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Anftrust R.eg,aladons and Trade Shows--- Can Dealers and Exhibitors

Be Excluded?

byJe'Anna Abbott and

Jcse~ La~za

Trade-show promoters may face antitrust claims if they exclude some

prospective exhibitors as a way to enhance the competitive position of

other exhibitors.

T rade shows historically have been used by trade and professional associations to promote association members' products and services. Over the years such opportunities have been increasingly available and popular. During the last two decades the number of trade shows sponsored by private promoters has also grown, along with shows' potential profitability.

Trade shows present special problems when viewed in light of antitrust regulation. As a particular trade show becomes more and more successful, increasing numbers of re-

Je'Anna Abbott, _I.D., is an assistant professor at the Conrad N. Hilton College of Hotel and Restaurant Management, at the University of Houston.Joseph Lanza, J.D., is an attorney with Richard Haynes & Associates, P.C., in Houston.

© 1998, Comelt University

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lated businesses may perceive the need to participate in that show just to remain competitive in the relevant market. Yet show promoters, whether trade associations or individual promotion companies, must somehow allocate usually limited trade-show space and resources. Indeed, facility capacity and limited resources may mean that not every business can participate as an exhibitor. Trade shows that use some method to screen exhibitors or as- sign prime exhibition space may be challenged in court by those exhibitors that are left out of the show or given undesirable exhibition space.

It's also the case that some associations have an underlying agenda that goes hand-in-hand with their trade shows, namely, to benefit association members in some manner. W h e n writing rules that will de- scribe who can participate in a trade show, however, trade associations and individual show promoters must be aware of the risk of crossing over the line from legitimate limitations to anticompetitive conduct.

R i g h t t o r e f u s e t o d e a l . As a general rule, a company has the unfettered right to deal with w h o m it pleases and to refuse to deal with w h o m it pleases, so long as the de- termination is made unilaterally and without regard to such characteris- tics as race and national origin. 1 That right, however, may be out- weighed by antitrust law in certain circumstances.

This article examines the types o f restrictions that can create risk for any trade-show promoter. It focuses first on violations of section one of the Sherman Act (restraint of trade), with particular emphasis on trade shows sponsored by associations, as history proves those to be most vulnerable to antitrust challenges. The article then turns to violations

See: Associated Press v. United States, 326 U.S. 1, 14-14 (1945); and United States v. Colgate & Co., 250 U.S. 300, 307 (1919).

of section two of the antitrust act (monopolization) and what that section means to promotion companies. Finally, we look at antitrust law specifically with the individual (nonassociation) promoter in mind. Each section provides guidelines for drafting appropriate restriction or exclusion criteria based on case law.

Sherman Antitrust Act The Sherman Act proscribes certain kinds o f business conduct. Engaging in that conduct is a felony under federal law. The specific conduct forbidden is defined and described in sections one and two of the Sherman Act. Federal statutes give certain classes of private individuals or entities the right to sue for violations of the Sherman Act and to collect monetary damages if they prevail.

Section One: Restraining Trade Section one of the Sherman Act prohibits any contract, conspiracy, or combination to restrain trade. A violation of section one requires proof o f three elements: (1) a contract, conspiracy, or combination, 2 (2) a resultant unreasonable restraint of trade in the relevant market, and (3) antitrust injury. 3

Having established that two or more entities did, in fact, enter into some agreement to restrain trade, the courts employ two standards to determine whether that restraint o f trade is unreasonable: (1) the per se

rule and (2) the "rule of reason." The nature of the restraint deter- mines which standard a court will apply. For example, a price-fixing

2 A "cont rac t , conspiracy, or c o m b i n a t i o n " means any agreement by two or m o r e entities, where the entities may be an individual, a c o r p o - rat ion, a sole proprie torship, a partnership, or the member s o r a trade or professional organizat ion. For the purposes o f this paper, a contract , c o n - spiracy, or combina t i on equals any ag reemen t to restrain trade.

