Wine and Spirits, LLC and Republic National Distributing Company, LLC (RNDC) to dismiss various claims for violations of state and federal antitrust and unfair competition laws asserted by Plaintiff Tiz, Inc., (d/b/a Provi), an online alcohol platform that operates as a "one-stop shop" for retailers to search for and purchase alcohol products across distributors. Tiz, Inc. v. S. Glazer's Wine & Spirits, LLC, 2024 WL 2785142 (N.D. Ill. May 30, 2024). Southern Glazer and RNDC are large, national wine and spirits distributors. In March 2022, Provi filed a complaint alleging that Southern Glazer and RNDC violated the Sherman Act, Illinois Antitrust Act and the California Unfair Competition Law and tortiously interfered with Provi's business expectancy by conspiring to exclude Provi as a competitor in the online alcohol marketplace, and by otherwise engaging in monopolistic conduct.

The court denied Southern Glazer and RNDC's motion to dismiss, holding that Provi's complaint plausibly stated claims for monopolization under Section 2 of the Sherman Act, horizontal and vertical conspiracy under Section 1, and tying under Section 1. In reaching these holdings, the court first undertook a lengthy and detailed analysis to determine that Provi had adequately alleged three relevant markets: online alcohol marketplaces, advertising on online alcohol marketplaces, and data analytics services for distilled spirits and wine purchasing. Turning to the Section 2 monopolization claims, the court found that Provi adequately alleged the defendants possessed monopoly power in the relevant markets through direct and circumstantial evidence, including by alleging the defendants eliminated competition in the relevant markets and caused higher prices, and wielded significant power in the relevant markets. Next, the court held that Provi adequately alleged that the defendants engaged in exclusionary conduct, including blocking and refusing to fulfill orders placed on Provi. Assessing Provi's Section 1 horizontal conspiracy claim, the court found that Provi adequately alleged parallel conduct by the defendants through circumstantial evidence and additional "plus factors" suggesting an agreement, including that the defendants both launched online platforms similar to Provi's within days of each other and blocked Provi's email domain so retailers' orders wound not reach the defendants. The court also found that Provi adequately alleged a vertical conspiracy under Section 1 in claiming the defendants coerced retailers into boycotting Provi. And the court allowed Provi's tying claim under Section 1 to survive. Provi's Illinois state antitrust claim and California Unfair Competition Law claim also survived because they turned on the plausibility of the federal antitrust claims. Finally, the court refused to dismiss a tortious interference claim asserted by Provi.

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