How Much Power Is Too Much Power?

      Don Magary, Editor

 "Power corrupts, and absolute power corrupts absolutely."

  This aphorism was stated by Lord Acton a century ago, yet the wisdom he expressed in the simple phrase remains true. The problem with having too much power is the temptation to abuse that power. There are obviously companies in the industry that have more economic clout than the Affinity Group, Inc., but we doubt that any company has more power than Affinity. Why do we think that? First of all they have a lock on the industry’s ability to speak to the consumer – and they control that gateway with an iron fist. If you have a product or service that you want to market to an RV owner, the only way to reach that audience in great numbers is through an Affinity publication, which includes Trailer Life, Motorhome, Roads to Adventure, Highways (the Good Sam magazine), Coast to Coast (the Coast to Coast magazine), or any of the many Woodalls’ regional magazines.

You say, well fine, simply run ads in Affinity’s magazines. Okay. But what if Affinity won’t let you advertise? You say, they wouldn’t turn advertising away. Oh yes they would and do. If your product or service is interpreted by them as competitive to any of their products or services, they will not let you advertise.

In recent weeks several people have called from companies that have had their advertising refused by Affinity; however, they eventually found an alternative method of reaching the consumer — Camping World. Starting to get the picture? These companies are extremely concerned that the Affinity policy will be superimposed on Camping World now that they own that company. If that happens these companies believe they will be driven out of business.

We believe these peoples’ stories to be true because we have personally been the beneficiary of Affinity’s monopolistic power. When we launched RV America On Line, the host web sites for RV industry companies on the Internet, we asked Affinity for a media kit and expressed our intention of advertising. Mike Schneider, COO, the Affinity Group, said Affinity would not accept our advertising because we were a competitor. True, Affinity also has an Internet site but the focus is entirely different. Interpreting RV America as a competitor took a huge leap of imagination; however, that was their decision. I suppose they view Microsoft and General Motors as competitors too because they also have Internet sites.

How much power is too much power? In this case, Affinity crossed the line of having too much power a long time ago in our opinion. Affinity has a monopoly on access to the RV consumer and that’s too much power, especially since they capriciously lord that power over would-be competitors. With the recent acquisition of Camping World, Affinity has significantly reinforced that power. Executives at Affinity act surprised that RV dealers are outraged because Affinity is targeting yet more of their profit centers - service and aftermarket parts and accessories.

Affinity has launched a public relations campaign to counteract the backlash from dealers and others in the industry who see the Camping World-Affinity marriage as detrimental to the well being of the industry. Their message is, TL publications, Good Sam, Woodalls, Coast to Coast and Camping World are all separate divisions of Affinity and are being run independently; therefore, don’t take it out on Trailer Life, for example, if you are upset by something Camping World does. That in itself should outrage the industry even more. Affinity is giving them the "idiot treatment" and expecting them to buy into it.

Unfortunately, it is working in some quarters. After Schneider appeared before the RVDA board of directors recently, delivering that "different" and "independent" nonsense, the board of directors voted by the narrowest of margins to re-instate it’s RV Business-RVDA partnership on the Quality Dealer of the Year, after having previously announced that they had suspended the relationship because of members’ opposition. Seems some board members are more flattered by the "idiot treatment" than others.

RVIA members might be surprised to know also that their board of directors is subsidizing Affinity by contributing $70,000 a year toward publishing Affinity’s newest publication, "Roads to Adventure." That’s so Affinity will provide copies of the magazine to pass out at consumer shows. That is a really dumb idea – Affinity should be paying RVIA to allow them to pass out the publication at retail shows! Perhaps RVIA should take that money and put it toward the Go Rving fund raising campaign rather than putting a surcharge on suppliers’ exhibit space at the Louisville show – but I digress.

Affinity has been implementing their predatory strategy for the past several years, and for the most part, it has gone unnoticed. Buying up all the available RV publications never aroused the interest of the average industry member. Some people, dealers primarily, started paying more attention when Affinity started selling extended warranties, insurance and secondary financing – all in the noble name of providing "membership benefits" to their clubs – Good Sam and Coast to Coast. Now, Affinity has upped the ante again, going into competition with dealers on every level of their business except selling rolling stock.

Affinity is certainly a monopoly; however, the mere possession of monopoly power is not unlawful. We believe that Affinity is walking an "antitrust" tightrope right now.

An attempt to monopolize, which is a violation of Section 2 of the Sherman Act, does not require a showing of monopoly power. This offense requires three basic elements: exclusionary or anti-competitive conduct, specific intent to control prices or destroy competition and a dangerous probability of success [Swift and Company v. U.S., 1905]. The second element, sometimes described as the "specific intent to destroy competition or build a monopoly," is often inferred from exclusionary or anti-competitive conduct by the firm. The final element requires a "dangerous probability" that the effort will result in the acquisition of monopoly power.

Traditionally, an examination of the alleged predator’s market share has been employed for this determination. A market share in excess of 40 to 60 percent has been viewed as providing the element of dangerous probability of success [Cargill Inc. v. Monfort of Colorado Inc., 1986].

Unfortunately, Affinity’s course may go uninterrupted unless someone tests their predatory conduct in court. And denying a competitor access to the marketplace when you control significant access, in excess of the 40-to-60-percent-marketshare test, gives rise to that possibility.

Affinity’s predatory path needs to be stopped. Aside from the costly and unpredictable legal course, the most effective way to stop Affinity is deny them the capital necessary to meet their financial obligations. Whether it is through advertising, providing "member benefits" at your expense by giving 10-percent discounts, or selling their products and services, every dollar you spend with Affinity, no matter how insignificant you believe it is, helps Affinity take your business, or in the case of a manufacturer, take your customers business, away.

It’s going to take people with guts like Paul Skogebo, president, Robert Crist & Co., a major RV dealership in Arizona. When the Trailer Life sales person came in for an ad recently, Paul said — no ad. When asked why not, Paul answered because of Affinity buying Camping World. The sales person said, but that’s another division – you shouldn’t take it out on Trailer Life. Paul answered, "Maybe so, but this is the only way I have to protest."

We applaud the Paul Skogebo’s of the industry - and there are many. We just need a lot more like him.

No matter how powerful Affinity believes itself to be, the real power is still at the grassroots level, individuals taking a stand.