Faire Wholesale Wins Dismissal of Monopolization Claims

Paul, Weiss secured a significant victory for Faire Wholesale, Inc., an AI-powered online wholesale marketplace platform, in an antitrust suit brought by competitor Tundra, Inc., obtaining the dismissal of the case on the basis that the plaintiff failed to plead a proper market.

Tundra sued in the Northern District of California in May 2023, alleging monopolization and unfair competition claims under the federal Sherman Act and California state law. Tundra claimed that Faire dominates 90% of the market for online wholesale marketplaces by implementing exclusionary agreements with brands and retailers to thwart competition from other market participants.

In our motion to dismiss, we asserted that Tundra failed to show that there was any anticompetitive term in Faire’s terms of service; that it failed to present facts showing that a well-defined relevant market was substantially foreclosed to competition; and that it failed to allege harm to competition in a “two-sided” market of merchants and customers as a whole, among other arguments.

In her order, U.S. District Judge Araceli Martínez-Olguín found that, as a threshold issue, Tundra did not accurately define the relevant market. Its proposed market definition of “online wholesale marketplaces that connect local retailers throughout the United States with new or emerging domestic brands” included terms that “artificially contour the market,” such as “local,” “new” or “emerging,” she wrote. This was a “fatal defect” for Tundra.

Judge Martínez-Olguín dismissed Tundra’s first cause of action under the Sherman Act for failure to state a claim, without prejudice. Finding that Tundra’s antitrust claim fails at the antitrust threshold of market definition, the judge did not reach the parties’ remaining arguments regarding Faire’s allegedly anticompetitive contracts and conduct.

The Paul, Weiss team includes litigation partner Katherine Forrest and counsel Daniel Crane.