On Wednesday, the Third Circuit Court of Appeals issued its opinion affirming the District Court’s judgment in Host International, Inc. v. MarketPlace, PHL, LLC. Through its decision in Host International, the Third Circuit answered the novel question of whether an exclusive beverage agreement at an airport can be challenged under the federal antitrust laws and held that it cannot.
According to the opinion, Host owns and operates food beverage and merchandise concessions at over 120 airports globally, including Philadelphia International Airport (PHL). The opinion states that the City of Philadelphia owns PHL and uses a private firm, MarketPlace, PHL, LLC, to act as a landlord for concession locations and other property within the airport.
The court’s opinion states that, after a competitive bidding process through MarketPlace, Host International won two concession spots at PHL to open a coffee shop and restaurant. However, negotiations began to falter when MarketPlace began insisting on terms in the agreement that would grant third-parties exclusive or semi-exclusive rights to be sole providers of certain foods, beverages or other types of products. Included in these terms was a “pouring-rights agreement” that granted Pepsi the exclusive control over beverage products advertised, sold and served at PHL.
Subsequently, Host International refused to agree to the “pouring-rights agreement,” walked away from the deal with MarketPlace and filed a complaint in the Eastern District of Pennsylvania. In the lawsuit, Host International alleged that Marketplace operated a scheme to gain control of the beverage sales at PHL by tying the “pouring-rights agreement” to lease commercial space to gain outside profit at the expense of PHL consumers, competing beverage suppliers and lessees of concession and retail space at PHL. Host International asserted those allegations under Section 1 of the Sherman Act, claiming an unlawful tying arrangement, an illegal conspiracy and an agreement in restraint of trade.
MarketPlace later moved to dismiss the complaint, stating that Host International failed to state a claim in which relief can be granted. The District Court granted the motion with prejudice stating that Host International had standing to bring its antitrust claims, but failed to adequately plead a relevant geographic market. Host International appealed the district court’s judgment to the Third Circuit Court of Appeals.
At the Third Circuit, Judge Matey affirmed the district court’s judgment holding that Host International lacks antitrust standing and failed to adequately plead a violation of Section 1 of the Sherman Act. Judge Matey states that Host International lacks antitrust standing because there was no antitrust injury, holding that failure to secure preferred contractual terms is not an antitrust injury. Additionally, the court held that Host International failed to state an adequate tying or restraint of trade claim under the Sherman Act. The Third Circuit stated that the relationship and negotiations between the parties ended due to the terms of the contract and not due to antitrust behavior.
Host International is represented by Goldstein & Russell, PC, Langer Grogan & Diver, PC and Yetter Coleman LLP. MarketPlace is represented by Ballard Spahr LLP. Additionally, an Amicus Curiae brief was submitted in support of Host International by the Restaurant Law Center through their counsel Jenner & Block LLP.