[Federal Register Volume 62, Number 22 (Monday, February 3, 1997)]
[Notices]
[Pages 5037-5046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2522]


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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.


[[Page 5038]]


    For the United States:
Craig W. Conrath,
Chief.
Reid B. Horwitz,
Assistant Chief.
John W. Van Lonkhuyzen,
Anne M. Purcell,*
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    * Counsel of Record.
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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,*
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    *Counsel of Record.
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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:
----------------------------------------------------------------------
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'').

[[Page 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

[[Page 5040]]

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 on-going 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

[[Page 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

[[Page 5042]]

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: __________

----------------------------------------------------------------------
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. Sec. 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

[[Page 5043]]

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.
---------------------------------------------------------------------------

    \1\ Skiing 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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \2\ The 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.
---------------------------------------------------------------------------

    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 multi-day 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.
---------------------------------------------------------------------------

    \3\ The 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 (30\2\+30\2\+20\2\+20\2\=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.
---------------------------------------------------------------------------

    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;

[[Page 5044]]

    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 profit-maximizing 
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.
---------------------------------------------------------------------------

    \4\See, e.g., Carl Shapiro, Mergers with Differentiated 
Products, 10 Antitrust 23 (1996).
---------------------------------------------------------------------------

    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

[[Page 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-and-fifty (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

[[Page 5046]]

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,

    \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. Sec. 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.
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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. 
para. 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\
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    \6\ United 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).
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    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\
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    \7\ United 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).
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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,*
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    * Counsel of Record.
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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