Bargaining and Monopolization: In Search of the 'Boundary of Section 2 Liability' between Aspen and Trinko
38 Pages Posted: 9 Aug 2005 Last revised: 22 Sep 2015
Aspen Skiing v. Aspen Highlands Skiing has had theoretical importance for antitrust law far out of proportion to the trivial dispute it resolved. It has divided adherents of the Chicago and Post-Chicago Schools, providing a useful vehicle for considering the proper goals of antitrust. And it has gained still more significance by the Supreme Court's recent characterization of it in Verizon Communications v. Trinko as at or near the outer boundary of Section 2 liability. The Court's metaphor suggests that antitrust governs a limited domain within a larger economy regulated by a variety of other laws, from the common law standards of property and contract to the much more intrusive requirements of the Telecommunications Act. In this image, Aspen recognized a duty to cooperate that was at the margin of antitrust's reach, while the Trinko plaintiffs sought recognition of a duty beyond it. Both cases involved a monopolist's refusal to deal with a smaller rival. Aspen, however, held that an operator of skiing facilities monopolized by refusing to continue to assist a smaller rival in offering skiers easy access to their combined areas, while Trinko held that a local telephone carrier did not monopolize by failing to provide smaller rival carriers with elements of its network. In evaluating the allegations in Trinko, the Court repeatedly referred to the facts and reasoning of Aspen.
In this essay, we attempt to clarify monopolization standards by examining why the Court considered the refusal to deal in Aspen to be within the boundaries of Section 2 liability and the one in Trinko beyond them. Attempting to clarify monopolization standards by resort to Aspen, and the Trinko Court's characterization of it, is a daunting task, however. As we show below, the Aspen Court failed to recognize a possible procompetitive explanation of the defendant's conduct, and failed to identify evidence sufficient to support a plausible anticompetitive explanation. Trinko was only partly successful in clearing up the confusion. The Court did reaffirm the principle, stated in Aspen, that even monopolists have no general duty to deal with their competitors, and it usefully offered three reasons for the right to refuse to deal. But the Trinko Court's explanation of why Aspen merited an exception to the general rule betrayed a misunderstanding of Aspen, which itself was ill-onsidered.
We try to restore a measure of clarity by identifying the real issues in Aspen, and the importance of those issues in defining the limits of a monopolist's right to refuse to deal. We begin by discussing the factors relevant to the characterization of allegedly monopolistic conduct - its effects on consumers and competitors, and its likely motivation - and examining the rationale for recognizing the right of a monopolist to refuse to deal. We then offer a model drawn from the facts of Aspen that illustrates the likely, or at least possible, effects of the termination of the all-Aspen ski ticket. We reexamine the facts of Aspen in light of the model. We suggest that the most plausible interpretation of the evidence is that, although the joint pass benefited consumers, it had become unprofitable to Ski Co., so long as the profits were distributed according to skiers' usage of the facilities. Consequently, one should evaluate Ski Co.'s termination of the pass and subsequent refusals to sell in the context of a bargaining impasse. Finally, we argue that our reconstruction of the issues in Aspen casts doubt on Trinko's extensive reliance on the case to define the boundary of Section 2 liability.
Keywords: Antitrust, monopolization, bargaining, exclusion, refusal to deal
JEL Classification: A11, A12, K21, K41, L40
Suggested Citation: Suggested Citation