3 For example, see: Denny's Marina v. Renfro Productions, 8 E3rd 1217 (7th Cir. 1993), s u m m a - r ized in foo tnote 30 on page 18.

agreement among retailers is a per se

unreasonable restraint o f trade. Antitrust cases frequently refer to

horizontal and vertical restraints. A horizontal restraint is one that af- fects a single economic level (e.g., all retailers or all wholesalers or all manufacturers). A vertical restraint generally involves several levels (e.g., a manufacturer acting in concert with several wholesalers or a wholesaler conspiring with several retailers). Vertical restraints are generally analyzed under the "rule of reason" by courts to determine whether the restraint is unreasonable. Horizontal restraints may be analyzed under either the per se rule or the rule of reason.

The per se rule bans conduct that the court presumes is unreasonable because o f its "pernicious effect on competit ion and lack of any re- deeming virtue TM In other words, some conduct is unreasonable, pe- riod. The "rule o f reason" requires courts to examine the reasons be- hind the agreement to determine whether it is a reasonable restraint o f trade. Thus, in the case of trade- show-participation restrictions or exclusions, the underlying reasons for the restrictions or exclusions, and in particular the way those relate to the legitimate functions of the trade show or association, will be o f significance, s

The last element required to prove a violation o f section one is injury. To prevail, a plaintiffmust show that the rules or restrictions caused some economic harm to its business. Other types of losses, such as business reputation or goodwill, are not components of anti-trust injury.

Should all three elements be satisfied, the plaintiff almost assur- edly will receive money damages.

4 Northern Pacific R R Co. v. United States, 350 U.S. 1 (1950).

s Northwest Wholesale Stationers, Inc. v. Pacific Stationary & Printing Go., 472 U.S. 284 (1985).

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Restricting trade-show access

only to association members,

or excluding importers or

discounters, are the types ol

restrictions that can lead

to legal trouble.

The "Rule of Reason" Where a trade or professional association is involved, "refusals to deal" may be te rmed a "group boycott ." Put simply, the members of a particular trade or professional association are viewed as a group of individual businesses and not as a single entity when they refuse to deal with a company or business.

Prior to 1985 the courts gener- alby considered group boycotts to be per se unreasonable restraints o f trade. In 1985, however, the U.S. Supreme Cour t eased the general rule. 6 N o w a group boycott effected through a trade or professional association is examined through the lens o f the rule o f reason

There are two exceptions to that rule. First, when a trade or professional association is the dominant power in a market, then exclusion from an association-sponsored trade show is more likely to trigger a per

se violation o f section one than is exclusion from a show sponsored by an association that lacks dominant power. Dominant market power may be gauged by, for example, the number, popularity, desirability, and relative sizes of the market's trade shows.

The trade show itself may become an "essential facility." If it is the only trade show in a given market, then it is more likely to be an essential facility than if there are many trade shows in the market. 7

~' Nvrthwest H/holesale Stationers, Inc. 7 The relevant market is itself a combination of

two elements: (1) relevant product market and (2) relevant geographic market. When deternfin- ing relevant product market, 11o definite rule can be declared. Loosely stated, commodities reason- ably interchangeable by consumers for the same purpose make up that "part of the trade or commerce" called the relevant product market. The relevant geographic market, such as a town or a country, must be determined by examining the particular situation of the parties and the product. See: Muenster Butane, b~c. v. Stewart Co., 651 E2d 292, 295,297 (5th Cir. 1981); and United States v. E. I. D u Pont de Nemours & Co., 351 U.S. 377,391 (1956).

Thus the relevant market will be determined by the facts on a case- by-case basis. It is a combination o f the geographic market (e.g., metro- politan region, the Midwest, or another nation) and the market for a particular type o f product or service (e.g., medical equipment, au tomo- tive accessories). In the case o f a trade show, it may also include a particular level o f distribution, such as wholesalers, retailers, manufacturers. For example, wholesalers o f paper products in the Northwest or manfacturers o f winter-sports cloth- ing in the Uni ted States.

