A recent legal decision may mean skiers at Deer Valley Resort will have to pay a little more for equipment rentals, but it also protects the private property rights of resort owners.
On Feb. 18, the Tenth Circuit Court of Appeals in Denver upheld a 2007 decision by the Utah District Court that Deer Valley Resort Company did not violate anti-trust laws by prohibiting Christy Sports from renting skis at its mid-mountain location in 2005.
The background on the case began in 1990 when Deer Valley sold parcels of land at its mid-mountain village. One of those parcels was in turn leased to a company under the condition that it would not rent skis. The next year, Deer Valley entered into a contract with the business that it could, so long as it gave Deer Valley 15 percent of the rental revenue. This contract had to be renewed annually.
When that lease holder merged with another company and became Christy Sports in 1994, it quit paying that 15 percent for unknown reasons, and likely due to personnel changes, no one at Deer Valley complained. Also, for many years the permission to rent skis was never given, but assumed.
Christy Sports attorney Thomas McMahon of Jones & Keller in Denver believes this inattention to the contract voided it. When Deer Valley decided to open its own ski rental operation at mid-mountain in 2005, it withdrew permission to Christy Sports, presumably to eliminate competition. McMahon believes that violated anti-trust laws.
Because it left visitors with only two options to paying higher prices bringing their own skis or taking a shuttle downtown it made destination skiers a trapped market over which Deer Valley had a monopoly.
The court disagreed. The decision recognized that had Deer Valley never sold the parcel that was later leased to Christy’s, and ran its own ski rentals from day one, it would not have violated antitrust laws.
To the contrary, by opening a resort, Deer Valley increased competition in the ski industry as a whole.
The court drew comparisons with an amusement park or sports arena which have no obligations to allow competitive suppliers of ancillary services like hotels, restaurants or gift shops on its property.
Parallels were also drawn to hospitals monopolizing medical services within themselves, cemeteries choosing to monopolize the sale of tombstones, and universities monopolizing on-campus student housing.
“It is not anticompetitive to refuse to grant access to competitors,” the decision read.
If Deer Valley did allow competition with ski rentals, it would need to make more money in other ways, still increasing costs for consumers, it reasoned.
“Indeed, allowing resorts to decide for themselves what blend of vertical integration and third-party competition will produce the highest return may well increase competition in the ski resort business as a whole, and thus benefit consumers,” the court said.
Since the original lease forbade ski rentals unless special permission was granted, the court said Christy Sports cannot claim unfair surprise.
“The antitrust laws should not be allowed to stifle a business’s ability to experiment in how it operates, nor forbid it to change course upon discovering a preferable path,” it said.
Sydnee Fox, a spokesperson for Christy Sports, said it’s “too bad” for the consumer. The decisions means that fewer skis will be available at the resort (about 620 pairs), fewer brands and choices (Deer Valley only rents Rossignol skis) and higher prices (about 20 to 30 percent higher).
“The ruling didn’t focus on what this means for consumers and competition. We honestly believe we have a good case and we’ll keep fighting it until we win,” she said.
The court did not dispute the allegations made by Christy Sports, but upheld the 2007 decision that Deer Valley’s actions were not anticompetitive.
McMahon disagrees with the court because antitrust laws are supposed to further consumer welfare. If Deer Valley is able to enforce its restriction (it recently lost a lawsuit to force Christy Sports to stop, which currently rents skis at Silver Lake) there will be fewer skis available to rent and more will be charged for them, which is anticompetitive on its face, he said.
“Reality is, look at competitive impacts,” he said. “In other cases, consumers know the rule you can’t bring beer into a restaurant, you can’t bring popcorn into an arena. When they get to Deer Valley they find out there and are stuck.”
He said his office will next appeal for a rehearing from the court.
Attorney for Deer Valley, Kevin Simon of Strachan, Strachan & Simon, emailed the following statement:
“The Tenth Circuit’s decision sends a very clear message that the federal antitrust claims brought against Deer Valley Resort lacked merit. We could not be more pleased with the outcome.”