Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices 5037

U.S. Agency for International

Development, Room 409, SA–18,

Washington, D.C. 20523–1822;

Fax Nos: 703/875–4384 or 875–4639;

Telephone: 703/875–4300.

Dated: January 27, 1997.

Michael G. Kitay,

Assistant General Counsel, Bureau for Global

Programs, Field Support and Research, U.S.

Agency for International Development.

[FR Doc. 97–2525 Filed 1–31–97; 8:45 am]

BILLING CODE 6116–01–M

DEPARTMENT OF JUSTICE

Antitrust Division

Proposed Final Judgment and

Competitive Impact Statement; United

States of America and the State of

Colorado v. Vail Resorts, Inc., Ralston

Resorts, Inc., and Ralston Foods, Inc.

Notice is hereby given pursuant to the

Antitrust Procedures and Penalties Act,

15 U.S.C. 16(b)–(h), that a proposed

Final Judgment, Stipulation, and

Competitive Impact Statement have

been filed with the United States

District Court for the District of

Colorado in United States and The State

of Colorado versus Vail Resorts, Inc.,

Ralston Resorts, Inc., and Ralston

Foods, Inc., Civ. Action No. 97–B–10.

The proposed Final Judgment is subject

to approval by the Court after the

expiration of the statutory 60-day public

comment period and compliance with

the Antitrust Procedures and Penalties

Act, 15 U.S.C. 16(b)-(h).

On January 3, 1997, the United States

and the State of Colorado filed a

Complaint seeking to enjoin a

transaction in which Vail Resorts, Inc.

(‘‘Vail’’) agreed to acquire Ralston

Resorts, Inc. (‘‘Ralston’’). Vail and

Ralston are the two largest owner/

operators of ski resorts in Colorado, and

this transaction would have combined

five ski resorts in Colorado. The

Complaint alleged that the proposed

acquisition would substantially lessen

competition in providing skiing to Front

Range Colorado skiers in violation of

section 7 of the Clayton Act, 15 U.S.C.

18.

The proposed Final Judgment orders

defendants to sell all of Ralston’s rights,

titles, and interests in the Arapahoe

Basin resort in Summit County,

Colorado to a purchaser who has the

capability to compete effectively in the

provision of skiing to Front Range

Colorado skiers at Arapahoe Basin. The

Stipulation also imposes a hold separate

agreement that, in essence, requires the

parties to ensure that, until the

divestiture mandated by the Final

Judgment has been accomplished,

Ralston’s Arapahoe Basin operations

will be held separate and apart from,

and operated independently of, Vail’s

assets and businesses. A Competitive

Impact Statement filed by the United

States describes the Complaint, the

proposed Final Judgment, and remedies

available to private litigants.

Public comment is invited within the

statutory 60-day comment period. Such

comments, and the responses thereto,

will be published in the Federal

Register and filed with the Court.

Written comments should be directed to

Craig W. Conrath, Chief, Merger Task

Force, Antitrust Division, 1401 H Street,

NW., Suite 4000, Washington, DC.

20530 (telephone: (202) 307–0001).

Copies of the Complaint, Stipulation,

proposed Final Judgment and

Competitive Impact Statement are

available for inspection in Room 215 of

the U.S. Department of Justice, Antitrust

Division, 325 7th Street, NW.,

Washington, DC 20530 (telephone: (202)

514–2481) and at the office of the Clerk

of the United States District court for the

District of Colorado, 1929 Stout Street,

Room C–145, Denver, Colorado 80294.

Copies of any of these materials may

be obtained upon request and payment

of a copying fee.

Constance K. Robinson,

Director of Operations, Antitrust Division.

In the United States District Court for

the District of Colorado

United States of America and the State of

Colorado, Plaintiffs, v. Vail Resorts, Inc.,

Ralston Resorts, Inc., and Ralston Foods,

Inc., Defendants.

Civil Action No. 97–B–10

Stipulation and Order

It is stipulated by and between the

undersigned parties, by their respective

attorneys, as follows:

1. The Court has jurisdiction over the

subject matter of this action and over

each of the parties hereto, and venue of

this action is proper in the District of

Colorado;

2. The parties stipulate that a Final

Judgment in the form hereto attached

may be filed and entered by the Court,

upon the motion of any party or upon

the Court’s own motion, at any time

after compliance with the requirements

of the Antitrust Procedures and

Penalties Act (15 U.S.C. 16), and

without further notice to any party or

other proceedings, provided that

plaintiff the United States has not

withdrawn its consent, which it may do

at any time before the entry of the

proposed Final Judgment by serving

notice thereof on defendants and by

filing that notice with the Court;

3. Defendants Vail and Ralston (as

defined in paragraphs II (A) & (B) of the

proposed Final Judgment attached

hereto) shall abide by and comply with

the provisions of the proposed Final

Judgment pending entry of the Final

Judgment, and shall, from the date of

the filing of this Stipulation, comply

with all the terms and provisions of the

proposed Final Judgment as through the

same were in full force and effect as an

order of the Court; provided, however,

that Ralston shall not be obligated to

comply with Section IV(A) of the

proposed Final Judgment unless and

until the closing of any transaction in

which Vail directly or indirectly

acquires all or any part of the assets or

capital stock of Ralston; and provided,

further, that Ralston shall be relieved of

its obligation to comply with Sections

IX (A) through (K) of the proposed Final

Judgment in the event that the Stock

Purchase Agreement among Vail

Resorts, Inc., Ralston Foods, Inc. and

Ralston Resorts, Inc., dated July 22,

1996 (the ‘‘Stock Purchase Agreement’’),

is terminated without consummation of

the transaction contemplated therein or

any variant of it; and provided, further,

that Ralston Foods, Inc. shall be relieved

of its obligation to comply with Sections

IV (A) through (G) and IX (A) through

(K) of the proposed Final Judgment

upon consummation of the transaction

contemplated by the Stock Purchase

Agreement.

4. Defendants shall not consummate

their transaction before the Court has

signed this Stipulation and Order;

5. Vail shall prepare and deliver

affidavits in the forms required by the

provisions of paragraphs A and B of

Section VII of the proposed Final

Judgment commencing no later than

January 23, 1997 and every thirty days

thereafter pending entry of the Final

Judgment;

6. In the event plaintiff United States

withdraws its consent, as provided in

paragraph 2 above, or if the proposed

Final Judgment is not entered pursuant

to this Stipulation, this Stipulation shall

be of no effect whatever, and the making

of this Stipulation shall be without

prejudice to any party in this or any

other proceeding;

7. The defendants represent that the

divestiture ordered in the proposed

Final Judgment can and will be made,

and that the defendants will later raise

no claims of hardship or difficulty as

grounds for asking the Court to modify

any of the divestiture provisions

contained therein.

8. All parties agree that this agreement

can be signed in multiple counterparts.

Dated: January 2, 1997.
5038 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices

* Counsel of Record. *Counsel of Record.

For the United States:

Craig W. Conrath,

Chief.

Reid B. Horwitz,

Assistant Chief.

John W. Van Lonkhuyzen,

Anne M. Purcell,*

James K. Foster,

Barry L. Creech,

John M. Lynch,

Susan Wittenberg,

Trial Attorneys.

U.S. Department of Justice, Antitrust

Division, Merger Task Force, 1401 H Street

NW., Suite 4000, Washington, DC 20530,

(202) 307–0001.

For the State of Colorado:

Gale A. Norton,

Attorney General.

Stephen K. ErkenBrack,

Chief Deputy Attorney General.

Richard A. Westfall,

Solicitor General.

Garth C. Lucero,

Deputy Attorney General.

Jan Michael Zavislan, 11636,*

First Assistant Attorney General.

Maria E. Berkenkotter, 16781,*

Assistant Attorney General, Civil Litigation

Section, Antitrust Unit.

1525 Sherman Street, 5th Floor, Denver,

Colorado 80203, DC Box No. 20, (303) 866–

3613.

For Defendant Vail Resorts, Inc.:

Bruce F. Black,*

Holme, Roberts & Owen, LLP,

1700 Lincoln, Suite 4100,

Denver, CO 80203,

(303) 861–7000.

