BUS670 Week 4 Discussion 2.

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University Of Arizona *

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670

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Law

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Nov 24, 2024

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Antitrust Law [WLO: 2] [CLOs: 2, 3, 4] [NACE: 1, 2, 3, 6, 7] Prior to beginning work on this discussion forum, review Chapter 31 in your textbook and use the information to address the following scenario: Rajah’s RV, Inc., a recreational vehicle (RV) dealer filed an antitrust lawsuit against Big Show, LLC; Springfield Convention Center, Inc; Central Illinois RV Dealers Association (CIRVDA) and several other RV dealers which are competitors in the central Illinois market. Big Show operates two RV shows each year, one in the spring and one in the fall, at the Illinois State Fairgrounds in Springfield, Illinois. The spring event is one of the largest in the United States and attracts over 60,000 consumers each year. The fall show is smaller, but it still has almost 20,000 people attend. Rajah’s has participated in the fall show for the past four years and the spring show for the last three. The company has been highly successful at selling RVs at each of the events because it urges customers to shop with other dealers and then return to Rajah’s for a lower price. After this year’s spring show, several competitors began to complain to Big Show about the methods used by Rajah’s. There were also objections made to the Springfield Convention Center and CIRVDA. As a result of these complaints, Big Show informed Rajah’s that after this fall’s event it would no longer be allowed to participate.  Analyze if the decision to exclude Rajah’s from future RV shows would result in a violation of Section 1 of the Sherman Act. What argument would be used to support Rajah’s position?  Discuss which standard – the per se or the rule of reason - a court would use to analyze this case. Explain why.  Describe any valid legal arguments that the defendants in this case (Big Show, the Springfield Convention Center, CIRVDA, etc.) would have for excluding Rajah’s from the shows.  Assume the court rules for Rajah’s. Discuss if this ruling would be fair or if it would be going too far in protecting the RV market in central Illinois?

The Discussion solution is below the image… Section 1 prohibits two or more parties from working together to restrict another company or individual’s access to sell their products (Seaquist, 2012). Section 1 of the Sherman Act was violated as the other RV sellers worked together to form complaints that then restricted Rajah’s access to RV shows thus limiting their ability to sell their products at both trade shows. Rajah’s could argue that the complaining dealers and association were price fixing or keeping prices higher by not offering discounts that would cause competitive pricing. By Rajah’s offering discounts the dealers and association retaliated causing Rajah’s ability to sell at the trade shows to be restricted. Because Big Show, LLC and the Convention Center enforced the action against Rajah’s they too would be liable. I believe the courts would argue that the per se violation was the act of agreeing amongst competitors to fix prices to maximize the profits between them. By

Rajah’s offering discounts below the other dealers they were losing business while Rajah’s was acting alone and is within their right to price match or beat competitors. The defendants could argue that Rajah’s is conducting price discrimination as they could be discounting at a loss in order to harm the other businesses. For Price Discrimination to be true the sales must be for goods not services, must be comparable to the goods of the other companies, there is probable harm to competitors, and usually the sale must be over state lines but there are exceptions based on specific areas (Price Discrimination, n.d.). If the courts ruled for Rajah’s then the business may not have been offering unfair discounts, or were not offering discounts at a loss for a long enough period of time as trade shows are not long events but the initial discount and sale could create brand loyalty that would pay-off at a later date when customers return for later purchases. The court ruling may also be protecting fair competitive pricing, as if the other dealers were not offering any discounts it could be considered collusion to keep profits at a maximum rather than competitive. References: Federal Trade Commission. (n.d.) Price Discrimination: Robinson-Patman violations. https://www.ftc.gov/advice-guidance/competition-guidance/ guide-antitrust-laws/price-discrimination-robinson-patman-violations Seaquist, G. (2012). Business Law for Managers. Zovio.

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BUS670 Week 4 Discussion 2.

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