The plaintiff, Aspen Skiing Company (Ski Co.), owns and operates three of the four mountains in Aspen, Colorado; including Ajax Mountain (opened in 1946), Buttermilk Mountain (opened in 1964) and Snowmass Mountain (opened in 1967). The defendant, Aspen Highlands Skiing Corporation (Highlands), owns and operates the fourth mountain in Aspen called Highlands Mountain (opened in 1958). The two company’s had offered an “All-Aspen” pass, which was initiated in 1962, in addition to their own independent proprietary passes. The All-Aspen pass allowed visitors to ski on any of the four mountains in a 6-day punch pass format, and they had an agreement for compensation based on actual usage of the mountains. This had been agreed upon for 16 years and started prior to Ski Co. opening Snowmass Mountain. During the 1977-1978 season, Ski Co. decided to no longer offer the All-Aspen pass, unless Highlands agreed to a stipulation to change compensation based on actual percentage of usage to a fixed 12.5 percent compensation for the following season. “Highlands' shares of the revenues were between 13 percent and 18 percent during the 1974-1978 period” (Prentice-Hall). Highlands made multiple counters, but all were declined, and in turn, highlands refused to accept the fixed percentage offer. Ski Co. discontinued the All-Aspen pass for the 1978-1979 season and offered a proprietary three mountain pass that did not include skiing at Highlands. Highlands the following year tried to purchase lift tickets from Ski Co. to sell at their mountain, but Ski Co. would not sell them lift tickets. Highlands in an attempt to combat their exclusion from the Ski Co.’s passes attempted to create and market a new pass idea called the “Adventure Pack” which included three days at Highlands and three redeemable vouchers for tickets at Ski Co.’s resorts. Ski Co. refused to accept the vouchers, and in response, Highlands put money orders instead of vouchers, which Ski Co. eventually accepted. “At this point, Highlands market share quickly declined, from 20.5% in 1976-77 to 11% in 1980-81” (Law School Case Briefs). Highlands filed a lawsuit against Ski Co. in 1979 claiming that Ski Co. violated the Sherman Act Section 2 with an act of monopolization, and the case was agreed to be heard by the Supreme Court in March of 1985.
What were the legal issues surrounding the case from the standpoint of each of the parties to the case
Highlands Filed the lawsuit claiming that Ski Co. had violated the Sherman Act Section 2 which states “every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation” (LII / Legal Information Institute). Due to the fact that Highlands share of the All-Aspen pass ranged between 13 percent and 18 percent, 12.5 percent is not a reasonable offer for Highlands to accept. Having the All-Aspen pass compensation based off of the percentage of use is the most reasonable agreement in business terms, and Ski Co. had no potent business reasons to not formulate some sort of an agreement with Highlands and exclude them from the market.
The question of intent is relevant to the offense of monopolization in determining whether the challenged conduct is fairly characterized as "exclusionary," "anticompetitive," or "predatory." In this case, the monopolist did not merely reject a novel offer to participate in a cooperative venture that had been proposed by a competitor, but instead elected to make an important change in a pattern of distribution of all-Aspen tickets that had originated in a competitive market and had persisted for several years (Justia Law).
The Supreme Court states that intent is important when gauging if a company acted with monopolizing intent. Ski Co. made fundamental changes to the distribution of passes for tourists and for locals with the direct intent to exclude Highlands from their prospective market share. The Supreme Court in order to decide if Ski Co.’s actions could be considered as exclusionary decided to delve into the adversities and how this affected the plaintiff, defendant, and customers. The distinction cannot be completely drawn whether or not Ski Co. acted malevolently just looking at the effects towards highlands, but it could be further drawn if consumers were being restricted. It is stated that there was a strong demand for the 6-day All-Aspen pass from locals and tourists. It was a very rewarding format for an experienced skier to be able to visit any of the four mountains; as well as, very convenient because skiers were able to choose when they were able to ski, and they could spend more time skiing and less time waiting to buy their daily ski ticket. “A consumer survey undertaken in the 1979-1980 season indicated that 53.7% of the respondents wanted to ski Highlands, but would not; 39.9% said that they would not be skiing at the mountain of their choice because their ticket would not permit it” (Justia Law). It is very evident that locals and tourists alike prefer the flexibility and convenience of being able to ski on all four mountains, but also being able to purchase tickets for any mountain at any mountain.
During the same season that Ski Co. discontinued the All-Aspen pass, they also refused to sell highlands any tickets for retail to their three mountains, so visitors of Highlands would not be able to purchase tickets to Ski Co.’s three mountains. In response to this exclusion Highlands produced the “Adventure Pack” that included three punch pass tickets to Highlands, and three redeemable vouchers for cash to purchase tickets to Ski Co.’s mountain’s, unfortunately, Ski Co. refused to accept them. Highlands then redesigned the Adventure Pack to no longer contain the vouchers, but now contain money order’s, and Ski Co. eventually accepted them. The Adventure Pack was a well-planned response to the discontinuation of the All-Aspen pass but was inconvenient compared to the convenience of the old pass. This made Highlands a ski destination within a ski destination, and their market share steeply declined (Justia Law).
