Articles Posted in Sports and Entertainment Law

Seven Lesser-Known Antitrust Exemptions and Immunities

June 18, 2026 | Aaron Gott

There are a number of exemptions to and immunities from the federal antitrust laws. Some are well known, and we have written about many of them before. Jarod Bona catalogued the big ones—state-action immunity, the filed-rate doctrine, the insurance exemption under the McCarran-Ferguson Act, the baseball exemption, the Capper-Volstead Act for agricultural cooperatives, Noerr-Pennington, the statutory and non-statutory labor exemptions, implied immunity, export trade exemptions, foreign sovereign doctrines, the FTAIA, and primary jurisdiction.

Maybe you knew about the baseball exemption. But did you know about the Coca-Cola exemption? How about the Sports Broadcasting exemption? As you might expect, Congress has carved out various immunities and exemptions—often to serve a particularly powerful constituency—and Coca-Cola (and its bottlers) and the National Football League top the list for firms that hold enough cultural sway and political capital to obtain an antitrust golden ticket.

I’m an antitrust lawyer, and even I didn’t know about the Coca-Cola exemption—until I listened to the Coca-Cola episode of Acquired. And that wasn’t even the first time Acquired had taught me about antitrust: it also taught me about the Sports Broadcasting exemption. I decided enough was enough and catalogued some more of these lesser-known antitrust exemptions so that this doesn’t happen to you, too. Some of these exemptions are narrow, some are surprisingly broad. All of them are at least interesting.

The Fishermen’s Collective Marketing Act

Passed in 1934, the Fishermen’s Collective Marketing Act is essentially a Capper-Volstead Act for the fishing industry. It permits associations of fishermen to collectively catch, prepare, handle, and market fish and fish products without triggering antitrust liability. Like the Capper-Valstead Act, the fishermen’s exemption covers the cooperative’s core marketing activities but does not immunize predatory conduct—using the cooperative as a vehicle to harm processors, distributors, or other non-member competitors falls outside its protection. The Act is rarely litigated, which is part of why it flies under the radar, but for commercial fishing operations structured as cooperatives, it is the primary statutory basis for coordinating output and pricing that would otherwise look like textbook horizontal price-fixing. If you advise fishing cooperatives or process antitrust complaints in that industry, it’s worth understanding the ins and outs of this exemption. If don’t deal in the fish industry, you are now well on your way to crushing your next trivia question about obscure antitrust exemptions.

The Soft Drink Interbrand Competition Act

Did you know that Coca-Cola doesn’t actually make the product you know and love? Instead, it makes syrup, and it sells that syrup to independent bottlers through a licensing agreement. The bottlers mix that syrup with carbonated water and put it in a can or bottle, and then deliver it to the store where you buy it. Make no mistake, Coca-Cola tightly controls the process and this distribution model benefits Coca-Cola in myriad ways. But to make it work, Coca-Cola had to give these independents exclusive territories. And even though Coca-Cola’s distribution model had existed for decades, the FTC decided in the 1970s that it did not like it. (The agency also targeted Pepsi and its bottler network.) The FTC argued that the exclusive territorial arrangements that soft drink manufacturers used for bottler distribution violated Section 1 of the Sherman Act because they were unlawful market allocation agreements between competitors.

Congress passed the Soft Drink Interbrand Competition Act in 1980 to preempt that debate by statute, expressly authorizing exclusive territorial grants in carbonated soft drink distribution—so long as the manufacturer faces substantial and effective interbrand competition from other brands. That “interbrand competition” requirement is the meaningful limitation on the exemption: if a brand faces robust competition from other soft drink brands, its exclusive territories are immunized. If the market has become so concentrated that a brand faces no real interbrand pressure, the immunity is more fragile. The Act is a notable example of Congress legislating a specific safe harbor for a single industry’s distribution structure—conduct that, in most other contexts, could be unlawful depending on the specifics of the distribution structure.

