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Page 8
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
Page 9
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
Page 10
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
case on which the district court below heavily relied. In Drury Inn, a motel chain purchasing a tract of land insisted
that the seller attach a restrictive covenant to a neighboring lot that would prevent a competing motel from operating
next door. The court held that the restrictive covenant was not a per se violation of § 1 of the Sherman Act, conclud-
ing that the arrangement was one that “merely regulates and perhaps thereby promotes competition.” Id. at 342. To
be sure, in an immediate sense the restrictive covenant barred competition against the motel chain, but in a broader
sense it facilitated the entry of a new market participant, to the benefit of consumers and competition overall. With-
out the covenant, Drury Inn might not have entered the market. This case is similar, in that DRVC insisted on attach-
ing a restrictive covenant to its sale of land to the Kimballs to protect its future ability to profitably operate a ski
rental business. Because both the land deal and the potential opening of a ski rental business would expand the mar-
ket, the arrangement “merely regulates and perhaps thereby promotes competition.” Id.
attachment of a restrictive covenant to one of the two parcels can promote competition by enabling the owner of the
other parcel to start a business without potentially crippling competition on its doorstep. It does not matter, legally or
economically, whether the business will be started by the purchaser (as in Drury Inn ), or the original property own-
er (as in our case). Just as a property owner who operates a business on his land has no obligation to sell part of his
property to a person who intends to open a competing facility, he generally has no obligation, if he sells part of the
resort developer to share its internal profit-making opportunities with competitors. The relevant market requirement
reaches this result by finding implausible a market definition that singles out a small component of the cluster of
services that constitutes the actual product; the anticompetitive conduct requirement reaches it by saying that it is not
anticompetitive to refuse to grant access to competitors.
that permission and took over the ski rental business for itself.
[12] We do not see the logic in this argument. If antitrust law permits a resort operator to organize its business in
either of two ways, by providing ancillary services itself or by allowing third parties to provide the service on a
competitive basis, we do not see why an initial decision to adopt one business model would lock the resort into that
Page 11
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
Page 12
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
eliminate that right. The antitrust laws should not be allowed to stifle a business's ability to experiment in how it
operates, nor forbid it to change course upon discovering a preferable path.
C. Whether Definition of a Relevant Market Is Required
[13][14] The plaintiff also argues that, having pled actual anticompetitive effects stemming from DVRC's enforce-
ment of the restrictive covenant, it was not required to plead a relevant market. It reasons that an allegation of actual
anticompetitive effects obviates any need to allege a relevant market because such effects are direct evidence that
134 F.3d 1010, 1019 (10th Cir.1998). A § 1 claim and a § 2 claim are different inquiries, though. The former prohib-
its “restraints of trade” that are accomplished through concerted action, while the latter prohibits unilateral conduct
but only when it rises to the more severe offense of threatening a monopoly. “Because the Sherman Act does not
prohibit unreasonable restraints of trade as such-but only restraints effected by a contract, combination, or conspira-
cy-it leaves untouched a single firm's anticompetitive conduct ... that may be indistinguishable in economic effect
One, Inc., 173 F.3d 995, 1018 (6th Cir.1999) (“[A]n antitrust plaintiff is not required to rely on indirect evidence of
a defendant's monopoly power, such as high market share within a defined market, when there is direct evidence that
the defendant has actually set prices or excluded competition.”). This circuit has neither accepted nor rejected the
theory. In two cases, Tarabishi v. McAlester Regional Hospital, 951 F.2d 1558, 1569 n. 15 (10th Cir.1991), and
Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951, 968 n. 24 (10th Cir.1990), this court discussed the
crease 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 compo-
nent of an interrelated package of services is not a relevant market for purposes of the Sherman Act or that it is not
Drury Inn, 878 F.2d at 343, where we found a restrictive covenant ancillary rather than naked. Christy acknowledg-
es, however, that the naked/ancillary restraint distinction pertains only to its § 1 claim, the appeal of which Christy
Page 13
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
decided to withdraw subsequent to briefing. Aplt. R. Br. 14 (“Those concepts apply only in the context of Section 1
er at issue and only § 2 claims remain, we need not address whether the restrictive covenant is a “naked restraint.”
III. Conclusion
Because Christy Sports has failed to plead a plausible claim for either attempted or actual monopolization under § 2
of the Sherman Act, we AFFIRM the district court's dismissal for failure to state a claim.
