Author(s)
Jonathan Lewinsohn and George Priest
Source
Book chapter in Antitrust Stories I, Eleanor Fox and David Crane, eds., Foundation Press, 2007
Summary
This paper looks at the business details behind a leading competition law case.
Policy Relevance
Even when a business acts in a way that helps consumers, it can be very hard to prove in court. Courts' errors in antitrust cases show up in hindsight as markets develop.
Main Points
- In 1985, the Supreme Court decided Aspen Skiing (AS) v. Aspen Highlands Skiing (H). In the 1950s and 1960s, antitrust was populist; the Supreme Court began trying to consider consumer welfare in the late 1970s, in particular, in 1978 in the GTE-Sylvania case, and Aspen Skiing was in that line of reasoning.
- The Supreme Court was handed a decision from the District Court (affirmed by the Court of Appeal) which defined the market incorrectly, not seeing that ski slopes in Aspen compete with slopes across the nation. AS owned three of four Aspen slopes, so it was considered too powerful.
- The Court ruled that AS must share resources with rival H. That is, AS must offer a joint ticket for all four slopes with H.
- H was not helping market the joint ticket, but AS did not explain this.
- The Court failed to ask how AS’s behavior raised H’s costs.
- Ultimately, H failed due to poor business decisions and AS succeeded, correcting the antitrust error.