Unacceptable Exclusion Criteria Only a few reported court cases deal with trade-show restrictions. Two of those present good examples of unacceptable exclusion criteria, as the restrictions imposed by the associations were particularly anticompetitive.

In one case the Winter Sports tLepresentatives Association was accused o f restricting participation in its trade shows by limiting its trade-show invitations to certain retailers and by preventing competing manufacturers' representatives from exhibiting at its shows.* The association was also accused o f dis- criminating unreasonably in the assessment o f expenses, rents, advertising charges, and other trade-show costs among exhibitors participating or seeking to participate in its trade shows.

The U.S. Depar tment o f Justice and the association entered into a "consent decree" wherein the association agreed to eliminate the questionable restrictions and practices but admitted no wrongdoing. In language that's paraphrased and shortened here, the association agreed that it would not:

x U.S.v. Winter Sports Representatives Association, blc., 1962 Trade Cas. (CCH) ¶ 70,418 (D.C.Cal. 1962).

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• Prohibit or regulate how trade- show exhibitors distributed invitations to the show;

• Prohibit or restrict the atten- dance at any trade show of any retailers holding a written invitation;

• Refuse to accept as an exhibitor or otherwise prevent any entity from exhibiting winter-sports goods at its trade shows (except for exhibitors wanting to show specific lines or brands of sport- ing goods that were already scheduled to be exhibited by a member of the association);

• Discriminate unreasonably among trade-show exhibitors in the allocation of space, exhibitor listings, and advertisements;

• Discriminate unreasonably among exhibitors in the assessment of expenses, rents, and advertising charges, and other show c os t s ;

• Charge or assess any exhibitor more than its pro rata share of the costs involved in the planning, promotion, and operations of the s h o w .

In another case, six trade associations serving material-handling- equipment manufacturers were accused of restricting access to their association-sponsored trade shows by prohibiting some association members from showing goods produced in foreign countries and prohibiting association members from participating in trade shows other than those sponsored by the six trade associations. 9 The U.S. Depart- ment of Justice sued the associations under section one of the antitrust act, resulting in a consent decree whereby the six associations agreed to cease the questionable practices. This case illustrates the misuse of exclusion criteria to target imported goods, restrict association members

9 US. v. Material Handling Institute, 1973-1 Trade Cas. (CCH) ¶ 74,362 (D.C. Pa. 1973).

from doing business with foreign manufacturers, and even restrict association members from exhibiting at competing trade shows.

Acceptable Exclusion Criteria Due to the limitations of space and the need for efficient management, most trade-show organizers must place some participation limitations on exhibitors. Some exhibitors, of necessity, may be excluded, and some certainly will be saddled with less desirable floor space than others. How, then, does an association de- cide what exclusionary criteria and restrictions it may impose?

KISS. There is one rule to remember: keep it simple. Exclusion and restriction criteria should be simple, succinct, fair, and absolutely unrelated to competitive positions. Simple restrictions lend themselves to ease of application and generally are difficult to misuse or abuse. Most important, restrictions should be applied equally to all applicants and participants, and should not favor one business or type of business over another. (For example, restricting trade-show access only to association members, excluding importers, or excluding discounters are the types of restriction that can lead to legal trouble.) Jacobs offers the following seven guidelines for evaluating and developing trade- show restrictions.I° (1) Is the association's trade show

the sole, or one of only a few, trade shows existing in the industry or profession?

(2) Have competing firms urged exclusion or expulsion of competitors?

(3) Are there legitimate reasons for the exclusion, unrelated to the excluded firm's competitive position?

l°Jerald A.Jacobs,"Trade Show Restrictions and Antitrust Liability" Association Counsel, Vol. 3, No. 1 (Spring 1986), p. 1.

(4) Are the restrictions tailored narrowly to meet the association's needs?

(5) Is access to the trade show linked to association membership?

(6) Are there fair procedures for dealing with complaints and protests?

(7) Are the criteria for gaining access objective, clear, and nonarbitrary?