Robert S., Schlossberg,

Peter E. Halle,

Jonathan M. Rich,

Robert B. Wiggens,

Harry T. Robins,

Anthony E. Bell,

Morgan, Lewis & Bockius LLP,

1800 M Street NW.,

Washington, DC 20036.

(202) 467–7000.

Attorneys for Vail Resorts, Inc.

For Defendants Ralston Resorts, Inc. and

Ralston Foods, Inc.:

Paul C. Daw,*

Sherman & Howard, LLC, 633 17th Street,

Suite 3000, Denver, CO 80202, (303) 299–

8124.

E. Perry Johnson, Rebecca A. Nelson,

Bryan Cave, LLP, One Metropolitan Square,

211 No. Broadway, Suite 3600, St. Louis, MO

63102, (314) 259–2000

J. Michael Cooper, Daniel C. Schwartz,

Bryan Cave, LLP, 700 13th Street, NW,

Washington, DC 20004, (202) 508–6000.

Attorneys for Ralston Resorts, Inc. and

Ralston Foods, Inc.

Dated: January 3, 1997.

So ordered:

lllllllllllllllllllll

United States District Judge.

Dated: January 3, 1997.

In the United States District Court for

the District of Colorado

United States of America and the State of

Colorado, Plaintiffs, v. Vail Resorts, Inc.,

Ralston Resorts, Inc. and Ralston Foods,

Inc., Defendants.

Civil Action No. 97–B–10

Final Judgment

Whereas plaintiffs United States of

America (hereinafter ‘‘United States’’)

and the State of Colorado, having filed

their Complaint herein on January 3,

1997, and plaintiffs and defendants, by

their respective attorneys, having

consented to the entry of this Final

Judgment without trial or adjudication

of any issue of fact or law herein, and

without this Final Judgment

constituting any evidence against or an

admission by any party with respect to

any issue of law or fact herein;

And Whereas defendants have agreed

to be bound by the provisions of this

Final Judgment pending its approval by

the Court;

And Whereas the essence of this Final

Judgment is prompt and certain

divestiture of assets to assure that

competition is not substantially

lessened;

And Whereas plaintiffs require

defendants to make certain divestitures

for the purpose of remedying the loss of

competition alleged in the Complaint;

And Whereas defendants have

represented to plaintiffs that the

divestiture ordered herein can and will

be made and that defendants will later

raise no claims of hardship or difficulty

as grounds for asking the Court to

modify any of the divestiture provisions

contained below;

Now, therefore, before the taking of

any testimony, and without trial or

adjudication of any issue of fact or law

herein, and upon consent of the parties

hereto, it is hereby Ordered, Adjudged,

and Decreed as follows:

I. Jurisdiction

This Court has jurisdiction over each

of the parties hereto and the subject

matter of this action. The Complaint

states a claim upon which relief may be

granted against defendants under

Section 7 of the Clayton Act, as

amended (15 U.S.C. 18).

II. Definitions

As used in this Final Judgment:

A. Ralston means defendants Ralston

Resorts, Inc., a Colorado corporation

headquartered in Keystone, Colorado;

and Ralston Foods, Inc., a Nevada

corporation headquartered in St. Louis,

Missouri, and includes their successors

and assigns, and their parents,

subsidiaries, directors, officers,

managers, agents, and employees acting

for or on behalf of any of them.

B. Vail means defendant Vail Resorts,

Inc., a Delaware corporation

headquartered in Avon, Colorado, and

includes its successors and assigns, and

its parents, subsidiaries, directors,

officers, managers, agents, and

employees acting for or on behalf of any

of them.

C. Divestiture Assets means all rights,

titles and interests, including all fee and

all leasehold, permit and renewal rights,

in Ralston’s Arapahoe Basin resort in

Summit County, Colorado, including,

but not limited to, all real property

(including but not limited to property

owned in fee or used through a lease or

special use permit from the United

States Forest Service), deeded

development rights to real property,

capital equipment (including but not

limited to lifts, grooming and

snowmaking equipment), buildings,

fixtures, inventories, contracts

(including but not limited to customer

contracts), customer lists, marketing or

consumer surveys relating to Arapahoe

Basin, permits (including but not

limited to environmental permits and

all permits from the United States Forest

Service), all work in progress on permits

or studies undertaken in order to obtain

permits, plans for design or redesign of

ski trails, trucks, snowcats and other

vehicles, water rights sufficient to

implement the snowmaking already

approved by the U.S. Forest Service for

Arapahoe Basin and the snowmaking

outlined in Arapahoe Basin’s pending

submission to the U.S. Forest Service,

and all other interests, assets or

improvements related to the provision

of skiing services to customers at the

Arapahoe Basin resort (collectively

‘‘Arapahoe Basin’’).
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices 5039

D. Skiing services means all services

related to providing access to downhill

skiing and snowboarding, including, but

not limited to, providing lifts, skiing

lessons, ski patrol, snowmaking, design,

building, and grooming of trails, and

ancillary services such as food service,

entertainment, and lodging.

III. Applicability

A. The provisions of this Final

Judgment apply to defendants, their

successors and assigns, parents,

subsidiaries, directors, officers,

managers, agents, and employees, and

all other persons in active concert or

participation with any of them who

shall have received actual notice of this

Final Judgment by personal service or

otherwise.

B. Defendants shall require, as a

condition of the sale or other

disposition of all or substantially all of

the assets of their ski operations in

Colorado, that the purchaser of such

assets agree to be bound by the

provisions of this Final Judgment;

provided, however, that the defendants

need not obtain such an agreement from

the acquirer of the Divestiture Assets in

the divestiture contemplated herein.

IV. Divestiture

A. Defendants are hereby ordered and

directed, in accordance with the terms

of this Final Judgment, within one

hundred and fifty (150) calendar days

after the filing of the Stipulation settling

this action, or within five (5) business

days after notice of entry of this Final

Judgment, whichever is later, to divest

the Divestiture Assets to a purchaser

acceptable to the United States, in its

sole discretion, after consulting with

Colorado.

B. Divestiture of defendants’

leasehold interests, if any, in the

Divestiture Assets shall be by transfer of

the entire leasehold interest, which

shall be for the entire remaining term of

such leasehold, including all renewal or

option rights.

C. Defendants agree to use their best

efforts to accomplish the divestiture as

expeditiously as possible. The United

States, after consulting with Colorado,

in its sole discretion, may extend the

time period for any divestiture for two

additional periods of time not to exceed

ninety (90) calendar days in toto.

D. In accomplishing the divestiture

ordered by this Final Judgment,

defendants promptly shall make known,

by usual and customary means, the

availability of the Divestiture Assets.

Defendants shall inform any person

making an inquiry regarding a possible

purchase that the sale is being made

pursuant to this Final Judgment and

provide such person with a copy of this

Final Judgment. Defendants shall make

known to any person making an inquiry

regarding a possible purchase of the

Divestiture Assets that the assets

described in Section II (C) are being

offered for sale. Defendants shall also

offer to furnish to all bona fide

prospective purchasers, subject to

customary confidentiality assurances,

all information regarding the Divestiture

Assets customarily provided in a due

diligence process except such

information subject to attorney-client

privilege or attorney work-product

privilege. Defendants shall make

available such information to plaintiffs

at the same time that such information

is made available to any other person.

E. Defendants shall not interfere with

any negotiations by any purchaser to

employ any employee of the defendants

who works at Arapahoe Basin, or whose

employment substantially relates to the

provision of skiing services at Arapahoe

Basin, or whose responsibilities include

the management of or marketing for

Arapahoe Basin.

F. Defendants shall permit

prospective purchasers of the

Divestiture Assets to have access to

personnel and to make such inspection

of the Divestiture Assets, and any and

all financial, operational, or other

documents and information customarily

provided as part of a due diligence

process.