The Newspaper Preservation Act

The Newspaper Preservation Act of 1970 authorizes joint operating agreements—JOAs—between competing newspapers in markets where one paper is at serious risk of financial failure. Under a JOA, two separately owned papers can merge their printing, distribution, advertising, and business operations while maintaining separate and independent editorial staffs. In antitrust terms, this is an explicit congressional authorization for competing publishers to share costs, coordinate pricing, and allocate markets in their commercial operations—conduct that would otherwise be per se illegal under the Sherman Act—so long as they seek preclearance to do so. The rationale is that two editorially independent papers sharing a back office serve the public better than one monopoly survivor. The Act requires the Attorney General to approve new JOAs, and the “probable danger of financial failure” standard is supposed to function as a real gatekeeping requirement—not a rubber stamp. The number of newspapers operating under JOAs has declined sharply as the industry has contracted, but as Pat Pascarella and I once argued, the JOA framework could still be relevant. And local news markets continue to consolidate as more and more papers go under.

The National Cooperative Research and Production Act

The National Cooperative Research and Production Act—the NCRPA—was originally enacted in 1984 as the National Cooperative Research Act and expanded in 1993 to cover production joint ventures. It does two distinct things. First, it requires that R&D and production joint ventures that file notification with the DOJ and FTC be evaluated under the rule of reason rather than the per se standard—a significant benefit given that horizontal coordination between competitors can attract fights over the application of the ancillary-restraints doctrine and possibly per se treatment. Second, and perhaps more importantly, it limits antitrust damages for qualifying ventures to actual damages rather than treble damages, even if the venture is ultimately found to have violated the antitrust laws. The notification process is not burdensome: the parties file with both agencies describing the venture’s scope and membership, and publish a summary in the Federal Register. The liability exposure drops substantially as soon as notification is filed. For technology consortia, standard-setting bodies, and any group of competitors considering pooled R&D or joint manufacturing, the NCRPA is a meaningful but often overlooked risk-reduction tool.

The Local Government Antitrust Act

The Local Government Antitrust Act of 1984—the LGAA—is distinct from, and more narrow than, state-action immunity under Parker v. Brown. State-action immunity is a complete defense: qualifying governmental conduct is simply not subject to antitrust liability. The LGAA operates differently. It does not immunize the underlying conduct; it eliminates only damages, and only for local governments and their officials. Under the LGAA, local governments and their officials acting in official capacities cannot be held liable for damages under the federal antitrust laws, even if their conduct is ultimately found to be anticompetitive. Injunctive and declaratory relief remain fully available. The practical consequence for plaintiffs is significant: before investing in antitrust litigation against a municipality or local agency, you need to assess whether injunctive relief alone justifies the cost, because treble damages—the usual engine driving private antitrust enforcement—are off the table. The LGAA damages bar can apply even when Parker immunity fails, so you want to consider both defenses in the case from the beginning.

The Shipping Act

The Shipping Act of 1984—updated by the Ocean Shipping Reform Act of 1998 and amended again by OSRA 2022—creates a regime of supervised antitrust immunity for ocean carrier agreements. Under the Act, common carriers can enter into agreements fixing rates, pooling revenues, allocating cargo, and coordinating vessel capacity, provided they file those agreements with the Federal Maritime Commission. Once filed, the agreements receive antitrust immunity unless the FMC acts to reject or modify them. The immunity is not unconditional: the FMC retains authority to prohibit agreement terms that are unjustly discriminatory or unreasonably harmful to shippers, and OSRA 2022 added new requirements around transparency and service contract compliance. But the core structure—FMC-supervised horizontal coordination among ocean carriers—remains intact and immunizes conduct that would be per se illegal under the Sherman Act in virtually any other context. For shippers challenging rate coordination or capacity management practices by ocean carriers, this means the FMC regulatory process, not an antitrust lawsuit, is generally the primary available remedy.

The Sports Broadcasting Act

The baseball exemption gets most of the attention in sports-and-antitrust discussions. Baseball’s exemption is judge-made, rooted in a 1922 Supreme Court decision holding that baseball was not interstate commerce—a conclusion the Court has since acknowledged was likely wrong but kept alive on stare decisis grounds. But there is another sports exemption that applies beyond baseball: the Sports Broadcasting Act.

