PHILADELPHIA (CN) - ShopRite franchisees must face claims that they tried to stall the opening of a Wegman's in Hanover, N.J., as part of a scheme to monopolize the local grocery market, the Third Circuit ruled Thursday.
Hanover Realty signed a lease with Wegman's in July 2012, more than a year before Village Supermarkets opened a ShopRite in nearby Morristown.
Though spelled as one word in the Third Circuit decision, Village Super Markets described itself in a statement to investors as a Wakefern Food subsidiary that owns 29 ShopRites, all but three of which are in New Jersey.
Hanover says Village Supermarkets and its subsidiary soon filed a series of permits to block construction of the Wegman's in Hanover. Objections from an ecological consulting firm working for the competitor ultimately resulted in Hanover having to survey the area for a species of bat.
Hanover ultimately filed a federal complaint against the ShopRite franchisees, but the case was dismissed for lack of antitrust standing.
The Third Circuit reversed 2-1 Thursday, saying Hanover's injury was not incidental to ShopRite's plan.
"Defendants would succeed in their scheme either by inflicting such high costs on Hanover Realty that it was forced to abandon the project or by delaying the project long enough so that Wegmans would back out of the agreement," Judge Julio Fuentes wrote for the court. "In both scenarios, injuring Hanover Realty was the very means by which Defendants could get to Wegmans; Hanover Realty's injury was necessary to Defendants' plan."
ShopRite argued that the success of the environmental permit demonstrated that its objections to the construction were legitimate.
"They first point to the fact that they successfully identified a technical deficiency in the application, and that the Environmental Department required Hanover Realty to correct this administrative error," Fuentes wrote. "We liken this to hitting a single in the second inning. Hanover Realty submitted a new application within days and the problem was resolved.
"Moreover, in an email, Defendants' ecological consultant touted its ability to delay the permit approval process," the decision continues.
Judge Morton Greenberg mostly concurred but wrote in dissent that the court should not be setting new precedent that lets landowners bring antitrust actions by virtue of the effects on their tenants.
Hanover does have "antitrust standing in the full-service supermarket market but not in the full-service supermarket rental space market," Greenberg said.
Judge Thomas Ambro meanwhile agreed that Village's "immunity defense is a sham and hence unavailing at this stage."
While Ambro voted to vacate the lower court's judgment and remand, he disagreed that Hanover suffered an antitrust injury to demonstrate standing.
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