G. Unless the United States otherwise

consents in writing, the divestiture

pursuant to Section IV (A), or by the

trustee appointed pursuant to Section V

of this Final Judgment, shall include all

of the Divestiture Assets and be

accomplished by selling or otherwise

conveying the Divestiture Assets to a

purchaser in such a way as to satisfy the

United States, in its sole discretion, after

consulting with Colorado, that the

Divestiture Assets can and will be used

by the purchaser as part of a viable,

ongoing business engaged in the

provision of skiing services at Arapahoe

Basin. The divestiture, whether

pursuant to Section IV or Section V of

this Final Judgment, shall be made to a

purchaser for whom it is demonstrated

to the United States’ sole satisfaction,

after consulting with Colorado, that: (1)

the purchaser has the capability and

intent of competing effectively in the

provision of skiing services at Arapahoe

Basin; (2) the purchaser has or soon will

have the managerial, operational, and

financial capability to compete

effectively in the provision of skiing

services at Arapahoe Basin; and (3) none

of the terms of any agreement between

the purchaser and defendants give

defendants the ability unreasonably to

raise the purchaser’s costs, to lower the

purchaser’s efficiency, or otherwise to

interfere in the ability of the purchaser

to compete effectively in the provision

of skiing services at Arapahoe Basin.

V. Appointment of Trustee

A. In the event that defendants have

not divested the Divestiture Assets

within the time specified in Section IV

(A) or (C) of this Final Judgment, the

Court shall appoint, on application of

the United States, a trustee selected by

the United States to effect the

divestiture of the Divestiture Assets.

B. After the appointment of a trustee

becomes effective, only the trustee shall

have the right to sell the Divestiture

Assets. The trustee shall have the power

and authority to accomplish the

divestiture at the best price then

obtainable upon a reasonable effort by

the trustee, subject to the provisions of

Sections V and VI of this Final

Judgment, and shall have such other

powers as the Court shall deem

appropriate. Subject to Section V (C) of

this Final Judgment, the trustee shall

have the power and authority to hire at

the cost and expense of defendants any

investment bankers, attorneys, or other

agents reasonably necessary in the

judgment of the trustee to assist in the

divestiture, and such professionals and

agents shall be accountable solely to the

trustee. The trustee shall have the power

and authority to accomplish the

divestiture at the earliest possible time

to a purchaser acceptable to the United

States, after consulting with Colorado,

and shall have such other powers as this

Court shall deem appropriate.

Defendants shall not object to a sale by

the trustee on any grounds other than

the trustee’s malfeasance. Any such

objections by defendants must be

conveyed in writing to plaintiffs and the

trustee within ten (10) calendar days

after the trustee has provided the notice

required under Section VI of this Final

Judgment.

C. The trustee shall serve at the cost

and expense of defendants, on such

terms and conditions as the Court may

prescribe, and shall account for all

monies derived from the sale of the

assets sold by the trustee and all costs

and expenses so incurred. After

approval by the Court of the trustee’s

accounting, including fees for its

services and those of any professionals

and agents retained by the trustee, all

remaining money shall be paid to Vail

and the trust shall then be terminated.

The compensation of such trustee and of

any professionals and agents retained by

the trustee shall be reasonable in light

of the value of the Divestiture Assets

and based on a fee arrangement
5040 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices

providing the trustee with an incentive

based on the price and terms of the

divestiture and the speed with which it

is accomplished.

D. Defendants shall use their best

efforts to assist the trustee in

accomplishing the required divestiture.

The trustee and any consultants,

accountants, attorneys, and other

persons retained by the trustee shall

have full and complete access to the

personnel, books, records, and facilities

of defendants, and defendants shall

develop financial or other information

relevant to such assets as the trustee

may reasonably request, subject to

reasonable protection for trade secret or

other confidential research,

development, or commercial

information. Defendants shall take no

action to interfere with or to impede the

trustee’s accomplishment of the

divestiture.

E. After its appointment, the trustee

shall file monthly reports with the

parties and the Court setting forth the

trustee’s efforts to accomplish the

divestiture ordered under this Final

Judgment. If the trustee has not

accomplished such divestiture within

six (6) months after its appointment, the

trustee thereupon shall file promptly

with the Court a report setting forth (1)

the trustee’s efforts to accomplish the

required divestiture, (2) the reasons, in

the trustee’s judgment, that the required

divestiture has not been accomplished,

and (3) the trustee’s recommendations;

provided, however, that to the extent

such reports contain information that

the trustee deems confidential, such

reports shall not be filed in the public

docket of the Court. The trustee shall at

the same time furnish such report to the

parties, who shall each have the right to

be heard and to make additional

recommendations consistent with the

purpose of the trust. The Court shall

enter thereafter such orders as it shall

deem appropriate in order to carry out

the purpose of the trust, which may, if

necessary, include extending the trust

and the term of the trustee’s

appointment by a period requested by

the plaintiffs.

VI. Notification

Within two (2) business days

following execution of a definitive

agreement, contingent upon compliance

with the terms of this Final Judgment,

to effect, in whole or in part, any

proposed divestiture pursuant to

Sections IV or V of this Final Judgment,

defendants or the trustee, whichever is

then responsible for effecting the

divestiture, shall notify plaintiffs of the

proposed divestiture. If the trustee is

responsible, it shall similarly notify

defendants. The notice shall set forth

the details of the proposed transaction

and list the name, address, and

telephone number of each person not

previously identified who offered to, or

expressed an interest in or a desire to,

acquire any ownership interest in the

assets that are the subject of the binding

contract, together with full details of

same. Within fifteen (15) calendar days

of receipt by plaintiffs of such notice,

plaintiffs may request from defendants,

the proposed purchaser, any other third

party, or the trustee if applicable

additional information concerning the

proposed divestiture and the proposed

purchaser. Defendants and the trustee

shall furnish any additional information

requested within fifteen (15) calendar

days of the receipt of the request, unless

the parties shall otherwise agree. Within

thirty (30) days after receipt of the

notice or within twenty (20) calendar

days after plaintiffs have been provided

the additional information requested

from defendants, the proposed

purchaser, any third party, and the

trustee, whichever is later, the United

States shall provide written notice to

defendants and the trustee, if there is

one, stating whether or not it objects to

the proposed divestiture. If the United

States provides written notice to

defendants and the trustee that it does

not object, then the divestiture may be

consummated, subject only to

defendants’ limited right to object to the

sale under Section V(B) of this Final

Judgment. Absent written notice that the

United States does not object to the

proposed purchaser or upon objection

by the United States, a divestiture

proposed under Section IV shall not be

consummated. Upon objection by the

United States, or by defendants under

the proviso in Section V(B), a

divestiture proposed under Section V

shall not be consummated unless

approved by the Court.

VII. Affidavits

A. Within twenty (20) calendar days

of the filing of this Final Judgment and

every thirty (30) calendar days thereafter

until the divestiture has been completed

whether pursuant to Section IV or

Section V of this Final Judgment, Vail

shall deliver to plaintiffs an affidavit as

to the fact and manner of defendants’

compliance with Sections IV or V of this

Final Judgment. Each such affidavit

shall include, inter alia, the name,

address, and telephone number of each

person who, at any time after the period

covered by the last such report, made an

offer to acquire, expressed an interest in

acquiring, entered into negotiations to

acquire, or was contacted or made an

inquiry about acquiring, any interest in

the Divestiture Assets, and shall

describe in detail each contact with any

such person during that period.

B. Within twenty (20) calendar days

of the filing of this Final Judgment, Vail

shall deliver to plaintiffs an affidavit

which describes in detail all actions

defendants have taken and all steps

defendants have implemented on an ongoing basis to preserve the Divestiture

Assets pursuant to Section IX of this

Final Judgment and describes the

functions, duties and actions taken by or

undertaken at the supervision of the

individual(s) described at Section IX(F)

of this Final Judgment with respect to

defendants’ efforts to preserve the

Divestiture Assets. The affidavit also

shall describe, but not be limited to,

defendants’ efforts to maintain and

operate Arapahoe Basin as an active

competitor, maintain the management,

sales, marketing and pricing of

Arapahoe Basin apart from that of

defendants’ other businesses that

provide skiing services, maintain and

increase sales of skiing services at

Arapahoe Basin, maintain the

Divestiture Assets in operable

condition, continuing normal

maintenance. Vail shall deliver to

plaintiffs and affidavit describing any

changes to the efforts and actions

outlined in defendants’ earlier

affidavit(s) filed pursuant to this Section

within fifteen (15) calendar days after

the change is implemented.

