Aspen Skiing Co. v. Aspen Highlands Skiing Corp.

Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), was a United States Supreme Court case that decided whether a dominant firm's unilateral refusal to deal with a competitor could establish a monopolization claim under Section 2 of the Sherman Act .

The unanimous Supreme Court agreed with the 10th Circuit that terminating a pro-consumer joint venture without a legitimate business justification could constitute illegal monopolization. However, its decision created an exception to the general rule that firms can decide with whom to do business absent collusion, sparking significant controversy about the appropriate scope of this exception.

In a subsequent case, Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP , Justice Scalia, writing for the majority, stated that Aspen Skiing is "at or near the outer boundary of § 2 liability." Although its holding has been narrowed, this case's relevance remains contested, especially in the context of refusals to license intellectual property.

Contents

• 1 Facts

• 2 Procedural history

• 3 Judgment

• 4 Criticism

  • 4.1 Inadequate analysis of exclusionary effects

  • 4.2 Improper market definition

  • 4.3 Inappropriate injunctive relief

• 5 Subsequent case law

• 6 References

• 7 External links

Facts

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Aspen Highlands and Aspen Skiing Co. were rival ski resorts in Aspen, Colorado . Throughout his ownership, Aspen Highlands founder Whip Jones remained at odds with Aspen Skiing Company , which owned and operated the three other Aspen ski areas: Aspen Mountain (Ajax) , Buttermilk and Snowmass .

In every season, but one, from 1962 to 1977, Highlands and Ski Co. collaborated to offer a 6-day, All-Aspen ticket. Revenues from All-Aspen ticket sales were divided according to which hills skiers used. Multi-area tickets became popular with consumers and by 1977 made up over one third of the market.

Despite more than a decade of cooperation, Ski Co. management grew discontent with the All-Aspen ticket. Complaining that monitoring ticket-holders' use was cumbersome and inaccurate and that the All-Aspen ticket attracted customers who would otherwise buy Ski Co.'s 3-area, 6-day ticket, Ski Co. management recommended abandoning the All-Aspen ticket for the 1978–79 season. Accordingly, the Ski Co. board offered Highlands a fixed percentage of the revenue significantly below Highland's usual rate to continue the All-Aspen ticket for the 1978–79 season. As one board member suggested, it was an offer Highlands "could not accept" and the All-Aspen ticket vanished.

Although Highlands sought other ways to offer multi-area passes to compete with Ski Co., Ski Co. successfully thwarted its efforts. Ski Co. refused to sell Highlands any lift tickets, even at retail value. It also refused to accept vouchers backed by local banks for the full cash-value of retail price lift tickets. Eventually, Highlands replaced vouchers with American Express Traveler's Checks or money orders. While Ski Co. accepted these, the product was inconvenient compared to the All-Aspen ticket and Highland's share of the Aspen downhill skiing market sank from 20.5% in the 1976–77 season to only 11% in the 1980–81 season.

In 1979, Highlands filed a complaint against Ski Co. alleging illegal monopolization in violation of Section 2 of the Sherman Act.

Procedural history

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A jury in the United States District Court for the District of Colorado found that Ski Co. maintained its monopoly through anticompetitive means in violation of the Sherman Act. The District Court awarded Highlands $7,500,000 in treble damages, costs, attorneys' fees and issued a temporary injunction requiring revival of the All-Aspen ticket. Ski Co. appealed the decision, arguing that its refusal to cooperate with a competitor could not constitute illegal monopolization as a matter of law. However, the 10th Circuit affirmed the jury verdict, finding that Ski Co.'s refusal to cooperate could constitute illegal monopolization applying either of the two available tests: (1) the anticompetitive effect and intent test and (2) the essential facilities doctrine .

The Supreme Court granted cert and affirmed the 10th Circuit's decision based on anticompetitive intent, without analyzing the essential facilities doctrine.

Judgment

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The Supreme Court held that Ski Co.'s refusal to deal with Highlands, despite the historical success of their joint-venture, could constitute illegal monopolization because it deprived consumers of a superior All-Aspen ticket option, injured Highlands' ability to offer competitive multi-area tickets, and, "perhaps most significant," it lacked any efficiency justification. As the Court recognized in Lorain Journal , a firm's right to choose with whom to do business, or not, is important, but not "unqualified."

A firm's refusal to engage in a specific joint venture can still be legally significant and, under certain conditions, lead to liability—particularly for a monopolist. The right to choose one's customers and associates is fundamental, but it exists alongside antitrust laws designed to prevent the abuse of market power. Therefore, a monopolist's decision to terminate a long-standing cooperative venture (like the joint ski pass) may cross the line from a legitimate business choice into an illegal exclusionary practice.

The court assessed and rejected all of Ski Co.'s proffered justifications for its refusals to deal. Ski Co. attempted to justify its termination of the All-Aspen ticket by suggesting that use monitoring was too inaccurate, but the Court pointed out Ski Co. already monitored usage on its own hills.

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