Gaia Wins in Antitrust Case

BREVARD, N.C.—Gaia Herbs announced it successfully defended a federal antitrust lawsuit filed in 2006 by Vitacost.com, an Internet distributor of dietary supplements, affirming Gaia’s position to not sell its herbal dietary supplements to dedicated e-commerce retailers who sell at deep discounts online. Vitacost.com alleged Gaia’s business practice of mandating a minimum resale price, known as Resale Price Maintenance (RPM), violated Florida antitrust laws In the ruling, Judge Donald M. Middlebrooks, U.S. District Court, Southern District of Florida, stated: “A product manufacturer may unilaterally announce its resale prices without committing an antitrust violation. Independent action is not proscribed. A manufacturer of course generally has a right to deal, or refuse to deal, with whomever it likes, as long as it does so independently.”

In January 2007, before the lawsuit had been resolved, Gaia Herbs (www.gaiaherbs.com) instituted a policy to discontinue sales of its products to dedicated online retailers who have no “brick and mortar” stores. The company’s management team determined sales to mass market customers at steep discounts via the e-commerce channel was inconsistent with its long term business strategy and customer service goals, which emphasize a premium product branding position promoted by extensive in-store marketing and individual customer service. Gaia’s retail customers who use an e-commerce tool in addition to their brick and mortar store may still sell the company’s products online as long as they uphold Gaia’s RPM policies.