C. Defendants shall preserve all

records of all efforts made to preserve

and divest the Divestiture Assets.

VIII. Financing

Defendants shall not finance all or

any part of any divestiture made

pursuant to Sections IV or V of this

Final Judgment without the prior

written consent of the United States,

after consulting with Colorado.

IX. Preservation of Assets

Until the divestiture required by the

Final Judgment has been accomplished:

A. Defendants shall take all steps

necessary to ensure that the Divestiture

Assets will be maintained and operated

as an ongoing, economically viable and

active competitor in the provision of

skiing services; and that, except as

necessary to comply with Sections IX(B)

to IX(H) of this Final Judgment, the

management of Arapahoe Basin shall be

kept separate and apart from the

management of defendants’ other ski

resorts and will not be influenced by

defendants, and the books, records, and

competitively sensitive sales, marketing

and pricing information associated with

Arapahoe Basin will be kept separate
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices 5041

and apart from that of defendants’ other

businesses that provide skiing services.

B. Defendants shall use all reasonable

efforts to maintain and increase sales of

skiing services at Arapahoe Basin, and

defendants shall maintain at 1996 or

previously approved levels, whichever

are higher, promotional, advertising,

sales, marketing, skier transportation,

reservation and merchandising support

for skiing services sold at Arapahoe

Basin. Defendants’ sales and marketing

employees responsible for sales of

skiing services at Arapahoe Basin shall

not be transferred or reassigned to other

ski resorts owned by defendant.

C. Defendants shall take all steps

necessary to ensure that the Divestiture

Assets are fully maintained in operable

condition and shall maintain and

adhere to normal maintenance

schedules for the Divestiture Assets.

D. Defendants shall provide and

maintain sufficient lines of sources of

credit to maintain the Divestiture Assets

as viable, ongoing businesses.

E. Defendants shall provide and

maintain sufficient working capital to

maintain the Divestiture Assets as viable

ongoing businesses.

F. Defendants shall not, except as part

of a divestiture approved by the United

States, after consulting with Colorado,

remove, sell, or transfer any of the

Divestiture Assets, other than sales in

the ordinary course of business.

G. Unless they have obtained the prior

approval of the United States, after

consulting with Colorado, defendants

shall not terminate or reduce the current

employment, salary, housing, or benefit

arrangements for any personnel

employed by defendants who work at,

or have managerial responsibility for,

Arapahoe Basin, except in the ordinary

course of business.

H. Defendants shall continue all

efforts in progress to obtain permits for

Arapahoe Basin, including, but not

limited to, efforts to obtain permits

relating to water rights or access or

snowmaking.

I. Defendants shall take no action that

would jeopardize their ability to divest

the Divestiture Assets as viable, ongoing

businesses.

J. Defendants shall appoint a person

or persons to oversee the Divestiture

Assets, and who will be responsible for

defendant’s compliance with Section IX

of this Final Judgment.

K. (a) Within five (5) days after the

closing pursuant to the Stock Purchase

Agreement amongst defendants,

defendants shall hire, subject to the

prior approval of the United States after

consulting with Colorado, a person with

the requisite experience and ability to

serve as chief executive officer of

Arapahoe Basin (the ‘‘A-Basin CEO’’).

The A-Basin CEO shall have complete

authority to manage and operate

Arapahoe Basin in the ordinary course

of business as a separate and

independent business entity, including

mountain operations, guest services,

food and beverage operations,

marketing, sales, lift ticket operations

and pricing; provided, however, that the

A-Basin CEO may continue A-Basin’s

participation in Ralcorp’s previously

announced marketing (e.g., Ski-3), skier

transportation and reservations

programs; and provided, further that,

consistent with their obligations under

Sections IX(B) to IX(H) of this Final

Judgment, defendants shall provide the

A-Basin CEO with whatever resources

the A-Basin CEO requests. The A-Basin

CEO may help facilitate the timely sale

of the Divestiture Assets (e.g., by

assisting in the due diligence process).

In no circumstances shall defendants

provide to, or receive from, the A-Basin

CEO competitively sensitive marketing,

sales and pricing information relating to

their respective ski operations, and,

further, except as is necessary for

defendants to comply with Sections

IX(B) to IX(H) of this Final Judgment or

to effect the divestiture contemplated by

Section IV(A), defendants shall not

communicate with, or attempt to

influence the business decisions of, the

A-Basin CEO. The A-Basin CEO shall

report directly in writing to the

plaintiffs on the operation of A-Basin

every thirty (30) days from the date he

or she is hired until the divestiture

required by this Final Judgment is

completed.

(b) The appointment of the A–Basin

CEO by defendants is for the purpose of

facilitating defendants’ compliance with

Section IX(A) of this Final Judgment,

and does not relieve defendants of

whatever additional measures they may

be required to take to comply fully with

Section IX(A) of this Final Judgment.

Furthermore, the appointment of the A–

Basin CEO shall not be construed to

relieve defendants of their obligations

under Sections IX(B) to IX(J), VII and X

of this Final Judgment.

(c) The A–Basin CEO’s compensation

shall not depend on A–Basin’s

revenues, profits, or profit margins, but

may depend on a measure of output

(e.g., skier days).

X. Compliance Inspection

Only for the purposes of determining

or securing compliance with the Final

Judgment and subject to any legally

recognized privilege, from time to time:

A. Duly authorized representatives of

the plaintiffs, including consultants and

other persons retained by the United

States or the State of Colorado , upon

written request of the Assistant Attorney

General in charge of the Antitrust

Division, or the Attorney General of

Colorado, and on reasonable notice to

defendants made to their principal

offices, shall be permitted:

(1) Access during office hours of

defendants to inspect and copy all

books, ledgers, accounts,

correspondence, memoranda, and other

records and documents in the

possession or under the control of

defendants, who may have counsel

present, relating to enforcement of this

Final Judgment; and

(2) Subject to the reasonable

convenience of defendants and without

restraint or interference from them, to

interview their officers, employees, and

agents, who may have counsel present,

regarding any such matters.

B. Upon the written request of the

Assistant Attorney General in charge of

the Antitrust Division or the Attorney

General of Colorado made to

defendants’ principal offices,

defendants shall submit such written

reports, under oath if requested, with

respect to enforcement of this Final

Judgment.

C. No information or documents

obtained by the means provided in

Section X of this Final Judgment shall

be divulged by a representative of the

plaintiffs to any person other than a

duly authorized representative of the

Executive Branch of the United States or

of the State of Colorado, except in the

course of legal proceedings to which the

plaintiffs are a party (including grand

jury proceedings), or for the purpose of

securing compliance with this Final

Judgment, or as otherwise required by

law.

D. If at the time information or

documents are furnished by defendants

to plaintiffs, defendants represent and

identify in writing the material in any

such information or documents to

which a claim of protection may be

asserted under Rule 26(c)(7) of the

Federal Rules of Civil Procedure, and

defendants mark each pertinent page of

such material, ‘‘Subject to claim of

protection under Rule 26(c)(7) of the

Federal Rules of Civil Procedure,’’ then

ten (10) calendar days notice shall be

given by plaintiff to defendants prior to

divulging such material in any legal

proceeding (other than a grand jury

proceeding).

XI. Retention of Jurisdiction

Jurisdiction is retained by this Court

for the purpose of enabling any of the

parties to this Final Judgment to apply

to this Court at any time for such further

orders and directions as may be
5042 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices

necessary or appropriate for the

construction or carrying out of this Final

Judgment, for the modification of any of

the provisions hereof, for the

enforcement of compliance herewith,

and for the punishment of any

violations hereof.

XII. Termination

Unless this Court grants an extension,

this Final Judgment will expire on the

tenth anniversary of the date of its entry.

XIII. Public Interest

Entry of this Final Judgment is in the

public interest.

Dated: lllll

lllllllllllllllllllll

United States District Judge

In the United States District Court for

the District of Colorado

United States of America and The State of

Colorado, Plaintiffs, v. Vail Resorts, Inc.,

Ralston Resorts, Inc., and Ralston Foods,

Inc., Defendants.

