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United States and State of Colorado v. Vail Resorts, Inc., et al.
United States District Court for the District of Colorado
Competitive Impact Statement, 1:11-cv-00106 (2011)
Vail Resorts, Inc. (defendant) owned two Colorado ski areas, and Ralston Resorts, Inc. (defendant) owned three. All five ski areas lay within driving distance of the Front Range, a region including several major metropolitan cities along the eastern foothills of the Rocky Mountains. The companies planned a merger that would result in Vail Resorts owning all five ski areas. The United States and Colorado (plaintiffs) filed suit to block the merger under the Clayton Act, claiming it would raise lift-ticket prices or reduce discounts for local skiers. The government also filed a proposed settlement that would require the companies to hold separate and divest one of Ralston’s resorts, Arapahoe Basin (A-Basin), keeping it independent to preserve competition. The settlement included a competitive-impact statement (CIS) that applied unilateral-effects analysis, based on information about elasticities, margins, and recapture ratios, to demonstrate how the merger might harm Front Range skiers. First, the CIS defined the relevant product market as Colorado’s Front Range downhill-skiing market. Most critically, unlike destination skiers, locals drive at most about two-and-a-half hours to ski and will not drive farther in response to ticket-price increases. Vail and Ralston used different marketing and pricing strategies for each market, and both competed for Front Range skiers. Therefore, the Front Range skier market qualified as the relevant product market for Clayton Act purposes.
Rule of Law
Holding and Reasoning
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