Operator Of South Texas Mall Sues Simon Property Group For Anticompetitive Practices

Days after Simon Property Group secured the green light to acquire JCPenney Co. out of bankruptcy in partnership with Brookfield Property Group, the mall operator is facing claims from another South Texas mall owner that alleges Simon is performing anticompetitive practices that are precluding other shopping center operators from securing quality retailers. 

First Hartford Realty Corp., a firm based out of Connecticut, filed a lawsuit in Hidalgo County, Texas, Monday alleging Simon, the largest mall owner and operator in the U.S., has committed anticompetitive and antitrust actions and has undue control over the retail market in South Texas. 

The plaintiff, which operates The Shoppes at Rio Grande Valley LP, claims Simon's nationwide attempt to take over major retailers like JCPenney, Brooks Brothers, Aeropostale and Forever 21 gives it control over national brand names, robbing other nearby retail centers of a chance to secure traffic-driving retail tenants. The plaintiff is most concerned about JCPenney being under the sole control of its main shopping mall competitor. First Hartford describes Penney's as an integral traffic anchor for its own mall.

“By directly purchasing retailers, Simon Properties can both protect its shopping center properties against reductions in occupancy rates and unpaid rents. Likewise, it can destroy competition by closing the stores of the retailers it now controls in competing shopping centers,” First Hartford said in the lawsuit. 

Bisnow has contacted Simon for comment and will update the story if Simon responds. 

The Shoppes at Rio Grande Valley is in Edinburg, Texas, and is anchored by JCPenney among other national brands. 

Simon operates La Plaza Mall 8 miles away in McAllen, Texas, and the Rio Grande Valley Premium Outlet Center 24 miles away in Mercedes, Texas. First Hartford claims Simon's takeover of retailers like Penney's will make it difficult for competitor malls in the area to retain existing tenants and attract other tenants that are either owned, operated or targeted for ownership by Simon. 

“Free market competition works to the benefit of the consumers and the community at large. This case aims to control the unchecked anticompetitive consolidation of market power in the retail industry during and after the Covid-19 pandemic,” First Hartford’s Texas counsel said in a statement. 

First Hartford had been accusing Simon of anti-competitive practices even before the pandemic and the acquisition of tenants — it filed a lawsuit in 2006 accusing Simon of using radius restriction agreements to prevent anchor tenants in Simon properties from also taking space in First Hartford properties.

The lawsuit was filed in Hidalgo County by Chamberlain Hrdlicka shareholders and attorneys David N. Calvillo and David M. Medina.