Civil Action No. 97–B–10

Competitive Impact Statement

The United States, pursuant to

Section 2(b) of the Antitrust Procedures

and Penalties Act (‘‘APPA’’), 15 U.S.C.

16(b)–(h), files this Competitive Impact

Statement relating to the proposed Final

Judgment submitted for entry in this

civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

The United States and the State of

Colorado filed a civil antitrust

Complaint on January 3, 1997, alleging

that the proposed acquisition by Vail

Resorts, Inc. (‘‘Vail’’) of the ski resort

businesses of Ralston Resorts, Inc.

(‘‘Ralston’’) would violate Section 7 of

the Clayton Act, 15 U.S.C. § 18. The

Complaint alleges that Vail and Ralston

are the two largest owner/operators of

ski resorts in Colorado, and that this

transaction would combine several of

the largest ski resorts in this region. In

particular, this acquisition would

increase substantially the concentration

among ski resorts to which several

hundred thousand skiers residing in the

‘‘Front Range’’ of Colorado—the

geographic area lying just east of the

Rocky Mountains, and including the

metropolitan areas of Fort Collins,

Boulder, Denver, Colorado Springs, and

Pueblo and surrounding population

areas—can practicably go for day or

overnight ski trips. As a result, the

acquisition would threaten to raise the

price of, or reduce discounts for,

weekend and day skiing to consumers

living in these areas. The acquisition

would thus violate Section 7 of the

Clayton Act. The prayer for relief in the

Complaint seeks: (1) A judgment that

the proposed acquisition would violate

Section 7 of he Clayton Act, 15 U.S.C.

18; and (2) a permanent injunction

preventing Vail and Ralston from

carrying out the Stock Purchase

Agreement, dated July 22, 1996, or from

entering into or carrying out any

agreement, understanding or plan, the

effect of which would be to combine the

businesses or assets of Vail and Ralston.

At the same time the Complaint was

filed, the United States and the State of

Colorado also filed a proposed

settlement that would permit Vail to

complete its acquisition of Ralston’s ski

resorts, but requires a divestiture that

would preserve competition for skiers in

the Front Range. This settlement

consists of a Stipulation and a proposed

Final Judgment.

The proposed Final Judgment orders

the parties to sell all of Ralston’s rights,

titles, and interests in the Arapahoe

Basin resort in Summit County,

Colorado to a purchaser who has the

capability to compete effectively in the

provision of skiing for Front Range

Colorado skiers at Arapahoe Basin. The

parties must complete the divestiture of

these ski resorts and related assets

before the later of one-hundred-and-fifty

(150) calendar days after the filing of the

Stipulation settling this action or five (5)

business days after the entry of Final

Judgment, in accordance with the

procedures specified in the proposed

Final Judgment. The stipulation and

proposed Final Judgment also impose a

hold separate agreement that requires

defendants to ensure that, until the

divestiture mandated by the Final

Judgment has been accomplished,

Ralston’s Arapahoe Basin operations

will be held separate and apart from,

and operated independently of, Vail’s

and Ralston’s other assets and

businesses. Defendants must hire,

subject to the prior approval of the

United States, a person to serve as chief

executive officer of Arapahoe Basin,

who shall have complete authority to

operate Arapahoe Basin in the ordinary

course of business as a separate and

independent business entity.

The United States, the State of

Colorado, Vail, and Ralston have

stipulated that the proposed Final

Judgment may be entered after

compliance with the APPA. Entry of the

proposed Final Judgment would

terminate this action, except that the

Court would retain jurisdiction to

construe, modify, or enforce the

provisions of the proposed Final

Judgment and to punish violations

thereof.

II. Description of the Events Giving Rise

to the Alleged Violation

A. The Parties and the Proposed

Transaction

Vail Resorts, Inc. (‘‘Vail’’), a Delaware

corporation headquartered in Vail,

Colorado, owns Vail Associates, Inc.,

which owns and operates two Colorado

ski resorts: Vail and Beaver Creek

Resorts. (Beaver Creek Resort includes

the formerly independent Arrowhead

Mountain.) During the 1995–96 ski

season, Vail’s resorts accounted for

approximately 280,000 Front Range

skier days. A ‘‘skier day’’ is one day or

part of a day of skiing for one skier. This

is about a 12 percent share of the Front

Range market. Overall, Vail’s resorts had

over 2.2 million skier days and had

revenues of over $140 million.

Ralston Resorts, Inc. (‘‘Ralston’’), a

Colorado corporation headquartered in

Keystone, Colorado, owns three

Colorado ski resorts: Keystone,

Breckenridge, and Arapahoe Basin.

Ralston is a subsidiary of Ralcorp

Holdings, Inc., a Missouri corporation

headquartered in St. Louis, Missouri.

Ralston Foods, Inc., a Nevada

corporation, is also a subsidiary of

Ralcorp Holdings, Inc., and is

headquartered in St. Louis, Missouri.

During the 1995–96 ski season, Ralston

accounted for approximately 600,000

Front Range skier days, or over 26

percent of the Front Range market.

Overall, Ralston’s resorts had more than

2.6 million skier days and had revenues

of more than $135 million.

Pursuant to a Stock Purchase

Agreement among Vail Resorts, Inc.,

Ralston Foods, Inc., and Ralston Resorts

Inc. dated July 22, 1996, Vail proposes

to acquire all of the voting securities of

Ralston, in return for which Ralston

Foods, Inc. will receive voting securities

of Vail valued at approximately $145

million. Vail will also assume or pay off

debt of Ralston Foods amounting to at

least $132 million and as much as $165

million under the Stock Purchase

Agreement. The total consideration is

valued at approximately $310 million.

This proposed transaction combining

the two largest owner/operators of ski

resorts in Colorado precipitated the

plaintiffs’ antitrust suit.

B. The Skiing Market

The Complaint alleges that the

provision of downhill skiing to

residents of Colorado’s Front Range

constitutes a relevant market for

antitrust purposes—that is, in the

language of the Clayton Act, it is a ‘‘line

of commerce’’ and is in a ‘‘section of the

country.’’ The Complaint further alleges

that the effect of Vail’s acquisition
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices 5043

1Skiing is a discretionary recreational activity,

but this does not, in itself, affect the antitrust

analysis of whether skiing constitutes a product

market. The antitrust laws protect and respect

consumers’ choices for discretionary products as

well as for nondiscretionary products.

2The Complaint does not allege a violation of the

Clayton Act for destination skiers or for types of

skiers other than Front Range skiers. The Division’s

investigation did not reveal any likely

anticompetitive effect from the proposed merger in

the destination skier market or in other relevant

markets such as the local skier market.

3The Herfindahl-Hirschman Index, or ‘‘HHI,’’ is

a commonly accepted measure of market

concentration. It is calculated by squaring the

market share of each firm competing in the market

and then summing the resulting numbers. For

example, for a market consisting of four firms with

shares of thirty, thirty, twenty, and twenty percent,

the HHI is 2600 (302+302+202+202=2600). The HHI

takes into account the relative size and distribution

of the firms in a market and approaches zero when

a market consists of a large number of firms of

relatively equal size. The HHI increases both as the

number of firms in the market decreases and as the

disparity in size between those firms increases.

Markets in which the HHI is between 1000 and

1800 are considered to be moderately concentrated,

and those in which the HHI is in excess of 1800

points are considered to be concentrated.

would be to lessen competition

substantially in the provision of skiiing

to Front Range skiers.

The business of skiing comprises all

services related to providing access to

downhill skiing and snowboarding,

including, but not limited to, providing

lifts, ski patrol, snowmaking, design,

building, and grooming of trails, skiing

lessons, and ancillary services such as

food service, entertainment, and

lodging. Downhill skiing differs from

other winter recreational activities, such

as cross-country skiing, ice skating,

snow-mobiling, sleigh riding,

tobogganing, ice fishing, and taking

cruises or vacationing in places with hot

climates.1 A small but significant and

nontransitory increase in prices for

skiing would not cause a significant

number of downhill skiers to substitute

other recreational activities for skiing.

