Case Problem Analysis: Monopolization

When Rose Valley Resort Co. (RVRC) was developing its ski resort in the Wasatch Mountains near Park City, Utah, it sold parcels of land in the resort village to third parties. Each sales contract reserved the right of approval over the conduct of certain businesses on the property including ski rentals. For fifteen years, RVRC permitted Sheila Sports, LLC, to rent skis in competition with RVRC's ski rental outlet.

When RVRC opened a new mid-mountain ski rental outlet, it revoked Sheila's permission to rent skis. This meant that most skiers who flew into Salt Lake City and shuttled to Rose Valley had few choices: they could carry their ski equipment with them on their flights, take a shuttle into Park City and look for cheaper ski rentals there, or rent from RVRC. Sheila filed a suit in a federal district court against RVRC. Was RVRC's action an attempt to monopolize in violation of Section 2 of the Sherman Act?

Identifying the Facts and Issues

To prove monopoly power indirectly, the plaintiff must show that the firm has a

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share of the

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market and that there are

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barriers for new competitors entering the market. Because RVRC created a situation where competitors could not enter the market in any close location and likely could control prices on the mountain, RVRC

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have monopoly power.

Assessment question

To determine relevant market, courts look at products that are identical or

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and that are sold in the same

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. In this situation, due to the location of the ski resorts, it

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likely that the relevant market test is met.

Assessment question

In addition to monopoly power and relevant market, a firm must have the

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to monopolize. If the monopoly power in the relevant market comes about because of

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business decisions, a

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product, or

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accident as opposed to engaging in

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behavior, there is no violation of the antitrust laws.

Assessment question

In this case, RVRC

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unilaterally refuse to deal with Sheila and

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underprice its products to drive Sheila out of business. RVRC

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exercise the historic contractual option to revoke permission to Sheila to sell or rent skis in order to improve its own profits. This

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be considered an illegal anticompetitive behavior. Therefore, RVRC likely

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violate Article 2 of the Sherman Act.

Assessment question

What If the Facts Were Different?

If RVRC made the decision to terminate a profitable relationship with Sheila without any economic justification and without the historic contract provision so that it could be the sole provider of ski rentals in its market, it likely

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be an attempt to monopolize under Article 2 of the Sherman Act because the

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factor that was missing in the original situation would now be present.