Restrictions should be related to the legitimate mechanics of manag- ing the show, such as the number of exhibitors that can be accommo- dated, the means by which potential exhibitors may apply to participate, and the way to allocate the exhibition space. Restrictions that distin- guish among the competitive positions of applicants or participants should be avoided. Finally, where there are restrictions, there should be a means by which complaints can be dealt with quickly and fairly.

Other factors to be considered are the size of the trade show, the existence of competing shows, and whether some exhibitors have urged the exclusion or expulsion of other exhibitors. The potential for antitrust problems is greatest where association members attempt to use the show to gain a competitive edge by excluding other exhibitors, especially nonmembers. Exclusions of this nature are particularly anticompetitive when the association in question possesses market power or has access to an element essential to effective competition. 11 Such exclusions are also anticompetitive when the trade show involved is the only one or among just a few in the industry and geographic market a r e a . 12

11 Northwest Wholesale Stationers, Inc., supra. 12 For examples, see: Family Boating Center, Inc.

v. Washington Area Marine Dealers Association, Inc., 1982-1 Trade Cas. (CCH) ¶ 64,592 (D.D.C. 1982); and Claudia Designs, Inc. v. American Fash- ion Home Sewing Council, 1972 Trade Cas. (CCH) ¶ 74,197, 73,907 (S.D.N.Y. 1972).

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Antitrust regulations may

come into play when a trade

show becomes so large that it

constitutes a monopoly or near

monopoly, or if the promoter

engages in conduct geared

to creating a monopoly.

Restrictions to Avoid The above discussion illustrates some restrictions to avoid. In sum- mary, associations should avoid the following types of t rade-show restrictions as they have resulted in complaints or litigation.

• Restr ict ions that limit participa- don to businesses that manufac- ture a certain percentage o f their goods in the Uni ted States.

• R, estrictions that limit, directly or indirectly, an exhibitor's manufac- ture or sale o f products produced outside the Uni ted States.

• l~estrictions that limit or prevent an exhibitor from demonstrating, promot ing, or exhibiting in any way at any show products manu- factured in a foreign country.

• Restrict ions that limit or prevent, directly or indirectly, an exhibitor f rom doing business wi th any manufacturer, importer , or dis- t r ibutor o f goods made in foreign countries.

• Restr ict ions that limit or prevent an exhibitor from taking part in a trade show sponsored by a non- m e m b e r or another association.

• Restrict ions that limit or prevent an exhibitor from promot ing or sponsoring a compet ing trade s h o w .

• Restrict ions that limit participation in a trade show to businesses holding an invitation to participate in the show:

• Restrict ions that exclude any manufacturer, wholesaler, or re- tailer o f products or services that compete with those o f an association member .

• Restrict ions that discriminate unreasonably in the allocation among participants o f space, exhibitor listings, and show advertisements.

• Restrict ions that discriminate unreasonably in the assessment among participants o f expenses, rents, advertising charges, and other show costs.

Section Two: Monopolization Unlike the Sherman Act's section- one violations that require action by two or more entities, sect ion-two prohibitions target compet i t ion- stifling conduct by a single economic entity. ~3 Offenses under this section are generally referred to as "monopol iza t ion" or "at tempts to monopolize."

The offense o f monopol iza t ion consists o f two elements: (1) posses- sion of m o n o p o l y power in the relevant market and (2) willful acquisition or maintenance o f that power as distinguished from growth or development as a consequence o f superior product, business acumen, or historical accident./4

M o n o p o l y p o w e r . Mo n o p o ly power is the power to control prices or exclude competition.l~ D e t e rmi - nation o f monopo ly power requires an analysis o f two elements: relevant market and market share, t~' Evidence o f a defendant's market share is the principal tool used by courts to de termine the existence o f m o - nopoly power.~7 This me thod of proof, known as structural analysis, depends on a showing of a high market share. TM A market share of 90 percent or higher creates a pre- sumption o f monopol izat ion. ~') It is

L~ For example, see: Berk W Phot¢ hie. v. EAstma, KodAk Co., 61/3 E2d 263,272 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980).

