You had to be a city and have an exibition ground to enter. Also if Liverpool qualified for a proper European trophy Everton couldn't get into a tin pot invitational. Barca pulled out at quarter final stage as water to concentrate on proper trophies. All well documentated
That isn't accurate. If Liverpool were in the cup winners cup or the European cup, Everton could still have entered the Fairs Cup.
In the very early years of it, when it was played over two years, the qualification process was between cities that had hosted an international trade fair. Hence the Fairs Cup.
By mid 60s it had evolved into a two legged knock out competition with qualification awarded on league placing. Initially the organisers had one club per city rule. Which is why Everton didn't qualify in your example. That rule was done away with not long after, although the FA kept it in place, and even into the 70s when the UEFA cup had taken over from the Fairs Cup.
The circumstances in which Newcastle qualified for the 68/69 competition were mad, but we didn't make the rules.
England had 3 places in the Fairs Cup awarded via league position and one club per city.
It meant that because Man United were defending champions of the European Cup, and Man City had won the league, 3rd place Liverpool took the first Fairs Cup place.
4th place Leeds entered the Fairs Cup as defending champions.
5th place Everton unable to enter due to Liverpool qualifying
6th place was Chelsea who took the second Fairs Cup slot.
7th placed Tottenham couldn't enter because of Chelsea.
8th place West Brom entered the Cup Winners Cup.
9th place Arsenal couldn't enter because of Chelsea.
10th place Newcastle got the last slot.
As I said, the qualification rules were stupid, but that's how the FA decided to keep it for a good while after one club per city was abolished. Still done well to win the thing though.