Smoore's Subsidiary CCELL Faces Antitrust Lawsuit in the U.S., Accused of Price Manipulation and Market Monopoly

Key Points:

·Monopoly Accusation: Smoore is accused of manufacturing 80% of the closed-system marijuana oil e-cigarette devices in the United States and forcing distributors to adhere to minimum pricing and prohibiting the sale of competing products. 

·Anticompetitive Behavior: The lawsuit alleges that Smoore conspired with distributors for ten years, sharing pricing data, dividing the market, and collecting $500,000 in security deposits to prevent violations. 

·Legal Basis: The plaintiffs are seeking compensation under the Sherman Antitrust Act, the Clayton Antitrust Act, and laws of 31 states for the high prices consumers have faced due to monopolistic practices. 

·Case Status: Smoore has not yet responded, and the case is filed under docket number 2:25-cv-02259 in the Federal Court of Arizona. 

【2Firsts news flash】According to a report by Law 360 on July 2nd, the Chinese marijuana e-cigarette brand CCELL and its several American distributors are accused of engaging in anticompetitive price manipulation to gain market dominance. This class-action lawsuit is the second this year to make similar allegations.

According to a lawsuit filed on June 28 in a federal court in Arizona, Shenzhen Smoore Technology Co. Ltd. and Smoore International Holdings Ltd. devised a plan to allocate market dominance by requiring distributors to agree to minimum prices and prohibiting them from selling competing products.

The complaint alleges that "Smoore is the monopolist in the American market for the production of closed-loop cannabis oil e-cigarette devices, manufacturing up to 80% of the products in the United States and selling them directly to cannabis producers and wholesale distributors, including the defendant distributor.

According to the lawsuit, Smoore is both a supplier to the distributor defendants mentioned in the lawsuit, as well as a competitor, including the largest CCELL product distributor in the United States, Jupiter Research LLC. Despite these distributors helping Smoore establish a monopoly, the lawsuit indicates that they were forced to do so in order to continue accessing these popular products.

"Smoore's dominant market share has put distributors accused in a position where they must choose between either participating in Smoore's anti-competitive plan or facing the consequences of being unable to do business with Smoore. This would entail the risk of losing a crucial supply source, which holds as much as 80% of the market share in the closed-loop cannabis oil vaporization system market in the United States."

This class action lawsuit seeks damages under the Sherman Antitrust Act and the Clayton Antitrust Act, as well as under the antitrust laws and consumer protection laws of 31 states and regions in the United States.

The claims in this lawsuit are similar to a lawsuit filed in a federal court in California, but the earlier lawsuit was filed by a marijuana retailer based in Arizona, which sought compensation as a business harmed by monopolistic practices. The current lawsuit is partly based on the theory that consumers who had to pay higher prices due to these monopolistic practices are seeking compensation.

The complaint states that this pattern of horizontal price fixing, market division, and exclusive dealing began nearly a decade ago.

According to the complaint, the retailers allege that Smoore and its distributors conspired not to compete for each other's customers, as well as not to charge customers fees lower than the agreed upon price for CCELL products. The accused distributors include Jupiter, CB Solutions LLC (better known as Canna Brand Solutions), and Greenlane Holdings Inc., all of which are named defendants in the California lawsuit.

The lawsuit alleges that Smoore demanded distributors to share confidential pricing data and customer information with each other on a monthly basis. All distributors were required to avoid competing with each other. Each distributor was also required to pay a $500,000 deposit. If Smoore found that someone violated the terms of the illegal agreement, they would deduct funds from the violator's deposit.

On June 25th, representatives of the company in question did not immediately respond to requests for comment. The lawyer information for the company in question has not yet been disclosed.

This class action lawsuit is being represented by Cristina Perez Hesano of Perez Law Group PLLC.