“Monopolies Are Not a Game” - New York Attorney General Sues Labrador, Song Owner for Shuttering Toggenburg
“This action is needed…to restore competition by ensuring that Toggenburg is back up and running in the hands of an independent competitor, rather than rusting away, idle, in Intermountain's grip"
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“Monopolies are not a game”
It always felt a little scuzzy. A little rash and brutal. Maximalist caveman capitalism unleashed. For 68 seasons Toggenburg was there and then one August day last year it was gone. Peter Harris, owner of nearby Labrador and Song mountains, had purchased the ski area from Greek Peak owner John Meier and would close it immediately.
“I struggled with the decision,” Harris told me last August, just after announcing the closure. “After much analysis, it seemed to be a logical decision, and I sincerely think this is better for the Central New York ski scene.”
Both buyer and seller argued the pure business case for giving up on Toggenburg. “Skiing doesn’t have to happen in New York State,” Meier told me, saying that there was “no scenario” in which Toggenburg would return the $10 million that he estimated would be required to modernize it. Harris echoed this sentiment, implying that any cash would be better invested in fixing up Labrador and Song. “I think we're going to have a better experience, because obviously we're going to have more resources to invest in the two remaining areas,” he said.
I was largely sympathetic to these arguments, writing, “There is no evidence that the two owners colluded to eliminate competition. The suggestion is more emotional than rational anyway: if I own two cars and my neighbor owns two cars and I buy one of his cars, I can fill it with Styrofoam peanuts and push it into my swimming pool if I feel like it.” Without more information, it was hard to tell someone that they were obliged to keep a business open without understanding whether that business was viable.
With 14 months to investigate the sale, New York State Attorney General Letitia James has presented a different take. On Friday, she sued Intermountain Management – the umbrella company that owns Labrador and Song – “for buying its main competitor, Toggenburg Mountain, then shutting it down to direct skiers to its own mountains.” This action, James said, created a “complete, unchallenged dominance in the Syracuse area” – a monopoly – for what her office calls “season-pass skiing” around Syracuse, a violation of New York State’s antitrust law, the Donnelly Act. “even if the Toggenburg acquisition and closure did not establish or maintain Intermountain’s monopoly, it harmed, and continues to harm, consumers by eliminating a competitor without any procompetitive justification,” the court summons states.
James also terminated a clause in the Toggenburg sales contract that prohibited Meier from hiring Intermountain employees or directly competing with its ski areas. “This action also seeks to enjoin the anticompetitive noncompete agreement (and no-poach provision) Intermountain induced Mr. Meier to enter,” the summons states. “By virtue of operation of the noncompete, Mr. Meier is prevented from opening a competing ski resort, hiring Intermountain’s employees, and soliciting business from Intermountain’s customers and vendors. This agreement helped to cement Intermountain’s ski resort monopoly, and harmed workers by chilling competition in the labor market.” Meier has agreed to pay a $195,000 fine – the amount he earned from the non-compete – and is cooperating with the state’s investigation.
“Intermountain tried to freeze out competitors to increase its profits and dominate the region’s ski market,” James said. “Today we are taking action to end these illegal arrangements and protect workers, skiers, and consumers. Monopolies are not a game. They harm consumers, drive up prices, and limit workers’ opportunities. Intermountain’s greedy behavior left skiers out in the cold, all so they could line their own pockets and be on top of the ski market. Illegal and unfair practices by businesses big and small will not be tolerated by my office.”
The consequences here could be enormous for Harris. James is “seeking to require Intermountain to sell one of its resorts and rescind its illegal noncompete agreement” to “restore competitive conditions” as well as to “restore Toggenburg’s position as an independent competitor” and seek “monetary relief for the ill-gotten gains from Toggenburg customers forced to move to Intermountain, and civil penalties for Intermountain’s unfair and illegal business practices.” Her hope is “to restore competition by ensuring that Toggenburg is back up and running in the hands of an independent competitor, rather than literally rusting away, idle, in the grip of Intermountain.”
“One of its resorts” could mean Labrador, Song, or Toggenburg. Toggenburg, unfortunately, is now a shell. Harris has stripped everything from the mountain other than the antique lift fleet and the base buildings (anything of value, such as kitchen equipment and rental gear, has reportedly been removed).
“We are aware of the concerns raised by the New York State Attorney General’s Office regarding our purchase of Toggenburg in 2021,” Harris said in a statement provided to The Storm Skiing Journal. “Operating a private ski resort in today’s economic climate is difficult at best. New York State has more ski resorts than any state nationwide. There are multiple facilities across Central New York with a diverse array of amenities. Central New York’s population has declined steadily since 1980. Like every other industry, consolidation has occurred based on population and demand. A short supply of labor has added tremendous challenges for all operators, and the cost of capital improvements at private ski resort is not supported by public money.”
In the 69-page summons that accompanied the attorney general’s announcement, the state, citing emails, text messages, and legal documents, meticulously lays out its case against Harris and Intermountain. How he plotted for years to seize and shutter Toggenburg. How he acted decisively, almost recklessly when he finally captured it. It’s a story of blind conviction to an idea, harebrained and almost cartoonish, an ‘80s spoof movie script of a cackling villain bent on profit above community or empathy. The documents also clarify some details that had been missing or mis-reported, including Toggenburg’s actual purchase price. Here’s a deeper look at what happened, what happens next, and possible outcomes for New York skiing, local skiers, and the ski industry in general:
Below the subscriber jump: a full breakdown of the Labrador/Song saga, an update on the race to open, Pennsylvania just won’t give up on lost ski area Denton, and much more.