Designer clothing rental company Rent the Runway Inc. was hit with a lawsuit on Monday by upstart rival FashionPass Inc., accusing it of monopolizing the fashion rental market by hogging suppliers and depriving it of more than $3 million in profits.
Since last fall, Rent the Runway has sought exclusive purchasing rights from several apparel brands including Citizens of Humanity, Fifth Label and Blank NYC, among others, according to the suit, which was filed in state court in Los Angeles.
FashionPass claimed that it had been working with the suppliers over the last two years, all of whom are either based in Los Angeles or have showrooms in the city, until many of them ended up agreeing to Rent the Runway’s bid to be their sole buyer. The company claims it lost more than $200,000 because of contract cancellations as a result.
“That is, rather than engaging in fair and open competition with FashionPass, RTR instead conceived its scheme to drive FashionPass out of the market by improperly using its market presence and greater financial capabilities to coerce FashionPass’s top suppliers to cease doing business with FashionPass,” the company wrote in its complaint.
Rent the Runway, founded in 2009 by Jennifer Hyman and Jenny Fleiss, has been gaining both momentum in the market and investors. It is the most prominent player in the rental space, which has grown rapidly as new players enter the market to tackle different categories — from accessories to designer looks.
FashionPass, which was founded in 2016, argues that Rent the Runway’s actions artificially hinder its survival in a market that otherwise imposes few constraints. Even apparel manufacturers sell their wares at wholesale rates to rental companies as they do to retailers, the company said.
FashionPass’s suit claims RTR’s actions violate California’s restrictions on antitrust and unfair competition, and asks for three times the damages it claims to have incurred. A spokeswoman for Rent the Runway did not immediately respond to a request for comment.