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03/27/2019

Subscription startup accuses Rent the Runway of unfair practices, files suit

FashionPass, an online subscription apparel retailer launched in 2016, is suing Rent the Runway.

In a lawsuit filed in California, Los Angeles-based FashionPass alleges Rent the Runway has been engaging in “anti-competitive and monopolistic” practices to prevent apparel brands from doing business with it. FashionPass was cofounded in 2016 by millennial Instagram influencer Brittany Johnson and is aimed at women in their 20s and 30s. The lawsuit comes shortly after Rent the Runway announced it had had obtained a $125 million investment, bringing the company’s total valuation to $1 billion.

“Confronted with the considerable growth and success of FashionPass, Rent the Runway embarked upon a wrongful, anti-competitive scheme and conspiracy to eliminate competition from FashionPass, rather than fairly competing against FashionPass in the marketplace based upon matters important and beneficial to consumers,” states the lawsuit. “Specifically, Rent the Runway is exerting its superior market power and financial capabilities to coerce FashionPass’s top suppliers to refuse to sell merchandise to FashionPass, and is thereby attempting to eliminate competition from FashionPass.”

The suit specifically mentions 20 apparel brands, including Blank NYC, Finders Keepers, and Yumi Kim, as having received “coercive threats” from Rent the Runway to stop selling merchandise to FashionPass or lose Rent the Runway’s business. According to FashionPass, each brand acceded to Rent the Runway’s demands and signed exclusive fashion rental contracts that prohibited them from selling merchandise to FashionPass.

In the filing, FashionPass states it has suffered continuing injury and damages in excess of $3 million and is entitled to recover three times its losses from Rent the Runway’s activities. Rent the Runway has not publicly responded to the lawsuit or allegations.