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Antitrust and Hockey: Competition Law Lessons That Apply Beyond the Ice

April 30, 2026 | Aaron Gott

Author: Aaron Gott

The 2026 Stanley Cup Playoffs are underway. For an antitrust lawyer and hockey fan, it is a fitting moment to take stock of professional hockey’s rich antitrust history.

Professional sports leagues create unusual market dynamics. Their products are produced jointly by competitors—teams that need each other to put on games, sell tickets, and negotiate broadcast deals—but those same competitors must hold themselves apart enough to compete for talent, fans, and championships. That tension between cooperation and competition is a recipe for antitrust scrutiny, and hockey has produced some instructive case law in the field. The lessons are not just for sports lawyers; the same dynamics increasingly play out in technology platforms, healthcare networks, and other ecosystems where rivals must coordinate to deliver a product.

Below is a tour of professional hockey’s antitrust story, from the reserve clause to the modern lockout, with stops along the way at relocation fights, the single-entity defense, and the league’s nine-figure expansion fees.

Player Mobility and the Reserve Clause

For most of the twentieth century, professional hockey players could not freely move between teams. The reserve clause, written into nearly every standard player contract, gave the team perpetual rights to renew the contract on its own terms. The practical effect was that NHL teams collectively suppressed labor competition: a player drafted by Toronto stayed in Toronto unless Toronto chose to trade him, and the league’s structure ensured no other employer could compete for his services.

That arrangement looked exactly like what it was—an agreement among competitors to control the labor market. When the World Hockey Association launched in 1972 and began signing NHL players, federal courts examined the reserve clause and found Sherman Act problems. The leading decision is Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc., in which the Eastern District of Pennsylvania issued a preliminary injunction against the NHL’s enforcement of the reserve clause and held that the league’s restrictive practices likely violated the antitrust laws.

Labor markets are markets, and agreements among horizontal competitors to suppress wages or restrict labor mobility receive scrutiny under the Sherman Act. The Justice Department and the FTC have in recent years returned to that principle in the form of no-poach and wage-fixing prosecutions across industries, from fast food to nursing to engineering. Hockey just got there first.

Rival Leagues and Group Boycotts: The NHL v. WHA

The reserve clause was only one piece of the NHL’s response to the WHA. The league also coordinated with arena operators to restrict the WHA’s access to facilities, leaned on broadcasters and equipment suppliers, and otherwise marshaled the resources of incumbents against an entrant.

That is classic group boycott territory. When dominant firms join forces to deny a rival the inputs it needs to compete—facilities, supplies, distribution—the conduct sits at the heart of Section 1 concern. The legal pressure on the NHL, combined with the WHA’s financial difficulties, ultimately produced a partial merger: four WHA teams (the Edmonton Oilers, Hartford Whalers, Quebec Nordiques, and Winnipeg Jets) joined the NHL in 1979, and the rival league dissolved.

The pattern repeats in technology, healthcare, finance, and transportation. Dominant platforms do not just compete with entrants; they shape the rules of competition, and they often do so collectively with other incumbents who depend on those rules. Hockey just happens to have litigated it earlier (and on skates!).

Drafts, Salary Caps, and the Non-Statutory Labor Exemption

Sports drafts and salary caps look like textbook Sherman Act problems. A draft is an agreement among competitors not to compete for entry-level talent. A salary cap is an agreement among competitors to fix the price of labor. In any other industry, both would be candidates for per se antitrust condemnation.

In professional sports, they usually survive because of the non-statutory labor exemption, a judicially crafted doctrine that immunizes certain restraints adopted through collective bargaining. The Court’s decision in Brown v. Pro Football, Inc. set out the contours: a restraint is exempt if it concerns a mandatory subject of bargaining, primarily affects the parties to the collective bargaining relationship, and is reached through bona fide arm’s-length bargaining.

Hockey has worn the exemption well. Drafts, entry-level contract restrictions, restricted free agency, and the salary cap all flow from collectively bargained agreements between the NHL and the National Hockey League Players’ Association. They have not been seriously vulnerable to antitrust challenge so long as the bargaining relationship holds.

