Non-price exclusion

Approaches to anallyzing exclusionary conduct:

• Traditional approach (Alcoa/Grinnell): analyze market power and exclusionary conduct separately
• Integrated approach (Aspen Skiing): evaluation of power, conduct, and effects are interrelated - don't artificially separate them
  • Evidence of conduct and effects can inform the question of market power
  • Evidence of market power and anticompetitive effects can inform the question of whether conduct is exclusionary

**Analytical framework for analyzing exclusionary conduct under integrated appraoch from Aspen Skiing:

1. Consider impact on consumers and whether conduct has impaired competition in an "unnecessarily restrictive way"
2. If a firm has been "attempting to exclude rivals on some basis other than efficiency," it is fair to characterize its behavior as predatory
3. Consider D's procompetitive of efficiency (business) justifications

**Test for anticompetitive conduct (nice formulation from Microsoft):

1. P must make a prima facie showing of conduct having anticompetitive effect (rather than intent)
2. D must offer procompetitive justification
3. If D is successful, then P must demonstrate that anticompetitive harm outweighs procompetitive benefits

Caselaw:

Aspen Skiing v. Aspen Highlands (1985) (duty to deal)

• Holding: there is sufficient evidence of monopolization for P to survive JMOL
  • Court doesn't decide the issue on essential facilities doctrine (unlike the appellate court): multi-area ticket was an essential facility that D had duty to jointly market
  • D: JMOL because even a firm with monopoly power has no duty to cooperate with a competitor
    • Court: doesn't answer directly, note that a duty to deal with competitors can exist in some circumstances, including
      • History of prior cooperation and an unjustified break from that cooperation
      • Cooperation (all area ticket) seemed like a norm in more competitive markets
      • (implicit) lack of cooperation is worse for consumers
    • None of these circumstances alone justify duty to deal, but a combination may (although it is rare)
  • Framework for exclusionary conduct under an integrated appraoch:
    1. Consider impact on consumers and whether conduct has impaired competition in an "unnecessariliy restrictive way"
       • Here, consumers seem to be hurt by the change, other areas offer the ticket
    2. If a firm has been "attempting to exclude rivals on some basis other than efficiency," it is fair to characterize its behavior as predatory
       • Clear harm to P: status has declined, market share has declined, it is going out of business, it is not a multi-day destination, not competing with other areas
    • D doesn't have any procompetitive or efficiency (business) justifications
  • Here, there is a duty to deal (although this is the outer bounds per Trinko)
• Facts: Aspen Skiing (D) owns 3 ski facilities on 3 Aspen mountains, while Aspen Highlands (P) owns facilities on the 4th
  • Since 1962, D and P offer an All-Aspen 6- or 7-day ticket
  • In 1978, D offers P 12.5% fixed revenue share, which P rejects after negotiations, ending the All-Aspen ticket
  • D offers 6-day, 3-area pass and discontinues 3-day, 3-area pass while P offers 3-day pass at Highlands and 3 vouchers for use at D's facilities
  • D refuses to sell P lift tickets and refuses to accept vouchers, although D eventually accepts P's traveler's checks and money orders
  • P's market share declines steadily, alleges Section 2 monopolization
• **Notes:
  • Important: Trinko limits duty to deal in Aspen to its facts and situations where a firm (1) gains market power, (2) breaks from past practice, and (3) sacrifices present profits
  • Know how to argue from perspective of d
    • Broader market definition: Market should be expanded to include all places people travel to ski
    • Impossible standard to follow: D would be sued under Section 1 for coordinating with competitors and Section 2 for not coordinating with rivals
    • D isn't at fault for dissolution of coordination: coordination could have continued if P accepted the 12.5% fixed revenue split, but they refused instead
      • Counterargument: fixed revenue sharing doesn't give companies incentive to compete for skiers
    • National campaign for 3-area, 6-day ticket was procompetitive: if there was coordination, there wouldn't be the same incentive to advertise nationally
      • Helps further justify "lowball" fixed share offer: D is bringing business to Aspen and growing the pie, P is not.
  • Not an argument from D: the mountains are complements - we want collaboration between producers of complements