Variable Prices Save Wholesale Retailers From Grocers’ Class Action Claims

Finding pricing issues too variable for common treatment, a federal court has denied grocery stores’ motion for class certification of their customer allocation claims against wholesale retailers SUPERVALU and C&S.

The plaintiffs in the In re: Wholesale Grocery Products Antitrust Litigation are retail grocers who allege that defendants SUPERVALU and C&S – two of the largest grocery product wholesalers in the U.S. – conspired to allocate territory and customers through an Asset Exchange Agreement.  The plaintiffs had asked the U.S. District Court for the District of Minnesota to certify two classes of retail grocers, in New England and the Midwest.

Throughout the 1990s and early 2000s, SUPERVALU’s wholesale business was mainly located in the Midwest but began expanding into New England.  A threatened C&S, whose market was mainly in New England, was forced to expand into states such as Ohio and Wisconsin.

In 2003, the two companies signed the Asset Exchange Agreement, pursuant to which SUPERVALU took over C&S locations in the Midwest, and C&S took over SUPERVALU’s distribution centers in New England.

Grocery stores in 13 different states claim that the effect of the SUPERVALU and C&S Asset Exchange Agreement was to implement an allocation of territories and customers that was anticompetitive in light of the bankruptcy of a third competitor, Fleming Companies, Inc.

Judge Ann D. Montgomery denied the class certification motion, finding that plaintiffs had failed to show that common issues predominated with respect to impact.

The court noted that the plaintiffs’ attempt to show common impact through imposition of supracompetitive prices was complicated by the fact that “prices vary by customer.”

Although the grocery stores’ evidence showed prices were higher, that evidence also indicated that price varies based on many factors, such as the distance between a SUPERVALU or C&S distribution center and each grocery store.

“Plaintiffs merely assume that C&S did in fact raise prices in response to the absence of SuperValu as a competitor,” wrote Judge Montgomery.  The court summed up by noting that “all evidence of record suggests that the nature of the wholesale grocery pricing is individual negotiation.”

The court concluded that such “pricing cannot provide common evidence to establish a prima facie case of class impact,” and denied plaintiffs’ motion for class certification.

Tagged in: Antitrust Litigation,