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Antitrust Complaint Alleges Cut-Throat Chicago Tactics In Prom Dress Market

Posted  April 15, 2013

Boycotts, spying and defamation are the Chicago way of snuffing out competition in the prom dress market, according to an antitrust lawsuit filed against Peaches Boutique in the U.S. District Court for the Northern District of Illinois.

Hannah’s Boutique Inc., a prom dress seller in the Chicago market alleges in Hannah’s Boutique Inc. v. Barbara Ann Surdej et al. that established prom dress retailer Peaches Boutique and its principals used hardball tactics in blocking competition from newcomer Hannah’s in violation of the Sherman Act and various Illinois state laws.  According to Hannah’s complaint, Peaches’ suppression of competition has inflated prom dress prices and reduced consumer options.

Hannah’s alleges that during the last 25 years, defendant Peaches Boutique has established “a reputation as one of the most fashionable and customer service oriented” prom dress retailers in Chicago.  Allegedly, Peaches has been able to dominate the market by stocking over 20,000 dresses in every size and color.

According to Hannah’s, Peaches engaged in illicit anticompetitive conduct at formal wear expos, where retailers gather each year to place dress orders for the upcoming season.  Peaches allegedly met with designers at the 2011 and 2012 expos and threatened to no longer carry the designers’ dresses if they continued to do business with Hannah’s.  Hannah’s alleges that the combination of Peaches’ threats and its dominance in the Chicago market forced designers to stop filling Hannah’s dress orders and remove Hannah’s as a vendor on their websites.

Peaches’ owners allegedly slandered Hannah’s (which is owned by a Muslim), asking the designers’ sales representatives, “How can you sell to those Muslims; they barbecue goats.”  Peaches also allegedly falsely accused Hannah’s of selling knockoff dresses and selling below the designers’ discount prices.

Hannah’s alleges that Peaches then sent employees into Hannah’s to take photos and videos of its stock and invoices.  Peaches allegedly used the spying to ensure that designers were following through with a boycott of Hannah’s.

According to Hannah’s, Peaches has also engaged in predatory and anticompetitive behavior against other competitors.  The complaint names five other formal wear boutiques that were allegedly forced out of the Chicago market since 2004.

“Peaches’ espionage and monitoring, orchestration of conspiracies and concerted refusals to deal, and elimination of horizontal competition has no pro-competitive benefits and no legitimate business justification,” the complaint alleges.

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