“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” (Law School Case Briefs).
The jury sided in favor with Highlands and was able to properly outline where Ski Co. had skirted the law and violated the Sherman Act Section 2. Ski Co. was not able to thoroughly justify their refusal to cooperate with Highlands. In addition, there were multiple malevolent acts made after to the removal of Highlands from the All-Aspen pass that could be properly categorized as exclusionary, anticompetitive, or predatory. Ski Co. refused to sell Highlands tickets to their mountains for the tour guide discount, let alone at retail. Ski Co. also refused to accept customers vouchers because they were purchased through highlands. The Aspen Skiing Company would rather sacrifice revenue not selling Highlands tickets or accepting vouchers in order to not include Highlands for their fair share of the market.
What was the court or jury’s disposition of the case (How and for whom did they find)
The jury sided in favor with Highlands and found Ski Co. guilty of violating Sherman Antitrust Act Section 2, and calculated Highlands actual damages to be $2.5 million. The District Attorney explains that a violation of the Sherman Act has two key principles: the corporation or person has monopolizing power, and that they use that power for anticompetitive or exclusionary purposes or means. It is very important to draw the distinction from malevolent monopolizing intent and a strictly superior product, efficiency in business, or luck in the gaining of monopolizing power. “It has been said that obtaining or maintaining monopoly power cannot represent monopolization if the power was gained and maintained by conduct that was honestly industrial. Or it is said that monopoly power which is thrust upon a firm due to its superior business ability and efficiency does not constitute monopolization” (Justia Law). A corporation with monopolizing power is not required to work with a competitor. A corporation is also not acting malevolently if they refuse to enter an agreement or partnership with a competitor if there are potent business reasons that justify that refusal. The All-Aspen pass was first introduced in 1962 and was in commission for 16 years until it was discontinued in 1978. This pass was far more convenient than the traditional daily ticket system. Rather than waiting in line to buy your ski ticket every day, you could purchase the 6-day All-Aspen pass and be able to go to any of the four mountains any days you pleased, and go straight on to the lift. This format offered variety of terrain, and convenience and independence from daily lift lines. After discontinuing the All- Aspen pass, Ski Co. did not return to the daily lift format but created their own convenient three mountain pass with a similar model, and excluded highlands from that offering. Ski Co. further refused to sell Highlands their tickets for a discount, let alone full retail, and blatantly refused to accept Highland’s Adventure Pack coupons. Customers were deprived of the foremost convenient and best offering that the two resorts could offer, and Highlands was excluded from their fair market share in the long run. Highlands was found to have $2.5 million in actual losses, and Ski Co. was required to pay punitive damages of $10 million to Highlands.
Did you agree or disagree with the court’s/jury’s findings? Explain why?
I agree with the court's findings. I think that there was blatant monopolizing intent from Ski Co. to exclude Highlands from the skiing industry in Aspen. They state that in order for a monopolizing company to refuse to cooperate with a competitor all they have to do is justify why. Ski Co. was not able to justify why they would not sell Highlands tickets, and why they would not accept the vouchers. It is an obvious idea that selling bulk tickets to another mountain for the full retail price could only be beneficial for the company yet Ski Co. refused to sell them tickets. I guess they could justify why they discontinued the All-Aspen pass as being because Highlands would not accept their offer of 12.5 percent compensation, but it is also economically beneficial for them to continue to sell this pass even if it is based on off actual percentages. I could understand that they would rethink their agreement if Highlands was getting 25 percent compensation, because their actual market share was not, for them to discontinue the pass because Highlands wouldn’t accept an offer for lower than their worst market share in the history of the pass is ludicrous. You would think that Ski Co. would be reasonable enough to negotiate terms with Highlands after they refused the offer, but no. Highlands did not only lose its customer base after being removed from the All-Aspen docket but lost a ton of revenue from lost business opportunities. It is not very feasible for a local or a tourist to be happy with no longer being able to go to all four mountain on one pass. Imagine if when you bought your ski pass you could only go to Aspen, Buttermilk, or Snowmass, and in order to ski Highlands at all, you had to go there and buy another ski pass on top of the one you’ve already purchased. In conjunction, imagine if you were to have been one of the ones the purchase the Adventure Pack, and you went to Aspen Mountain to redeem your vouchers and they refused to accept them because you purchased them from Highlands. I would be pissed in either scenario. It was very interesting learning about the nuances of monopolization. I knew that being a monopoly was illegal, but I did not know what about being a monopoly, or what a monopoly did to be illegal. I didn’t realize that by sheer economies of scale, efficiency, or a plainly superior product could cause the achievement of monopoly power, but it is also entirely legal to grow or maintain that power of done fairly. The only violations in the law come when acting malevolently on the competition in anti competitor, excusatory, or predatory way. It makes sense that it should not be illegal for a well run business to grow, but that it is illegal when that company impedes the possibility of another to grow. I think that they choose the right side, and I also think that $10 million in punitive damages is a very sufficient settlement given that it was calculated that Highlands had $2.5 million in damage.