Page 9
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
Page 10
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
case on which the district court below heavily relied. In Drury Inn, a motel chain purchasing a tract of land insisted
that the seller attach a restrictive covenant to a neighboring lot that would prevent a competing motel from operating
next door. The court held that the restrictive covenant was not a per se violation of § 1 of the Sherman Act, conclud-
ing that the arrangement was one that “merely regulates and perhaps thereby promotes competition.” Id. at 342. To
be sure, in an immediate sense the restrictive covenant barred competition against the motel chain, but in a broader
sense it facilitated the entry of a new market participant, to the benefit of consumers and competition overall. With-
out the covenant, Drury Inn might not have entered the market. This case is similar, in that DRVC insisted on attach-
ing a restrictive covenant to its sale of land to the Kimballs to protect its future ability to profitably operate a ski
rental business. Because both the land deal and the potential opening of a ski rental business would expand the mar-
ket, the arrangement “merely regulates and perhaps thereby promotes competition.” Id.
attachment of a restrictive covenant to one of the two parcels can promote competition by enabling the owner of the
other parcel to start a business without potentially crippling competition on its doorstep. It does not matter, legally or
economically, whether the business will be started by the purchaser (as in Drury Inn ), or the original property own-
er (as in our case). Just as a property owner who operates a business on his land has no obligation to sell part of his
property to a person who intends to open a competing facility, he generally has no obligation, if he sells part of the
resort developer to share its internal profit-making opportunities with competitors. The relevant market requirement
reaches this result by finding implausible a market definition that singles out a small component of the cluster of
services that constitutes the actual product; the anticompetitive conduct requirement reaches it by saying that it is not
anticompetitive to refuse to grant access to competitors.
that permission and took over the ski rental business for itself.
[12] We do not see the logic in this argument. If antitrust law permits a resort operator to organize its business in
either of two ways, by providing ancillary services itself or by allowing third parties to provide the service on a
competitive basis, we do not see why an initial decision to adopt one business model would lock the resort into that
Page 11
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
Page 12
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
eliminate that right. The antitrust laws should not be allowed to stifle a business's ability to experiment in how it
operates, nor forbid it to change course upon discovering a preferable path.
C. Whether Definition of a Relevant Market Is Required
[13][14] The plaintiff also argues that, having pled actual anticompetitive effects stemming from DVRC's enforce-
ment of the restrictive covenant, it was not required to plead a relevant market. It reasons that an allegation of actual
anticompetitive effects obviates any need to allege a relevant market because such effects are direct evidence that
134 F.3d 1010, 1019 (10th Cir.1998). A § 1 claim and a § 2 claim are different inquiries, though. The former prohib-
its “restraints of trade” that are accomplished through concerted action, while the latter prohibits unilateral conduct
but only when it rises to the more severe offense of threatening a monopoly. “Because the Sherman Act does not
prohibit unreasonable restraints of trade as such-but only restraints effected by a contract, combination, or conspira-
cy-it leaves untouched a single firm's anticompetitive conduct ... that may be indistinguishable in economic effect
One, Inc., 173 F.3d 995, 1018 (6th Cir.1999) (“[A]n antitrust plaintiff is not required to rely on indirect evidence of
a defendant's monopoly power, such as high market share within a defined market, when there is direct evidence that
the defendant has actually set prices or excluded competition.”). This circuit has neither accepted nor rejected the
theory. In two cases, Tarabishi v. McAlester Regional Hospital, 951 F.2d 1558, 1569 n. 15 (10th Cir.1991), and
Reazin v. Blue Cross & Blue Shield of Kansas, Inc., 899 F.2d 951, 968 n. 24 (10th Cir.1990), this court discussed the
crease 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 compo-
nent of an interrelated package of services is not a relevant market for purposes of the Sherman Act or that it is not
Drury Inn, 878 F.2d at 343, where we found a restrictive covenant ancillary rather than naked. Christy acknowledg-
es, however, that the naked/ancillary restraint distinction pertains only to its § 1 claim, the appeal of which Christy
Page 13
555 F.3d 1188, 2009-1 Trade Cases P 76,499
(Cite as: 555 F.3d 1188)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
decided to withdraw subsequent to briefing. Aplt. R. Br. 14 (“Those concepts apply only in the context of Section 1
er at issue and only § 2 claims remain, we need not address whether the restrictive covenant is a “naked restraint.”
III. Conclusion
Because Christy Sports has failed to plead a plausible claim for either attempted or actual monopolization under § 2
of the Sherman Act, we AFFIRM the district court's dismissal for failure to state a claim.
