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From Antitrust Law Daily, June 23, 2017

Rolex avoids antitrust, RICO claims over efforts to block gray market imports

By Jeffrey May, J.D.

Watch importers failed to allege that affiliated Rolex companies conspired to restrain the market for Rolex watches by deliberately and unlawfully permitting U.S. Custom and Border Protection officials to detain genuine Rolex watches imported into the United States from overseas. The plaintiffs alleged that the watches were no longer entitled to gray market protection once defendant Rolex USA, which imported Rolex watches into the United States, came under common ownership with Rolex Holdings, S.A., a foreign entity. These related entities could not conspire with each other for purposes of Sherman Act liability, and there were no plausible allegations that any defendant entered into an agreement with a third party. Therefore, the federal district court in New York City denied on futility grounds the complaining watch importers’ motion to file a Second Amended Complaint pursuant to Federal Rule of Civil Procedure 15(a)(2) (Boneta v. Rolex Watch U.S.A., Inc., June 21, 2017, Schofield, L.).

In February, the court dismissed the watch importers’ suit in its entirety for failure to state a claim. In addition to attempting to allege antitrust violations, the watch makers contended that Rolex USA committed substantive Racketeer Influenced and Corrupt Organizations Act (RICO) violations under 18 U.S.C. § 1962(b) and 18 U.S.C. § 1962(c) through their participation in a pattern of mail and wire fraud and engaged in a conspiracy to violate RICO under 18 U.S.C. § 1962(d). However, the court found that the allegations were insufficient to plead a pattern of racketeering activity. The RICO conspiracy count failed for the same reason as the Sherman Act claim. There was no plausible allegation of any agreement among the defendants or with anyone else.

Monopolization. The court also rejected a Sherman Act, Section 2 claim because the complaint limited the market to Rolex watches. One brand does not constitute a relevant product market when the brand competes with potential substitutes, the court explained.Thus, the monopolization claim was dismissed.

On the motion to amend the complaint, the court reiterated its earlier holdings.

The case is No. 1:16-cv-02369-LGS.

Attorneys: Jerry David Goldstein (Goldstein, Vespi, & Vazquez, LLC) for Erik Boneta. Jean-Marie L. Atamian (Mayer Brown LLP) and Adam Wallace Sgro (Gibney, Anthony & Flaherty, LLP) for Rolex Watch U.S.A. Inc.

Companies: Rolex Watch U.S.A. Inc.; Rolex Holdings, S.A.

MainStory: TopStory Antitrust RICO NewYorkNews

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