14 United StAtes v. Grinnell Corp., 384 U.S. 563 (1966); I , re Municipal Bomt Reportin 2 Amitrust Lit., 672 E2d 436,441 (5th Cir. 1982).

~" United States ~: E.I. D , Pont de Nemours, at 377, 391 (1956).

i¢, See: A,l, enster BUtAne, htc. tt StewArt Co., 651 E2d 292, 295,297 (Sth Cir. 1981); and United StAres v. E.I. Da Pont de Nemours, at 395e (1956).

~7 Dimmitt A~Jri-h~dustries, Inc. ta CPC lnterna- tioHal, Inc., 679 E2d 516,521 (5th Cir. 1982), cerL denied 46[! U.S. 1/)82 (1983).

t~ Structural analysis, however, is not the only way of showing monopoly power. Early cases discussed monopolizat ion offenses in terms of the actual conduct of the defendant, using an approach that may be called "conduct analysis." The cases relied on the actual exercise of market power to control prices or exclude competitors, for example, predatory practices such as tortious attacks or threats on property and discriminatory price cutting. See: Dimmitt A qri-lndustrie6 at 526.

>2 Dimmitt Agri-lndt~stries, Inc., at 526.

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doubtful whether a 60-percent market share would be enough, and 33 percent is generally not sufficient to constitute a monopoly3 °

The second element o f monopolization is the willful acquisition of or maintenance of the monopoly power. 21 In other words, monopolization includes the general intent to do acts acquiring or maintaining the monopoly power. = The second element can be demonstrated by conduct designed to block access to markets or inhibit production, g3

Attempts to monopol ize . Sec- tion two of the Sherman Act also prohibits attempts to monopolize. Under the act, the offense o f an attempt to monopolize consists of three elements: (1) specific intent to control prices or eliminate competition in some market; (2) predatory or anticompetitive conduct directed at accomplishing this unlawful purpose; and (3) a dangerous probability of success. 24

Specific intent is essential to a federal "at tempt to monopolize" complaint, yet specific intent is difficult to prove because the evidence is often ambiguous. A business in competition naturally "intends" to injure its competitors, so specific intent clearly cannot include the

mere intention to prevail over one's rivals. 25 Nevertheless, courts need evidence of intent to evaluate the purpose and likely effects of certain business conduct:

Intent and conduct are closely related; and there must be some element of unfairness in the conduct before an anticompetit ive intent can be found .. . . as distinguished from the benign intent to beat the opposi t ion2 6

The fact that the acts themselves are lawful is o f little significance because, when the intent and the acts are bound together as part o f a single plan, they may become unlawful, iv It is this "plan" which can make otherwise legal acts unlawful. 28

B a d dog . While federal law requires conduct as well as intent, the two are closely intertwined in federal case law. Conduct can be best characterized as the employment o f methods, means, and practices that would, if successful, accomplish monopolization. 29

Many activities have been characterized as bad-conduct attempts to monopolize. Those include indus- trial espionage or sabotage, false advertising, threats, exclusive dealing, tying arrangements, and agreements with competitors to exclude rivals.

20 United States v. Aluminum Co. of America, 148 E2d 416,424 (2d Cir. 1945). 2t In re Municipal Bond Reporting Antitrust Lit., at 441. 22 For example, see: Times-Picayune Pub. Co. v. United States, 345 U.S. 594,626 (1953). 23 Heatransfer Corp. v. Volkswagenwerk, A .G. , 553 E2d 964,981 (Sth Cir. 1977), cert. denied

434 U.S. 1087 (1978). 24 Swift & Co. v. U.S., 196 U.S. 375 (1905). 2s E.I. du Pont de Nemours & Co., 96 ET.C. 653 (1980), citing R Areeda and D. Turner, Antitrust Law,

para. 822a at 314 (1977): "To declare that intention unlawful would defeat the antitrust goal of en- couraging competition on the merits, which is heavily motivated by such an intent....As a general matter, it seems unwise to find that a firm has the requisite specific intent for anticipating the exclu- sory consequences of successful competitive behavior which leads, or may lead, to a monopoly, so long as that behavior is reasonable. To suggest otherwise would be to proscribe all acts in which firms conjure up some thoughts of achieving monopoly irrespective of the actual character of the means employed to gain that end."

