Twenty years ago, a merger of giants in the ski industry triggered antitrust concerns that the lack of competition could lead to price spikes for skiers.

Today, with recent consolidation deals setting up a battle between two major resort operators in an industry driven by season-pass sales, the competition could involve two titans offering more for less.

When Denver private equity firm KSL Capital Partners — the owner of California’s Squaw Alpine resort — announced last month it was joining privately owned Aspen Skiing Co. in acquiring Intrawest’s six resorts for $1.5 billion as well as southern California’s four-hill Mammoth Resorts, the deal marked the return of an oligopoly in the resort industry.

Within the span of one newsy week in April, the resort industry veered from a semi-monopoly controlled by Vail Resorts to a duopoly, with two giants vying for control.

But regardless of how the competition between the continent’s largest resort operator, Vail Resorts, and the newly formed KSL-Aspen Skiing alliance will affect prices, the duopoly — involving 22 major resorts across North America — could trigger federal antitrust concerns. It’s happened before. Related Articles April 10, 2017 Details are scant, but big investments in Steamboat and Winter Park are coming

April 12, 2017 New Aspen partnership buys Mammoth resorts, challenges Vail Resorts’ dominance in season pass sales

“They might lower the price to drive people out of business or they might raise the price. The point is, does it violate the fundamental principles of antitrust law because it prevents a plurality of participants from controlling the price?” said University of Denver law professor John Soma, a former trial attorney for the Department of Justice’s antitrust division. “The idea is that you need many buyers and many sellers in the market, and their combined actions determine the price.”

Pricing concerns were at the center of a Department of Justice investigation into 1997’s $310 million deal that had Vail Resorts — then the operator of just Vail and Beaver Creek — buying Ralston Resorts’ Breckenridge, Keystone and Arapahoe Basin ski areas.

Ralston Resorts, a division of Ralcorp Holdings, and Vail Resorts were the largest resort operators in the state back then. Ralston’s Breckenridge, Keystone and Arapahoe Basin ski areas logged 600,000 Front Range visits in the 1995-96 season, accounting for 26 percent of Front Range skier traffic. Overall, Ralston reported 2.6 million skier days and revenues of more than $135 million in 1995-96.

Vail Resorts’ Vail Mountain and Beaver Creek reported 280,000 Front Range visits, accounting for 12 percent of the region’s skier visits. Overall, the two-resort company reported 2.2 million skier days and revenues of more than $140 million in 1995-96.

The Department of Justice noted in its January 1997 antitrust complaint that the combined Vail and Ralston resorts would have twice the Front Range market share of its next competitor, which wasn’t named but was likely Winter Park or Copper Mountain. Those two resorts expressed concerns over the merger in 1996.

“The combined Vail and Ralston resorts would be likely to raise prices or reduce the level of discounts offered to skiers from the Colorado Front Range,” read the complaint. “In addition, the transaction would give other ski resorts serving the Front Range the incentive to raise their lift ticket prices to Front Range skiers following a price increase at the combined Vail and Ralston resorts. The effects of the proposed transaction … may be to lessen competition substantially and to tend to create a monopoly.”

The Department of Justice, seeking to protect competition that provided discounts for Front Range skiers, ordered Vail to sell Arapahoe Basin.

“Competition among ski resorts has meant discounts for Colorado Front Range skiers,” Joel I. Klein said in a January 1997 statement, when he was the assistant attorney general in charge of the Antitrust Division at Justice. “Without selling off the Arapahoe Basin resort, this deal would have resulted in fewer and smaller discounts on lift tickets.”

In August 1997, Vail sold Arapahoe Basin for a scant $4 million to Canada’s Dundee Realty USA, which had developed condominium complexes in Beaver Creek. By the end of 1997, the ski industry was dominated by three major players: Vail Resorts, Intrawest and American Skiing Co.

All three began trading on the New York Stock Exchange in 1997. Colorado was their battleground, with Intrawest owning Copper Mountain, American Skiing at Steamboat and Vail Resorts controlling four resorts in Eagle and Summit counties.

Despite the antitrust fears of rising lift ticket prices, the cost of season passes plummeted. An innovative 1998 season pass product at Winter Park — $800 for four season passes — triggered a pass war that redefined the resort industry, with once-pricey passes offering skiing at deep discounts. Twenty years later those ubiquitous passes are the new financial engine for Colorado’s resort industry, which has long lived and died with the snowfall. That engine is about to move beyond Colorado.