Customers of defendants’ ski resorts

include two types of skiers: destination

skiers and Front Range skiers.2

Destination skiers come from outside

Colorado, many from outside of the

United States. These skiers ski for

extended periods of time, typically for

a week. Many destination skiers fly to

their ski resort and are usually attracted

to the resort by both the mountain (e.g.,

terrain, trails, lifts, and grooming) and

resort amenities (e.g., lodging and night

life). In contrast, Front Range skiers are

day or overnight skiers. Most Front

Range skiers drive to their ski resort and

limit the resorts they use for day trips

to those which fall within a radius of

about two-and-one-half-hour travel time

from where they live, and a somewhat

larger radius for overnight trips. Front

Range skiers are typically more

interested in the mountain and skiing

facilities than in the resort amenities.

The defendants market their ski

resorts differently to skiers depending

on whether they are destination or Front

Range skiers. They advertise their ski

resorts outside the Front Range area of

Colorado for destination skiers, for

example, in major metropolitan

newspapers and in magazines sold

throughout the United States. In

marketing to destination skiers, the

resorts emphasize package pricing,

which typically includes one or more of

lift tickets, lodging, airfare, and also

emphasize resort amenities as well as

mountain features. In contrast, the

defendants market their resorts to Front

Range skiers by advertising in the Front

Range, e.g., using direct mail within

certain zip codes, billboards, and local

newspapers. Front Range advertising, in

contrast to destination skier advertising,

emphasizes discount prices on lift

tickets to the Front Range skier. There

is also less emphasis on resort amenities

as opposed to qualities of the mountains

themselves.

The defendants’ ski resorts use

different pricing strategies depending on

whether they are selling tickets to

destination skiers or Front Range skiers.

These resorts sell single-day and multiday lift tickets through the resort ticket

window primarily to the destination

skier. In selling to Front Range skiers,

these ski resorts sell single-day lift

tickets through off-mountain retailers

located within the Front Range that are

discounted below the window lift ticket

price. These resorts also offer the Front

Range skier coupons that discount off

the window ticket price, as well as

frequent skier cards that provide

discounts from the window price and

may also provide a free day of skiing

after a Front Range skier has paid for a

certain number of lift tickets.

Promotions are targeted to Front Range

skiers, and measures are taken

successfully to limit the access of

destination skiers to such promotions.

Consequently, the lift ticket prices

defendants charge to Front Range skiers

are different from the prices they charge

to destination skiers.

C. Competition Between Vail and

Ralston

Vail and Ralston compete directly to

provide skiing to Front Range Colorado

day and overnight skiers.

As noted above, Front Range skiers

typically drive to their ski resort and

limit the resorts they use for day trips

to those which fall within a radius of

about two-and-one-half-hour travel time

from where they live, and a somewhat

larger radius for overnight trips. The

most popular of these resorts are located

off Interstate 70 west of Denver. The

Vail and Ralston resorts are located

within this radius. Front Range skiers

would not turn to resorts that fall

outside of this two-and-one-half-hour

radius in sufficient numbers to defeat a

small significant, non-transitory price

increase imposed by resorts within this

radius.

Resorts located farther away cannot,

and after this transaction would not,

constrain prices charged to skiers living

in the Front Range. Although Front

Range skiers occasionally choose to ski

at more distant resorts, skiing at such

resorts is not a practical or economic

alternative for most Front Range skiers

most of the time.

Ski resorts in Colorado that are within

the distance which a Front Range

resident will practically travel for a day

or a weekend skiing trip can charge

different prices to these skiers than they

charge to customers coming from other

parts of the country or the world.

Thus, the provision of downhill

skiing to Front Range residents is a

relevant market within the meaning of

Section 7 of the Clayton Act (i.e., is a

‘‘line of commerce’’ and is in a ‘‘section

of the country’’), and Vail and Ralston

compete directly in this market.

D. Anticompetitive Consequences of the

Acquisition

The Complaint alleges that the

combination of Vail and Ralston would

substantially increase concentration in

the Front Range skier market, using the

Herfindahl-Hirschman Index (‘‘HHI’’)3

as a measure of market concentration.

The post-merger HHI, based on Front

Range skier days derived from surveys

of skiers conducted in 1994, 1995, and

1996, would be approximately 2,228

with a change in HHI of about 643

points. During the 1995–96 skiing

season, Vail’s resorts accounted for

about 12 percent and Ralston’s resorts

over 26 percent of Front Range skier

days. If the proposed acquisition were

consummated, the combined company

would account for over 38 percent of

skier days in the Front Range market.

The Complaint further alleges that the

acquisition of Ralston by Vail would

substantially lessen competition. The

transaction would have the following

effects, among others:

1. Competition generally in providing

skiing to Front Range skiers would be

lessened substantially;

2. Actual competition between Vail

and Ralston in providing skiing to Front

Range skiers would be eliminated;
5044 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices

4See, e.g., Carl Shapiro, Mergers with

Differentiated Products, 10 Antitrust 23 (1996).

3. Discounting to Front Range skiers

by Vail and Ralston would likely be

reduced;

4. Prices for skiing to Front Range

Colorado skiers would likely be

increased.

The Complaint also alleges that

successful entry or expansion in the

skiing business would be difficult, time

consuming, and costly, as well as

extremely unlikely. Entry or expansion

therefore would not be timely, likely, or

sufficent to prevent any harm to

competition.

Prices charged to Front Range skiers

are constrained by competition among

ski resorts for these skiers’ business.

That is, each ski resort is limited in

raising its price by the fact that when a

resort raises its price, it can lose

revenues because customers switch to

other ski resorts. Thus, a resort’s prices

are constrained by other resorts’ prices.

Similarly, if prices increase, some

customers would ski less frequently.

This, too, constrains the prices a resort

may charge.

Acting in light of these facts, a ski

resort (like any business) attempts to set

a price that will earn it the most profit.

It does not want to charge a price so

high that it loses too many customers,

nor does it want to charge a price so low

that it misses the opportunity for the

revenue that a higher price would bring.

For each resort, the price that will

maximize profit balances these two

conflicting goals—either a higher or a

lower prices would be profitable.

Businesses often cannot easily

determine the profit-maximizing price,

and may do so through trial and error.

But the effort to find the profitmaximizing price—that is, the price that

neither drives away too many customers

because it is too high nor misses

revenue opportunities because it is too

low—is reflected in the day to day

business decisions of ski resorts, as well

as countless other businesses.

Economists have developed an

analytical framework to explain how a

merger can allow a firm to charge higher

prices after acquiring a competitor, even

if firms do not coordinate their behavior

(such as by explicitly colluding with

one another). Associated with this

framework are standard tools that allow

us to predict specific price effects. This

framework has been called a unilateral

effects’’ mode. It is particularly useful in

markets that have differentiated

products, that is, where products of

different firms are not identical 4 Each

ski resort, for example, has

characteristics, such as terrain and

amenities, that different consumers

value differently. This unilateral effects

model is an additional tool to examine

the accepted, common-sense notion that

a merger is more likely to have a

harmful effect if the merging firms are

close competitors.

Before a merger, increases in price by

two independent resorts are deterred by

the loss of customers that would result

from a price increase. If resorts are put

under common ownership by a merger,

however, they no longer constrain each

other’s prices in the same way. A merger

can make a price increase profitable. In

particular, before a merge, if two resorts

are significant competitors to each other

and one of these resorts increases its

prices, a significant proportion of this

resort’s customers would be ‘‘lost’’ to

the other resort. After merger between

these two resorts, however, some

customers who switch away from the

resort that raises its price would no

longer be lost, but rather would be

‘‘recaptured’’ at the newly-acquired

resort. Price increases that would have

been unprofitable to either firm alone,

therefore, would become profitable to

the merged entity.

