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Aspen Skiing Co. v. Aspen Highlands Skiing Corp. - 472 U.S. 585, 105 S. Ct. 2847 (1985)

Rule:

The offense of monopoly under § 2 of the Sherman Act, 15 U.S.C.S. § 2, has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. 15 U.S.C.S. § 2.

Facts:

Aspen Highlands Skiing Corporation (“Highlands”), which owns one of the four major mountain facilities for downhill skiing at Aspen, Colo., filed a treble-damages action in Federal District Court in 1979 against Aspen Skiing Corporation(“Skiing”), which owns the other three major facilities, alleging that Skiing had monopolized the market for downhill skiing services at Aspen in violation of § 2 of the Sherman Act. The evidence showed that in earlier years, when there were only three major facilities operated by three independent companies (including both petitioner and respondent), each competitor offered both its own tickets for daily use of its mountain and an interchangeable 6-day all-Aspen ticket, which provided convenience to skiers who visited the resort for weekly periods but preferred to remain flexible about what mountain they might ski each day. Skiing, upon acquiring its second of the three original facilities and upon opening the fourth, also offered, during most of the ski seasons, a weekly multiarea ticket covering only its mountains, but eventually the all-Aspen ticket outsold Skiing's own multiarea ticket. Over the years, the method for allocation of revenues from the all-Aspen ticket to the competitors developed into a system based on random-sample surveys to determine the number of skiers who used each mountain. However, for the 1977-1978 ski season, Highlands, in order to secure Skiing's agreement to continue to sell all-Aspen tickets, was required to accept a fixed percentage of the ticket's revenues. When respondent refused to accept a lower percentage -- considerably below its historical average based on usage -- for the next season, Skiing discontinued its sale of the all-Aspen ticket; instead sold 6-day tickets featuring only its own mountains; and took additional actions that made it extremely difficult for respondent to market its own multiarea package to replace the joint offering. Respondent's share of the market declined steadily thereafter. The jury returned a verdict against Skiing, fixing Highlands’ actual damages, and the court entered a judgment for treble damages. The Court of Appeals affirmed, rejecting Skiing's contention that there cannot be a requirement of cooperation between competitors, even when one possesses monopoly powers.

Issue:

Were the actions of Highlands properly held to violate Section 2 of the Sherman Act?

Answer:

Yes

Conclusion:

The Supreme Court affirmed the judgment upholding the finding of a violation of Section 2 of the Sherman Act, 15 U.S.C.S. § 2. The Court found that the monopolist elected to make an important change in a pattern of distribution that had originated in a competitive market and had persisted for several years. The absence of an unqualified duty to cooperate did not preclude a finding that the monopolist's decision not to participate in the cooperative marketing venture had evidentiary significance as to its liability. The right to refuse to deal with rival firms was not unqualified. Because the jury was unambiguously instructed that the monopolist's refusal to deal with its rival did not violate § 2 if valid business reasons existed for that refusal, the jury concluded that there were no valid business reasons for the refusal. The conclusion found support in the record, most significantly because the monopolist failed to persuade the jury that its conduct was justified by any normal business purpose.

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