Friday, January 17, 2014

Aspen Skiing Co. v. Aspen Highlands Skiing Corp. case brief summary

Aspen Skiing Co. v. Aspen Highlands Skiing Corp. case brief summary

Aspen (P) owned three ski resorts (mountains) in Aspen, Colorado, and Highlands (D) owned the fourth. Until 1977, the four mountains sold varying types of all-Aspen tickets.  They shared revenues based upon usage of the resorts. In the 1977-78 season, Ski Co. refused to offer the all-Aspen ticket, unless Highlands was to accept a fixed percentage of the revenue. In 1978, Ski Co. declined to continue offering the all-Aspen ticket, and offered Highlands a “deal they could not accept,” and, furthermore, refused to split revenues with Highlands paying an independent auditor at its own expense.  At this point Highlands market share quickly declined, from 20.5% in 1976-77 to 11% in 1980-81.

The Court found that there was sufficient evidence for the jury to determine that Ski Co. was not motivated by efficiency concerns and that Ski Co. was willing to sacrifice short-run benefits and consumer goodwill in exchange for the long-term exclusion of Highlands.
  • The Court noted that multi-area tickets are used in other competitive markets, which allowed for an inference that they satisfy consumer demand.
  • The Court assumes that the jury concluded there was no valid business reason for the “important change in a pattern of distribution that had originated in a competitive market and persisted for several years.”
Analysis and Notes
  • Many commentators have questioned the market definition as limited to Aspen, although the Court was required to accept the market definition that was found by the jury.
  • From an economic point of view, exclusion of rivals and harm to competition essentially ensures that the harm outweighs any potential benefits.
  • The Court examined claims that the all-Aspen ticket is superior in quality, that Highland’s ability to compete is impaired, and looks for a [non-existent] business justification from defendant.
  • Intent can be proved through specific statements, threatening conduct, as well as actions unrelated to efficiency (see Footnote 39, which suggests that this is not the full rule of reason analysis).
  • The Court highlighted the existing relationship.  
  • The court suggests that there is no duty to deal, instead there is a duty to continue dealing.

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