As a result of this recapture

phenomenon, a merged firm, acting

independently to earn the most profits

it can, will choose higher prices than its

two component firms did before the

merger, if those firms were significant

competitors to each other before the

merger. The loss of competition that

arises as a result of this effect is what

is meant by a ‘‘unilateral’’

anticompetitive effect, that is, an effect

that does not depend on the firms in the

market acting interdependently. This

unilateral effect will be larger as the

recapture rate (which is sometimes

called the ‘‘diversion ratio,’’ see infra

noted 4) is larger, as the margin earned

on recaptured customers is higher, and

as the customers who leave the merging

firms in response to a price increase are

fewer (in technical terms, the lower the

‘‘own price elasticity’’).

The Vail and Ralston resorts are close

competitive alternatives for a number of

Front Range skiers. Some of the

customers who would switch away from

Vail’s resorts if Vail raised its price

would instead go to Ralston resorts, and

some customers who currently ski at

Ralston’s resorts would switch to Vail if

Ralston raised its price. After the

merger, Vail-Ralston would no longer

lose revenues from these customers if it

raised its price, because it would

recapture the revenues from customers

who would switch between Vail and

Ralston in response to a price increase.

The profit-maximizing price for the

post-merger Vail-Ralston therefore

would be higher than that for either firm

before the merger. Moreover, once Vail

and Ralston resorts charge higher prices,

other resorts in the market have an

incentive to raise their prices somewhat

in response to less intense price

competition for Front Range customers.

Economics allows us to estimate the

likely unilateral effect of a merger if we

have information on the elasticities,

margins and recapture ratios. In this

case, information about the Front Range

Colorado skiing market permitted

estimates of the relevant range of likely

price increases. Existing surveys of

Front Range skiers were used to

estimate how many customers are likely

to switch between Vail and Ralston

resorts in response to a price change

(the recapture ratios). Margin

information was derived from

accounting and marketing documents

obtained from the parties. A range of

likely elasticities was derived from a

number of sources, including surveys,

existing literature about the market, and

market data on past price changes. In

conjunction with other information

about costs and demand in the market,

this information permitted estimates of

how much the profit-maximizing price

for various resorts would increase as a

result of the merger. It was estimated

that, if the merger were allowed to take

place without any divestiture, there

would be an overall average increase in

Front Range discounted lift ticket prices

on the order of 4%, or about $1 per lift

ticket on average to all Front Range

customers, with higher price increases

at the merging firms’ resorts.

III. Explanation of the Proposed Final

Judgment

The proposed Final Judgment would

preserve competition for Front Range

skiers in the operation of ski resorts in

Colorado. Within one-hundred-and-fifty

(150) calendar days after filing the

proposed Final Judgment, defendants

must sell all of Ralston’s rights, titles,

and interests in the Arapahoe Basin

resort in Summit County, Colorado. The

assets and interests will be sold to a

purchaser who demonstrates to the sole

satisfaction of the United States (which

will consult with Colorado) that it will

be an economically viable and effective

competitor.

The divestiture ordered in the

proposed Final Judgment resolves the

anticompetitive problems raised by the

proposed transaction. Since Ralston has

jointly owned Arapahoe Basin,

Keystone, and Breckenridge, these three

resorts have not been competing against

each other for customers. Divesting

Arapahoe Basin restores significant

competition among these mountains
Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices 5045

and, more generally, permits Arapahoe

Basin to serve as an independent

competitor for skiers throughout the

Front Range. While Arapahoe Basin is

smaller than the other Ralston resorts in

absolute size, it has a high proportion of

Front Range skiers (roughly one-quarter

of Ralston’s Front Range skier days last

year were at Arapahoe Basin) and is

thus relatively more competitively

significant in the Front Range skiing

market than its overall number of skier

days might suggest. Furthermore, with a

large percentage of its terrain attracting

advanced intermediate and expert

skiers, Arapahoe Basin competes

directly with the bowl and glade skiing

experience offered at a number of Vail’s

mountains. A relatively small shift in

skier days to Arapahoe Basin would

make any significant price increase by

the merged firm unprofitable. The

calculations of profit-maximizing

behavior described above suggest that,

after the merger, once Arapahoe Basin is

divested, any increase in average

discounted prices to Front Range skiers

would be negligible.

With this divestiture, the post-merger

HHI for the Colorado Front Range skiing

market will be below 1800 and the

defendants’ post-merger market share in

the Front Range will be less than 32%.

Given the post-divestiture HHI level, the

combined firm’s post-divestiture market

share, and the number and size of

independent competing ski resorts

remaining in the affected markets, the

proposed transaction is not likely to

lead to a significant anticompetitive

effect—provided that Arapahoe Basin is

divested.

Until the ordered divestiture takes

place, defendants must take all

reasonable steps necessary to

accomplish the divestiture, and

cooperate with any prospective

purchaser. If defendants do not

accomplish the ordered divestiture

within the specified one-hundred-andfifty (150) calendar day time period,

which may be extended by the United

States for two additional periods of time

not to exceed (90) calendar days in toto,

the proposed Final Judgment provides

for procedures by which the Court shall

appoint a trustee to complete the

divestiture. In that case, defendants

must cooperate fully with the trustee.

If a trustee is appointed, the proposed

Final Judgment provides that

defendants will pay all costs and

expenses of the trustee. The trustee’s

compensation will be structured so as to

provide an incentive for the trustee to

obtain the highest price for the assets to

be divested, and to accomplish the

divestiture as quickly as possible. After

the effective date of his or her

appointment, the trustee shall serve

under such other conditions as the

Court may prescribe. After his or her

appointment becomes effective, the

trustee will file monthly reports with

the parties and the Court, setting forth

the trustee’s efforts to accomplish the

divestiture. At the end of six (6) months,

if the divestiture has not been

accomplished, the trustee shall file

promptly with the Court a report that

sets forth: (1) The trustee’s efforts to

accomplish the divestiture, (2) the

reasons, in the trustee’s judgment, why

the divestiture has not been

accomplished, and (3) the trustee’s

recommendations. The trustee’s report

will be furnished to the parties and shall

be filed in the public docket, except to

the extent the report contains

information the trustee deems

confidential. The parties each will have

the right to make additional

recommendations to the Court. The

Court shall enter such orders as it deems

appropriate to carry out the purpose of

the trust.

The Stipulation and proposed Final

Judgment also impose a hold separate

agreement that requires defendants to

ensure that, until the divestiture

mandated by the Final Judgment has

been accomplished, Ralston’s Arapahoe

Basin operations will be held separate

and apart from, and operated

independently of, defendants’ other

assets and businesses. Defendants must

hire, subject to the prior approval of the

United States, a person to serve as chief

executive officer of Arapahoe Basin,

who shall have complete authority to

operate Arapahoe Basin in the ordinary

course of business as a separate and

independent business entity.

IV. Remedies Available to Potential

Private Litigants

Section 4 of the Clayton Act, 15

U.S.C. 15, provides that any person who

has been injured as a result of conduct

prohibited by the antitrust laws may

bring suit in federal court to recover

three times the damages the person has

suffered, as well as costs and reasonable

attorney’s fees. Entry of the proposed

Final Judgment will neither impair nor

assist the bringing of any private

antitrust damage action. Under the

provisions of Section 5(a) of the Clayton

Act, 15 U.S.C. 16(a), the proposed Final

Judgment has no prima facie effect in

any substantial private lawsuit that may

be brought against Vail or Ralston.

V. Procedures Available for

Modification of the Proposed Final

Judgment

The United States, the State of

Colorado, and the defendants have

stipulated that the proposed Final

Judgment may be entered by the Court

after compliance with the provisions of

APPA, provided that the United States

has now withdrawn its consent. The

APPA conditions entry upon the Court’s

determination that the proposed Final

Judgment is in the public interest.

The APPA provides a period of at

least sixty (60) days proceeding the

effective date of the proposed Final

Judgment within which any person may

submit to the United States written

comments regarding the proposed Final

Judgment. Any person who wishes to

comment should do so within sixty : 60)

days of the date of publication of this

Competitive Impact Statement in the

Federal Register. The United States will

evaluate and, after consultation with the

State of Colorado, will respond to the

comments. All comments will be given

due consideration by the Department of

Justice, which remains free to withdraw

its consent to the proposed Final

Judgment at any time prior to entry. The

comments and the response of the

United States will be filed with the

Court and published in the Federal

Register.

