Corporate & Securities Law

The Tenth Circuit Rejects Deer Valley Ski Rental Store’s Claims for Monopolization and Attempted Monopolization against Ski Resort

By Matthew S. Wild

On February 18, 2009, the United States Court of Appeals for the Tenth Circuit affirmed dismissal of a complaint filed by a ski rental store against the Deer Valley, Utah ski resort operator with its own ski rental operation alleging monopolization and attempted monopolization in violation of Section 2 of the Sherman Act.  Christy Sports LLC v. Deer Valley Resort Co., Ltd., No. 07-4198 (10th Cir. Feb. 18, 2009) (Christy Sports v. Deer Valley Resort Decision).  Plaintiff had sought to prevent enforcement of a restrictive covenant governing its use of property sold by the ski resort operator.  When the ski resort operator sold the parcel of land on which the ski rental store operates, it imposed a restrictive covenant in the deed only permitting the operation of a ski rental business with its permission.  For years, the ski resort operator permitted plaintiff to operate accepting a share of the profits in return.  Preferring to capture that business in the future, the ski resort operator sought to enforce the restrictive covenant and put the ski rental store out of business.  The Tenth Circuit rejected plaintiff?s claims under Section 2 of the Sherman Act for two independent reasons.  First, the Court rejected plaintiff?s relevant product market definition of ski rental stores.  Rather the Court held that the relevant market was the skiing experience.  It reasoned that skiers do not come to the area to rent skis and that ski rentals are just one component of the skiing experience that they seek.  It should be of no consequence that the ski resort operator charges more for ski rentals and as a consequence, less for e.g., lift tickets.  Second, the Court held that there were no allegations of anticompetitive conduct.  The antitrust laws do not forbid a business from imposing a restrictive covenant on a neighboring parcel of land to avoid competition and justify its investment in entry.  Accordingly, nothing precludes the enforcement of an otherwise permissible restrictive covenant.

Full post as published by Antitrust Commentary on February 23, 2009 (boomark / email).