26 Swift & Co., supra, at 396. 27 Ibid. 28 Federal courts have never developed a general rule for distinguishing legitimate from illegitimate

intent to injure one's competitors. Those courts, however, continue to require a showing of specific intent, which is usually manifested as: (1) an intent to achieve monopoly power, or (2) an intent to drive competitors out of business so that the defendant could later charge monopoly prices. A prime example of specific illegitimate intent can be found in LorainJournal Co. v. U.S., 342 U.S. 143 (1951). In brain , the defendant was the only newspaper in town. When a radio station started broadcasting, the newspaper told its advertisers that they would not be permitted to buy advertising in the paper if they bought advertising on the radio station.

29For example, see: American Tobacco Co. v. United States, 328 U.S. 781,785 (1946).

Generally, the offense of"a t tempt to monopolize" has narrower and more-specific conduct requirements than the offense of monopolization. That's because the defendant in an attempt offense is generally not already a monopolist. W h e n analyzing conduct, it is important to keep in mind these three limitations: (1) the conduct, or planned or threatened conduct, must be capable of giving the defendant monopoly power; (2) conduct that is legal for someone who is already a monopolist is also legal for someone who is not yet a monopolist; and (3) sometimes efficient, socially beneficial conduct can create substantial market power (as contrasted with outright monopoly power).

Finally, there must be a dangerous probability o f success. This requirement is also difficult to establish. Courts usually analyze this element by examining the relevant market and the defendant's conduct. Many courts also require that the defendant have a certain amount o f "mar - ket power" before this requirement is met.

The market-power analysis is similar to that under the offense o f monopolization. The greater the market power of a firm, the greater the risk the firm will succeed in its attempt to monopolize that market. For example, conduct that is capable of giving a firm monopoly power is not as likely to succeed for a firm with only a 20-percent market share as it is for a firm controlling 70 percent o f the market. Great market power coupled with conduct is what gives substance to the threat of a dangerous probability of success. By looking at those elements courts attempt to determine whether the defendant's conduct was likely to create a monopoly.

Individual Trade-Show Promoters Although the vast majority of reported antitrust court cases involv- ing trade shows deal with agree-

June 1998 • 11

ments among members of an association sponsoring a trade show, a new breed of promoter, the individual promoter, has come on the scene. Trade shows may now be sponsored by a single company or even a single person.

Private promoters or promotion companies are less likely to draw a section-one "restraint of trade" claim than is a trade association. That's because, as an individual entity (ver- sus being a collective), the common- law right to refuse to deal affords greater protection to an individual than it does to a group, so long as the decision not to deal is made unilaterally. 3° Nonetheless, under section two, if the trade show becomes so large that it constitutes a monopoly or near monopoly, or if the private promoter engages in conduct geared to creating a monopoly, then antitrust regulations may come into play.

Monopoly. Analyzing trade- show restrictions imposed by individual promoters, particularly exhibitor exclusion, is problematic under section two. Two factors are involved in supporting a claim of monopolization: (1) the size of the trade show (i.e., market share) and availability of"substitute" forums

30 This is not to say that an individual promoter, as a single entity, does not have to worry about the Sherman Act's section one. An individual promoter, if it permits exhibitors to pressure it into excluding a competitor, violates section one. For example, in Denny's Marina v. Renfro Productions, a trade-show promoter found itself in section-one hot water when it was sued by Denny's Marina, a boat dealer. Renfro produced two boat shows in Indiana each year. Denny's had exhibited at the shows in previous years, and boasted that it would meet or beat any other dealer's price. Denny's was apparently successful with this tactic because the Central Indiana Marine Dealers' Association (CIMDA) complained to Renfro about Denny's sales pitch. Renfro thereafter allegedly excluded Denny's from future boat shows. Denny's brought suit (Renfro was not the only defendant in that suit), alleging violations of section one of the Sherman Act. The Federal Court of Appeals for the Seventh Circuit concluded R.enfro and the CIMDA defendants had engaged in a horizontal price-fixing scheme, a per se violation of section one.