Written comments should be

submitted to: Craig W. Conrath, Chief,

Merger Task Force, Antitrust Division,

United States Department of Justice,

1402 H Street, NW., Suite 4000,

Washington, DC 20530.

The proposed Final Judgment

provides that the Court retains

jurisdiction over this action, and the

parties may apply to the Court for any

order necessary or appropriate for the

modification, interpretation, or

enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final

Judgment

The United States considered, as an

alternative to the proposed Final

Judgment, a full trial on the merits of its

Complaint against Vail or Ralston. The

United States is satisfied, however, that

the divestiture of the assets and other

relief contained in the proposed Final

Judgment will preserve competition in

the operation of ski resorts that

otherwise would be affected adversely

by the acquisition. Thus, the proposed

Final Judgment would achieve the relief

the government would have obtained

through litigation, but avoids the time,

expense, and uncertainty of a full trial

on the merits of the government’s

Complaint.

VII. Standard of Review Under the

APPA for Proposed Final Judgment

The APPA requires that proposed

consent judgments in antitrust cases

brought by the United States be subject
5046 Federal Register / Vol. 62, No. 22 / Monday, February 3, 1997 / Notices

5 119 Cong. Rec. 24598 (1973) See United States

v. Gillette Co., 406 F. Supp. 713, 715 (D. Mass.

1975). A ‘‘public interest’’ determination can be

made properly on the basis of the Competitive

Impact Statement and Response to Comments filed

pursuant to the APPA. Although the APPA

authorizes the use of additional procedures, 15

U.S.C. § 16(f), those procedures are discretionary. A

court need not invoke any of them unless it believes

that the comments have raised significant issues

and that further proceedings would aid the court in

resolving those issues. See H.R. Rep. 93–1463, 93rd

Cong. 2d Sess. 8–9, reprinted in (1974) U.S. Code

Cong. & Ad. News 6535, 6538.

6United States v. Bechtel, 648 F.2d at 666

(citations omitted) (emphasis added); see United

States v. BNS, Inc., 858 F.2d at 463; United States

v. National Broadcasting Co., 449 F. Supp. 1127,

1143 (C.D. Cal. 1978); United States v. Gillette Co.,

406 F. Supp. at 716; see also Microsoft, 56 F.3d at

1461 (whether ‘‘the remedies [obtained in the

decree are] so inconsonant with the allegations

charged as to fall outside of the ‘reaches of the

public interest.’ ’’) (citations omitted).

7United States v. American Tel. and Tel. Co., 552

F. Supp. 131, 150 (D.D.C. 1982), aff’d sub nom,

Maryland v. United States, 460 U.S. 1001 (1983),

quoting United States v. Gillette Co., supra, 406 F.

Supp. at 716; United States v. Alcan Aluminum,

Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985). * Counsel of Record.

to a sixty (60) day comment period, after

which the could shall determine

whether entry of the proposed Final

Judgment ‘‘is in the public interest.’’ In

making that determination, the coust

may consider—

(1) the competitive impact of such

judgment, including termination of

alleged violations, provisions for

enforcement and modification, duration

or relief sought, anticipated effects of

alternative remedies actually

considered, and any other

considerations bearing upon the

adequacy of such judgment;

(2) the impact of entry of such

judgment upon the public generally and

individuals alleging specific injury from

the violations set forth in the complaint

consideration of the public benefit, if

any, to be derived from a determination

of the issues at trial.

15 U.S.C. 16(e) (emphasis added). As

the United States Court of Appeals for

the D.C. Circuit has held, this statute

permits a court to consider, among other

things, the relationship between the

remedy secured and the specific

alleviations set forth in the

government’s complaint, whether the

decree is sufficiently clear, whether

enforcement mechanisms are sufficient,

and whether the decree may positively

harm third parties. See United States v.

Microsoft, 56 F.3d 1448, 1461–62 (D.C.

Cir. 1995).

In conducting this inquiry, ‘‘the Court

is nowhere compelled to go to trial or

to engage in extended proceedings

which might have the effect of vitiating

the benefits of prompt and less costly

settlement through the consent decree

process.’’ 5 Rather,

absent a showing of corrupt failure of the

government to discharge its duty, the Court,

in making its public interest finding, should

* * * carefully consider the explanations of

the government in the competitive impact

statement and its responses to comments in

order to determine whether those

explanations are reasonable under the

circumstances.

United States v. Mid-American

Dairymen, Inc., 1977–1 Trade Cas.

¶ 61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to the

adequacy of the relief secured by the

decree, a court may not ‘‘engage in an

unrestricted evaluation of what relief

would best serve the public.’’ United

States v. BNS, Inc., 858 F.2d 456, 462

(9th Cir. 1988), quoting United States v.

Bechtel Corp., 648 F.2d 660, 666 (9th

Cir.), cert. denied, 454 U.S. 1083 (1981);

see also Microsoft, 56 F.3d at 1460–62.

Precedent requires that the balancing of

competing social and political interests

affected by a proposed antitrust consent

decree must be left, in the first instance,

to the discretion of the Attorney

General. The court’s role in protecting

the public interest is one of insuring

that the government has not breached its

duty to the public in consenting to the

decree. The court is required to

determine not whether a particular

decree is the one that will best serve

society, but whether the settlement is

‘‘within the reaches of the public

interest.’’ More elaborate requirements

might undermine the effectiveness of

antitrust enforcement by consent

decree.6

The proposed Final Judgment,

therefore, should not be reviewed under

a standard of whether it is certain to

eliminate every anticompetitive effect of

a particular practice or whether it

mandates certainty of free competition

in the future. Court approval of a final

judgment requires a standard more

flexible and less strict than the standard

required for a finding of liability. ‘‘[A]

proposed decree must be approved even

if it falls short of the remedy the court

would impose on its own, as long as it

falls within the range of acceptability or

is ‘within the reaches of public interest.’

(citations omitted).’’ 7

VIII. Determinative Documents

There are no determinative materials

or documents within the meaning of the

ARPA that were considered by the

United States in formulating the

proposed Final Judgment.

Dated: January 21, 1997.

Respectfully submitted,

Craig W. Conrath,

Chief.

Reid B. Horwitz,

Assistant Chief.

John W. Van Lonkhuyzen,

Anne M. Purcell,*

James K. Foster,

Barry L. Creech,

John M. Lynch,

Susan Wittenberg,

Trial Attorneys.

U.S. Department of Justice, Antitrust

Division, Merger Task Force, 1401 H Street,

NW, Suite 4000, Washington, DC 20530,

(202) 307–0001.

In the United States District Court for

the District of Colorado

United States of America and the State of

Colorado, Plaintiffs, v. Vail Resorts, Inc.,

Ralston Resorts, Inc., and Ralston Foods,

Inc. Defendants.

Case No. 97–B–10

Certificate of Service

I hereby certify that on this 21st day

of January, 1997 a true and correct copy

of the foregoing Competitive Impact

Statement was delivered by overnight

mail to the following persons:

Bruce F. Black,

Holme, Roberts & Owen, LLP, 1700 Lincoln,

Suite 4100, Denver, Colorado 80203

and

Robert S. Schlossberg,

Peter E. Halle,

Morgan, Lewis & Bockius, LLP, 1800 M Street,

N.W., Washington, D.C. 20036

Counsel for Vail Resorts, Inc.

Jan Michael Zavislan,

First Assistant Attorney General, 1525

Sherman Street, 5th Floor, Denver, Colorado

80203,

Counsel for State of Colorado

Paul C. Daw,

Sherman & Howard, LLC, 633 17th Street,

Suite 3000, Denver, Colorado 80202

and

E. Perry Johnson,

Bryan Cave, LLP, One Metropolitan Square,

211 No. Broadway, Suite 3600, St. Louis,

Missouri 63102

and

J. Michael Cooper,

Daniel C. Schwartz,

Bryan Cave, LLP, 700 13th Street, N.W.,

Washington, D.C. 20005

Counsel for Ralston Resorts, Inc. and Ralston

Foods, Inc.

[FR Doc. 97–2522 Filed 1–31–97; 8:45 am]

BILLING CODE 4410–11–M