Season passes in the spring and summer have ironed out roller-coaster ticket sales. And, where the three major resort companies in the late 1990s and early 2000s leaned on real estate development as the key to riches, the two that leaned the most — American Skiing and Intrawest — are gone or soon will be. Only Vail Resorts remains vibrant, with real estate accounting for a sliver of its bottom line and more than 650,000 sales of its wildly popular Epic Pass delivering financial stability.

A source close to the KSL-Aspen Skiing deal said a pass product involving all the Intrawest resorts, Squaw Alpine, Mammoth Resorts and Aspen Skiing’s four ski areas is planned and will rival the Epic Pass.

Independent resort owners across the state are watching the KSL-Aspen Skiing deal warily. A market dominated by cheap season passes could pinch resort owners dependent on day-ticket sales.

Like Aaron Brill, the owner of southern Colorado’s Silverton Mountain, a longtime, vocal critic of the Epic Pass’ devaluation of day lift ticket prices.

Brill said the new KSL-Aspen versus Vail Resorts dynamic “is bad for everyone other than people who like cheap season passes above all else and don’t care about massive crowds and what comes with them.”

“People scoff at paying for skiing at window rates when their season pass covers so many areas these days. More small operators will go out of business or eventually be gobbled up by the giants or simply shut down,” said Brill, who has cut his discounted unguided skiing program to a single weekend and expanded his much pricier helicopter skiing to keep his business afloat. “Luckily we have other popular products we offer that can offset that loss of revenue … but what about the small ski areas that only have lift ticket sales to pay the bills? The future is not so bright. It’s ‘adapt or die’ these days.”

Powdr Corp. is the model of resort operator adaptation. The company, which owns nine mountain resorts in six states, including Copper Mountain and Eldora, has diversified away from a reliance on lift ticket sales with the acquisition and expansion of the Outside Television network and Woodward action sports training camps, making it more of an adventure/lifestyle company than a ski-area operator.

“Powdr’s approach to the ski business has evolved over the years and differentiated us within the competitive industry,” said Tim Brennald, Powdr’s head of resorts, who had forged pass-sharing deals with Intrawest to promote cross-visitation.

Even with a footprint beyond ski areas, Powdr relies on season pass sales.

“It’s still early to tell what kind of impact resort consolidation might have, but our partnership with Intrawest on pass products has been key in reaching our goal to provide guests awesome experiences in amazing places,” Brennald said.

But with Vail and Aspen selling day lift tickets for as much as $189 last season — a pricing strategy that pushes both day-trippers and destination guests toward the $859 Epic Pass — the little resorts with tickets closer to $100 have an appeal among budget-minded skiers who aren’t bothering with a season pass.

“In some ways, I wonder if this might help us,” said Davey Pitcher, the longtime owner of Wolf Creek ski area. “Our day tickets are much lower than most day tickets. These crazy season passes, it’s a business model that we have to live with but I’m not really sure it’s anything we can complain about.”

“We have a big pricing advantage over the big guys,” said Monarch owner Bob Nicolls. “If they raise prices, that’s a good thing. We can track behind those guys. Things are going to consolidate, and they aren’t going to lower prices. Just watch.”

Exactly, said Soma. If the price for season passes does fall with the introduction of a KSL-Aspen Skiing pass, they won’t stay low for long in a market controlled by two entities.

“History says that a duopoly will simply maximize the price between the two entities,” Soma said.

One interesting twist in the KSL-Aspen Skiing deal is that Aspen Skiing’s chiefs have said repeatedly that their four Roaring Fork Valley ski areas — Aspen Mountain, Aspen Highlands, Buttermilk and Snowmass — will remain separate from the collective under the new, yet unnamed company. That would prevent Aspen Skiing from even being at the table when the new company schemes its ticket revenue strategy. Two competitors can’t work together to set pricing. So the deal will likely require Aspen Skiing to create a sort of wall between the new KSL partnership to prevent the appearance of collusion on pricing.

“We are very aware of all these things and proceeding accordingly,” said Aspen Skiing spokesman Jeff Hanle, adding that it was “premature” to discuss any potentially contentious issues before the deal is even finalized, which is expected in the next several months.

Soma said the idea that Aspen Skiing will remain separated from the new company “is just horsefeathers.”

“That’s a bunch of baloney,” Soma said. “Give it two, three years and they will be operating as if they are the same group.”