The takeaway is not that drafts and salary caps are competitively benign. It is that how a restraint is adopted can matter as much as what the restraint does. That distinction has implications well beyond sports—particularly in industries where standard-setting bodies, joint ventures, and trade associations make rules that look a great deal like restraints on competition.

Territories, Relocation, and Market Allocation

NHL teams do not move freely. League rules grant existing teams territorial rights and condition relocation and expansion on supermajority votes of the other owners. The result is a system in which incumbents collectively decide who can enter their markets and on what terms.

Geographic market allocation among horizontal competitors is normally per se illegal under Section 1. Yet the NHL has largely avoided antitrust liability in this area. Part of the explanation is doctrinal: courts have moved away from the per se rule for sports league rules, applying the rule of reason instead in light of the joint-venture features of professional sports. Part of it is pragmatic. The NHL has historically resolved territorial disputes through indemnity payments rather than through litigation. When the Disney-owned Mighty Ducks of Anaheim entered the league in 1993, Disney was required to make a substantial payment to the Los Angeles Kings, whose territorial rights covered the Anaheim market.

The NFL has not been as fortunate. In Los Angeles Memorial Coliseum Commission v. National Football League, the Ninth Circuit affirmed a treble-damages verdict against the NFL for blocking the Oakland Raiders’ relocation to Los Angeles. Applying the rule of reason, the court found that the NFL’s three-quarters approval requirement for franchise relocation was not justified by procompetitive benefits—particularly given that the league had invoked the rule to protect the L.A. Rams, who had themselves moved from Los Angeles to Anaheim.

More recently, the NHL itself flirted with similar trouble. The 2009 bankruptcy of the Phoenix Coyotes produced a high-profile dispute over Jim Balsillie’s bid to buy the team and move it to Hamilton, Ontario. The NHL invoked its relocation rules to block the move, and Balsillie pressed antitrust counterclaims accusing the league of conspiring to allocate the southern Ontario market to the Toronto Maple Leafs and Buffalo Sabres. The bankruptcy court ultimately rejected Balsillie’s bid on other grounds, and as a result the antitrust questions were not resolved. They will likely arise again in the next dispute spurred by the relocation rules.

When they do, courts will likely apply the rule of reason, but even with the special treatment of professional sports, an agreement among competitors to divide the market is dangerous territory.

Lockouts and Concerted Refusals to Deal

The NHL has locked its players out three times since 1994, costing the league a half-season in 1994–95, all of 2004–05, and another half-season in 2012–13. From the players’ side, a lockout looks like a concerted refusal to deal, or group boycott: the team employers, acting through the league, jointly impose terms after a bargaining impasse and jointly refuse to hire players except on those terms.

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The Paramount–Warner Bros. Deal: What It Signals for Antitrust Merger Review in Consolidating Industries

March 7, 2026 | Sabri Siraj

Author: Sabri Siraj

In February 2026, Paramount Global signed a $110 billion agreement to acquire Warner Bros. Discovery, setting the stage for one of the largest media combinations in recent memory. The transaction follows a competitive process that included a proposal from Netflix late last year to merge with Warner Bros. Discovery. Netflix ultimately withdrew its bid, citing financial considerations.

While much of the public conversation has centered on personalities and politics, the more meaningful takeaway for businesses lies elsewhere. This transaction offers a clear window into how regulators, both state and federal, are approaching major mergers in industries that are consolidating after years of rapid growth.

For companies contemplating transformative deals in their own sectors, the Paramount–Warner transaction signals an important shift in merger review: agencies are looking beyond simple market share metrics and focusing more closely on how consolidation reshapes long-term competitive dynamics.

Transaction Background

Under the reported agreement, Paramount would acquire Warner Bros. Discovery in a transaction valued at approximately $110 billion, including assumed debt. The combined company would control a substantial portfolio of film studios, premium cable brands, broadcast networks, and direct-to-consumer platforms.

The deal emerges at a time when the media industry is recalibrating. Subscriber growth has slowed, content production costs remain high, and companies are under pressure to improve profitability. In December, Netflix explored strategic transactions involving studio and streaming assets, underscoring the broader industry push toward scale and operational efficiency.