such as competing trade shows, print media, and broadcast media; and (2) the purpose of the restriction or exclusion. Restrictions that would most likely be deemed to have the purpose of maintaining monopoly power are those that exclude exhibitors who participate in competing trade shows, sponsor competing trade shows, or compete indirectly with the trade-show promoter.

One type of indirect competition is the publication of trade-show dailies. What follows is a courtroom example that illustrates both the potential problems individual promoters face and the strength of their position under existing law. 31

Interface Group sponsored a thrice-yearly computer exposition. Gordon Productions distributed a guide to the expo during the course of the shows, with Interface's ap- proval. Gordon Productions sold advertising to pay for the guide, and those sales were quite profitable--so profitable, in fact, that Interface de- manded a 25-percent cut of the gross profits. Gordon Productions refused and was excluded from future shows. Interface then produced and sold advertising in its own show daily. When Gordon thereafter sought to distribute its daily at hotels and restaurants where convention participants and exhibitors were likely to congregate, Interface dis- couraged those establishments from accommodating Gordon. Then In- te~ace sued Gordon to prevent him from distributing his daily guide at all, and Gordon counter-sued, alleging (1) Interface had conspired with hotel and restaurant owners to exclude his publication from their premises (a section-one violation), and (2) Interface's conduct consti- tuted the offenses of monopolization and attempt to monopolize (a section-two violation).

31 Interface Group v. Gordon Productions, 562 ESupp. 1235 (D.C. Mass. 1983).

Gordon argued that the relevant market was trade shows; however, the court agreed with Interface that the relevant market was advertising in computer-trade publications. That substantially diluted the importance (market share) of Interface's trade show as it applied to Gordon's publications. Another factor that cut against Gordon's claim was the fact that it substantially discounted advertising prices in its trade-show daily to induce exhibitors to adver- tise in its other magazines. Gordon argued Interface was charging "monopoly" prices for advertising, but used its discounted rates in the daily as evidence of this practice. As a result there was no clear indication of what advertising prices should have been for trade-show dailies, and Gordon Productions was unable to sustain its argument that Interface was charging monopoly prices.

In brief, Interface saw a profitable segment of the market (i.e., show dailies) and used its dominant position at the trade shows to first exclude Gordon and then compete with Gordon. When Gordon con- tinued to compete, Interface again used its power to discourage hotels and restaurants from carrying the publication. Eventually Interface was counter-sued for violations of sections one and two of the Sherman Act. Even then, though, the district court noted Gordon was unlikely to succeed on the merits of its claims.

Monopolies. Analyzing"attempts to monopolize" claims pre- sents similar problems. Key here are the conduct (the reasons for exclusions) and whether there is a dangerous probability the promoter will succeed in creating a monopoly. Courts will look to the nature of the exclusion or restriction to determine whether there was, indeed, an intent to monopolize. Restrictions or exclusions related to whether a prospective exhibitor can participate in competing trade shows or sponsor its own trade show likely would show

1, EflRNELL HOTEL AND RESTAURANT ADMINISTRATION QUARTERLY

the requisite intent. Other conduct that might show requisite intent to monopolize could be (1) threats to pull advertising from newspapers or other forums that carry competitors' advertisements, (2) exclusive dealing, and (3) tying arrangements (e.g., participation in a trade show being conditioned on the purchase of some product or service, such as advertising in a magazine).

Finally, even with evidence o f bad intent and conduct, there must still be a dangerous likelihood of success on the part of the promoter at- tempting to monopolize. As a general rule, the promoter must already possess a substantial amount o f the market and be in a position to in- crease that market share through its conduct.

