Circuit Judge McConnell When the Deer Valley Resort Company (“DVRC”) was developing its world-renowned ski resort in the Wasatch Mountains, it sold parcels of land within the resort village to third parties, while reserving the right of approval over the conduct of certain ancillary businesses on the property, including ski rentals. For about years, DVRC granted permission to Cole Sports and plaintiff-appellant Christy Sports to rent skis in competition with its own ski rental outlet. More recently, however, DVRC revoked that permission, presumably in order to gain more business for its own newly opened mid-mountain ski rental store. The question is whether this revocation violated the antitrust laws. I. BACKGROUND Deer Valley is one of three resorts in the vicinity of Park City, Utah. Many–indeed, “the vast majority,” according to the Complaint of Deer Valley’s patrons are destination skiers who fly into Salt Lake City and then take a forty-five minute bus or shuttle ride to the resort. The resort itself is divided into two areas: the base area, located at the bottom of the mountain, and the ritzier mid-mountain village, located halfway up the slope. DVRC has always been the sole provider of ski rentals at the base area, but at the mid-mountain village, Christy and Cole Sports have operated rental facilities; DVRC itself opened a mid-mountain ski rental facility in 2005. Originally, DVRC owned all the property at the mid-mountain village, but over the years it has sold parcels to third parties. In 1990, DVRC sold one such parcel to S.Y. and Betty Kimball, subject to a restrictive covenant that prohibited use of the property for either ski rental or real estate sales office purposes without DVRC’s express written consent. The Kimballs built a commercial building and leased space in it to Christy’s corporate predecessor, Bulrich Corporation. The lease expressly prohibited both the rental of skis and the operation of a real estate office. The next year, though, DVRC gave Bulrich permission to rent skis in return for 15% of the rental revenue. When Bulrich merged with another company in 1994 and formed Christy Sports, LLC, Christy continued to operate the rental business. According to the complaint, Christy stopped paying DVRC 15% of its rental revenue in 1995, though the reason for this change is unknown. Christy rented skis at the Deer Valley mid-mountain village with no objection from DVRC until 2005. During that time, DVRC was the sole purveyor of rental skis at the base area but did not have a ski rental operation at mid-mountain. II. ANALYSIS * * * * * Christy has alleged that DVRC violated Section 2 of the Sherman Act by either actual or attempted monopolization. . . . Under both types of Section 2 claims Christy must plead both power in a relevant market and anticompetitive conduct. The relevant market, according to Christy’s complaint, is the market for ski rentals to destination skiers in Deer Valley in general or, even more narrowly, the market for ski rentals in the mid-mountain village. The alleged anticompetitive conduct is the enforcement of the restrictive covenant. A great many pages in the briefs are devoted to whether the defined market set forth in the complaint–destination skiers at Deer Valley, or alternatively at Deer Valley’s mid-mountain village–is too small to constitute a market for antitrust purposes, in light of the proximity of a number of ski rental outlets in Park City, just down the road. For purposes of analyzing the complaint, however, we find it not implausible that destination skiers who arrive at the resort by bus or shuttle will find it sufficiently inconvenient to travel into town to rent skis that a * * * * * Although Christy insists that it has shown anticompetitive effects by its allegations of a decline in quantity and increase in price of rental skis at the mid-mountain village, this is just a repackaging of the argument rejected above. A resort operator’s ability to reserve to itself the operation of ancillary businesses within the resort is not dependent on the quantity of output being as high or the price being as low as they would be if there were competition from third parties within the resort. It depends, instead, on either the proposition that a market that involves only one component of an interrelated package of services is not a relevant market for purposes of the Sherman Act or that it is not anticompetitive conduct for a resort owner to refuse to invite competitors to supply ancillary services within its resort. The fact . . . that fewer skis will be available for rental and that prices for rental skis will be higher, does not refute either of these legal propositions. * * * * * Affirmed. Questions 1. a. Explain why the court concluded that “destination skiers at Deer Valley” or at “Deer Valley’s mid-mountain village” constitute a market separate from ski rental outlets in nearby Park City. b. How did the Court define the “true product” market? 2. a. The plaintiff failed to establish the two core elements of its proof as required by the court. Explain those elements and describe why the court ruled against the plaintiff. b. How will consumers be protected from monopoly behavior by the defendant Deer Valley? 3. Why should Deer Valley be allowed to restrict output and raise prices by denying the plaintiff the continuing opportunity to rent skis at Deer Valley? 4. The U.S. government sued DuPont, claiming monopolization of the cellophane market. DuPont produced almost 75 percent of the cellophane sold in the United States. Cellophane constituted less than 20 percent of the “flexible packaging materials” market. The lower court found “[g]reat sensitivity of customers in the flexible packaging markets to price or quality changes.” a. What is the relevant product market? b. Who wins the case? Explain. See United States v. E.I. DuPont de Nemours & Co. , 351 U.S. 377 (1956).
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