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Industry associations disapprove San Diego Convention Center ruling

While San Diego Convention Center may be celebrating its victory on Aug. 15 when the Ninth Circuit Court of Appeals upheld its right to retain exclusive in-house cleaning services, leading industry associations are voicing their condemnation of the decision.

United National Maintenance, a vendor of tradeshow cleaning services, originally brought a lawsuit against San Diego Convention Center Corp. in November 2007 for violating antitrust laws when the facility instituted a policy in July of that year mandating that it would be the exclusive provider of cleaning services staffing within its facility.

SISO, ESCA and IAEE spoke out against the ruling requiring show organizers to use the facility’s exclusive services.

“The Ninth [Circuit Court of Appeals] basically said that San Diego was above the Law and could do whatever they wanted, which…is not favorable to organizers or contractors. The real question is how far will San Diego or other venues go to bring services in house and then require organizers to purchase services from the venue eliminating our Freedom to choose our own vendors,” stated Lew Shomer, executive director, SISO. “The crux of the matter is that when I have my own choice I can then control the quality I get from my sub-contractors as well as making sure that the costs are competitive. Take that away and I am at the mercy of the venue, which would cause the organizer to raise my prices to my exhibitors and that becomes a slippery slope.”

In a publicly released statement, the industry associations spoke on behalf of show organizers and exhibitors:

“The Society of Independent Show Organizers (SISO), the Exhibition Services & Contractors Association (ESCA) and the International Association of Exhibitions and Events (IAEE) are disappointed at the result of the Ninth Circuit Court of Appeals which has recently amended its opinion to state that SDCCC is a public entity and denied UNM’s petition for a rehearing on antitrust charges. The Ninth Circuit cited that ‘SDCCC operates as an instrument of San Diego, based on the facts that SDCCC’s board members are appointed by the City of San Diego, SDCCC’s assets revert to San Diego, and the fact that, SDCCC must publicly account for its operations. SDCCC is an extension of the municipality of San Diego and thus does not require active supervision by the state in order to retain its immunity from antitrust liability.’

“The decision to allow San Diego to virtually eliminate fair and equal access to organizers’ existing contracts with vendors is a restraint of trade, forcing organizers to use the vendors selected by the convention center which automatically creates control and quality issues for the organizers and their exhibitors.

“As the representatives of the majority of show organizers in the U.S., it is our responsibility to advise our members of practices that inhibit their ability to provide their customers with the best possible services and [ensure] their success at the events we organize. San Diego, with this new judgment, will inhibit the way our members do business in San Diego and most likely will cause organizers to look for more user-friendly venues.

“The act of forcing existing customers to use services provided by the facility forces organizers to pass extra burdens of cost and possible risk on to their customers. This, in many cases, would cause the organizer to be at the mercy of how and who the venue selects to provide security, maintenance and other vendors for the organizers’ own events. Losing the ability to control and reward their own appointed vendors for these and other services creates an open door policy that will allow the center to institute new practices of exclusivity that can reduce service and increase costs to all parties. These exclusive arrangements take away all of the organizers’ rights to protect their customers by forcing them to use agents that they might not necessarily consider competent or competitive. This finding, if allowed to stand without further appeals, will threaten organizers’ existing agreements with their exhibitors and contractors, thereby interfering with the results they have previously projected, based upon existing leases and agreements with their appointed vendors

“We urge San Diego and other venues to use prudence when reviewing the Ninth Circuit’s findings regarding any exclusives that might interfere with the organizers’ right to Freedom of Choice.”

Lew Shomer, Executive Director, SISO
Larry Arnaudet, Executive Director, ESCA
David DuBois, President, CEO, IAEE

Reach Lew at (310) 450-8831 x2 or lshomer@shomex.com; Larry at (972) 447-8210 or larry@esca.org; David at (972) 687-9204 or ddubois@iaee.com.

See related article
San Diego Convention Center Corp. wins court appeal from vendor
Court invalidates financing for San Diego Convention Center expansion
San Diego Convention Center expansion faces legal woes

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