Grocers’ Market Allocation Claims Won’t Go To Market

Claims by retail grocers that two of the largest grocery wholesalers in the United States violated the antitrust laws by market allocation have hit a dead end in the case of In re Wholesale Grocery Products Antitrust Litigation in the U.S. District Court for the District of Minnesota.

The court has granted defendants SuperValu, Inc. and C&S Wholesaler Grocers, Inc. summary judgment on the claims of plaintiffs Deluca’s Market Corp. and D&G, Inc., two retail grocers, that defendants violated the Sherman Act by allocating territories and customers through an Asset Exchange Agreement.

In 2003 C&S purchased the grocery operations and distribution centers of Fleming Companies, a competing wholesaler that had filed for bankruptcy earlier that year.  A Vermont corporation with headquarters in Keene, New Hampshire, C&S had concentrated its business in the Northeast, and decided to sell the Flemings operations located in the Midwest to SuperValu.  In return, SuperValu, whose business operations are centered in Minnesota, gave its distribution centers and operations in the Northeast to C&S.

Plaintiffs argued the asset exchange agreement was a per se violation of antitrust laws.  As part of the agreement, the two wholesalers did not compete for customers previously serviced by Flemings.

However, Judge Ann D. Montgomery disagreed.  The court held that since the agreement did not prohibit SuperValu and C&S form competing for customers not covered by the agreement, it did not make an “exclusive market allocation,” and thus should not be treated as per se illegal.

Applying a rule of reason analysis, the court held that plaintiffs failed to produce sufficient evidence of an unreasonable restraint of trade.  Not only were there were other wholesalers competing against the defendants, but neither SuperValu nor C&S ever gained a dominant share of the market.

Deluca and D&G were the last plaintiffs remaining after class action certification was denied in July.