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Judge Rules 5-Hour Energy Maker Gave Costco Unequal Deals, But No Antitrust Violation Found

By  |  May 29, 2025

A California federal judge ruled this week that the manufacturer of 5-Hour Energy, Living Essentials LLC, offered disproportionately favorable promotions to retail giant Costco, creating an unfair playing field for regional wholesalers. However, the court concluded that the actions did not amount to a violation of federal antitrust law, according to Reuters.

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    In a decision issued Tuesday, U.S. District Judge Consuelo B. Marshall determined that while Living Essentials did provide Costco with significantly larger promotional allowances than it offered to a group of seven California-based wholesalers, the plaintiffs failed to show that the disparities caused a measurable competitive injury. This finding effectively dismissed claims brought under both Section 2(d) of the Robinson-Patman Act and California’s Unfair Competition Law (UCL).

    Per Vital Law, the case originated from a lawsuit filed by U.S. Wholesale Outlet & Distribution, Inc. and six other family-owned distributors, who alleged that the 5-Hour Energy maker granted exclusive and advantageous marketing support to Costco without offering proportionally equal opportunities to other buyers. The wholesalers contended that this harmed their ability to compete in the same geographic markets, particularly where Costco Business Centers served small businesses — the same target market as the plaintiffs.

    Read more: Supreme Court Sidesteps 5-Hour Energy Pricing Case, Allowing Antitrust Claims to Proceed

    The dispute has been ongoing for several years. In 2021, the district court had initially ruled in favor of Living Essentials, rejecting the wholesalers’ arguments. But a 2024 mandate from the Ninth Circuit vacated part of that ruling, instructing the lower court to reevaluate the Section 2(d) claim. The appellate court asked the judge to determine whether the transactions in question were reasonably contemporaneous and whether Costco and the plaintiffs were competing on equal terms in the same functional space.

    Following that remand, the court acknowledged the promotional discrepancies but ruled that the plaintiffs did not present sufficient evidence to establish that these practices led to lost sales or hindered their competitiveness. As such, all requested remedies, including a permanent injunction, were denied, and the UCL claim was dismissed as derivative of the unsuccessful federal claim.

    According to Reuters, the ruling underscores the challenge of proving antitrust injury in cases involving promotional allowances, even when disparities between retailers are evident. Living Essentials, which uses brokers to distribute its products, continues to sell to both Costco and the plaintiffs through similar distribution channels.

    Source: Vital Law