Rent the Runway faces lawsuit for anti-competitive conduct

Rent the Runway, a luxury platform for renting designer fashion and accessories, is being sued by FashionPass, a subscription service for fast fashion, claiming the company lost profits due to anti-competitive conduct.

FashionPass on Tuesday launched a complaint with the Superior Court of California in Los Angeles citing Rent the Runway (RTR) used coercive tactics for brands to “refuse to sell merchandise to FashionPass,” and is seeking damages in excess of 3 million dollars.

Rent the Runway has a variety of exclusive deals with fashion brands, allowing it to provide one-of-a-kind service and products to its subscription base, according to Luxury Daily. FashionPass is claiming that many of RTR’s exclusives have caused it to lose contract cancellations.

“Since its founding in 2016, FashionPass has achieved strong and steady growth and has become a showcase retailer in the fashion rental business, as a result of its substantial and strategic investment of capital, its fashion, design and marketing acumen, and its technological capabilities,” said the lawsuit. “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.

“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.”

Rent the Runway is currently valued at over 1 billion dollars after its latest funding round.

A subscription service for exclusivity

FashionPass specifically named 20 manufacturers in the lawsuit, alleging that “in or around October 2018 and November 2018, and continuing thereafter,” Rent The Runway demanded that manufacturers grant them “an exclusive right to buy” and refuse to sell merchandise to FashionPass. If these terms were not met, Rent The Runway would not purchase any merchandise from the manufacturers, FashionPass alleges.

According to Retail Touchpoints, the average demographic for a RTR customer is a 29 year-old professional looking for formal attire, such as cocktail dresses and wedding outfits. Although the company has since expanded its rental offerings to include more casual collections, FashionPass aims to appeal to women in their 20s and 30s and is focused more casual wear, office attire and holiday looks.

Photo credit: Rent the Runway website