Essential Facilities Some trade shows may grow to such a size that participation in them becomes essential to compete. In this respect, it is theoretically possible for such a trade show to fall within the parameters of the "essential facilities" or"bot t leneck" doctrine. 32 This doctrine imposes on the controller of an essential facility the obligation to make the facility available to competitors on nondiscriminatory terms. 33 A refusal to deal by the controller of an essential facility violates the antitrust law because control o f the facility can extend monopoly power from one stage of production to another, and from one market to another. 34

Reconsider the Interface case where Interface Group used its control over the trade shows first to exclude Gordon Productions and then to produce its own daily show magazine (to collect the advertising revenues). If Intefface's computer

32 Cf. Otter Tail Power Co. v. United States, 410 U.S. 366 (1972).

33 Fergusen v. Greater Pocatello Chamber of Com- merce, Inc., 848 E2d 976 (9th Cir. 1988).

34 Fishman v. Estate of Wirtz, 807 E2d 520 (7th Cir. 1986).

expositions had been so large that they were the dominant or only trade shows in the market, the essential-facilities doctrine may have come into play, in favor of Gordon.

To establish antitrust liability under the essential-facilities doctrine, the plaintiff must demonstrate that some entity controls an essential facility; that it is impossible, imprac- tical, or unreasonable to duplicate that facility; that use of the facility has been denied; and that it was feasible to provide use o f the facility. 3~ To be "essential" within the meaning of this doctrine, the facility need not be indispensable. It is sufficient if duplication of the facility would be economically infeasible and if denial of its use inflicts a se- vere handicap on potential market entrants .36

We are not aware of any cases where a trade show sponsored by an individual promoter was found to fall within the scope of this doctrine. It may well be that competition among promoters is sufficiently fierce that no show would ever ob- tain the requisite stature in the market so as to become, in essence, an essential facility. Nonetheless, it is an area of the law about which individual promotions companies should be aware and knowledgeable.

Restrictions and Conduct to Avoid Some general guidelines can be gleaned from the above discussion. First, an individual promoter apparently has greater leeway in restricting participants or excluding exhibitors at a trade show than does an association. The nature of the restriction itself will be of paramount importance, however. The following are restrictions to avoid.

• Any restriction that limits or pre- vents an exhibitor from participating in a competing trade show.

35 T V Communications Network, Inc. v. ESPN, Inc., 767 ESupp. 1062 (D.C. Colo. 1991).

36 Fishman, supra.

• Any restriction that limits or pre- vents an exhibitor from promot- ing or sponsoring its own competing trade show.

• Any restriction that conditions participation in the trade show on the purchase of a product or service from the show promoter.

• Any restriction that conditions participation in a trade show on some agreement that the exhibitor purchase products or services exclusively from the promoter.

• Any restriction that, in concert with other exhibitors or trade- show promoters, excludes a competitor of those trade-show promoters or their exhibitors. Nevertheless, even if the first four

types of restriction are imposed or shown to exist, we believe that, ab- sent monopoly power or a dangerous probability of success, the likelihood of a challenger prevailing in court is nil.

The fifth restriction, however, brings the promoter's conduct within the reach of section one. Further, if the show in question is very large, the only one, or one of just a few in the market, the individual promoter may want to take into consideration the essential- facilities doctrine. In this respect, using the guidelines enumerated above for restricting access to or fairly excluding exhibitors from a trade show should go a long way toward fending off any potential claims under the doctrine.

D e e p hole . This article is not intended as an in-depth treatment of antitrust regulation. Antitrust law is complex and intricate. Rather, the purpose was to provide some insight into this area of law, and provide suggestions and guidelines on ways to avoid potential pitfalls. Always remember to err on the side of cau- tion, for it makes good business sense to minimize one's potential exposure to litigation, especially needless litigation, for litigation is nothing if not a money pit. CQ

June 1998 ,,, l e