NY Settlement with Outlet Mall Owner Eliminates Non-Compete Extending into Southwestern Connecticut

Most Connecticut residents are likely unfamiliar with Woodbury Common, an outlet mall in the town of Central Valley in Orange County, New York brimming with 240-plus retailers.  Due to a contract provision with those retailers that prevented them from opening another location within a 60 mile radius of Woodbury Common, however, the impact of that mall may have been felt throughout southwestern Connecticut for decades. A settlement in pending litigation reached between the New York Attorney General’s Office and Simon Property Group (SPG), owner of Woodbury Common, and announced late last month, could open the door to new retail outlet opportunities in Southern and Western Connecticut – regions that had long been under the restrictions.

"No business should be allowed to stifle an entire industry at the expense of consumers—but for years, that's exactly what Simon Property Group did to New Yorkers," said New York Attorney General Schneiderman. "Simon's anticompetitive conduct blocked competition and drove up prices for New York consumers. That ends today. I am pleased this agreement will allow for new shopping outlets to finally open within New York City, and make affordable shopping more accessible for residents across the region."

While Schneiderman focused on New York, the possible consumer benefits from the agreement extend further.  The region under the now-eliminated restrictions extends beyond New York into Connecticut, including much of Fairfield County – including Norwalk, Stamford, Danbury and Bridgeport - and extending nearly into New Haven.  (The straight line distance from Central Valley, NY to New Haven is 62 miles; to Milford is 55 miles.)

In a press release, Simon said Woodbury Common's 60 mile radius provision has been used since 1985, well before SPG acquired Woodbury Common as part of its 2004 acquisition of Chelsea Property Group. The statement pointed out that Woodbury's radius provisions have been upheld as lawful, reasonable and consistent with industry practice in the courts, as recent as 2010.

“While we have agreed to reduce the reach of the radius provisions in Woodbury Common leases, these provisions will continue to cover Woodbury Common's essential trade area, extending to all of Manhattan,” the company noted.

Simon Property Group described Woodbury Common as “an economic engine for Orange County, the lower Hudson Valley, and New York State,” indicating that “it regularly granted exceptions to radius provisions and understands the importance of competition and consumer choice in the market.”  In Connecticut, SPG operates two properties in southeastern Connecticut - Clinton Crossing Premium Outlet in Clinton and Crystal Mall in Waterford.

Reached via the New York State Thruway at exit 16 in Harriman, Woodbury Common Premium Outlets features “the most sought after, high-end fashion and designer retail brands in the world,” SPG said in its news release, highlighting stores including Tory Burch, Nike, Celine, Bottega Veneta, Polo Ralph Lauren, Michael Kors, Burberry, Coach, and The North Face.

As part of the settlement, Simon Property agreed to revise their existing leases with Woodbury Common retailers to remove the radius restrictions; not to engage in exclusionary tactics, including radius restrictions, for the next 10 years; and pay a $945,000 fine to New York State.

Even as negotiations proceeded on the settlement, Woodbury Common announced last month that 10 new retailers would be opening at the premium outlet mall, including Zadig & Voltaire, a high-end French ready-to-wear brand, and Sayki, a Turkish menswear designer.  The outlet mall also recently completed extensive multi-million dollar renovations. Simon Property Group, based in Indianapolis, owns nearly 100 outlet malls around the world and is an S&P 100 company.