If completed, the merger would reduce the number of diversified, large-scale competitors operating across film production, content licensing, advertising, and subscription services. As a result, the transaction is likely to receive scrutiny from U.S. federal and state and international enforcers.

The Legal Framework Governing the Review

Section 7 of the Clayton Act prohibits acquisitions whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” The inquiry is forward-looking and predictive. Regulators assess whether a transaction is likely to reduce output, raise prices, diminish innovation, or otherwise weaken competitive rivalry.

In a conventional horizontal merger analysis, agencies examine relevant product and geographic markets, the degree of overlap between the merging firms, and changes in market concentration. Structural indicators often provide the starting point for the analysis.

Modern merger review, however, does not end there. Particularly in capital-intensive industries with relatively few major competitors, agencies increasingly evaluate how consolidation affects incentives and industry structure over time. That broader structural focus is likely to shape review of the Paramount–Warner transaction.

State antitrust enforcers have been increasingly active in reviewing mergers that affect the citizens and consumers of their states. For example, multiple state attorneys-general challenged the Kroger-Albertsons merger. Here, the California Attorney General, at least, has signaled that he plans to investigate the merger.

The Key Signal: Structural Scrutiny in Consolidating Industries

The most instructive aspect of this deal is not simply that two competitors are combining. Rather, it is how enforcement agencies are likely to assess consolidation in a mature, high-fixed-cost industry.

Media production and distribution share structural features common to many other sectors: significant upfront investment, repeated interaction among a limited number of firms, and publicly observable pricing and strategic behavior. When markets exhibit these characteristics, regulators may evaluate not only whether the merged firm could raise prices unilaterally, but also whether reducing the number of independent competitors makes coordinated outcomes more likely.

This coordinated-effects lens focuses on market structure. Agencies may ask whether having fewer major decision-makers increases the risk of parallel pricing behavior, output discipline, or softened rivalry over time—even in the absence of explicit agreement.

That analytical approach has implications far beyond media. Healthcare systems, aerospace and defense contractors, energy infrastructure providers, and industrial manufacturers all operate in industries with high fixed costs and limited numbers of national competitors. In those sectors, consolidation may attract scrutiny not solely because of market share thresholds, but because of how it alters competitive incentives across the industry.

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Seventh Circuit Benches University of Wisconsin Athlete After Antitrust Claim Against NCAA Falls Short

September 15, 2025 | Ruth Glaeser

Author: Ruth Glaeser

The Seventh Circuit Court of Appeals reversed an injunction that would have allowed University of Wisconsin–Madison football player Nyzier Fourqurean to play a fifth season, ruling that his antitrust allegations failed to clearly define the relevant market.

Background from the Seventh Circuit’s Opinion

UW-Madison footballer Nyzier Fourqurean alleged that the National Collegiate Athletic Association (“NCAA”) violated the Sherman Act by restricting student-athletes to four seasons of intercollegiate competition per sport, a policy commonly referred to as “The Five-Year Rule.” The Five-Year-Rule restricts an athlete’s participation to four years of college-level play. For example, once a student enrolls full-time in college, they have five calendar years to complete their four seasons of athletic eligibility in a given sport. The clock starts the day they first enroll full-time, not when they first compete. While there are exceptions, this rule is meant to balance athletics with academics, and to ensure college sports don’t become prolonged semi-professional careers.

Here, the district court reasoned that the NCAA Division I Football Bowl Subdivision (FBS) is the relevant market. Because the Five-Year Rule excluded Fourqurean from this market, the court determined it likely had anticompetitive effects. On that basis, the district court granted Fourqurean’s injunction, temporarily blocking the NCAA from enforcing the rule, and concluding that he was likely to succeed on the merits of his Sherman Act claim.

The Sherman Act is a federal antitrust law that limits and penalizes anticompetitive conduct. It has often been used to challenge NCAA rules limiting what college athletes can receive and how they remain eligible to compete. Courts have reached varying conclusions on these challenges. But the Supreme Court’s decision in Alston v. NCAA held that certain NCAA restrictions on education-related benefits violated antitrust law. That ruling opened the door to broader reforms in athlete compensation. For instance, a recent settlement now allows schools to share roughly $20 million in name, image, and likeness (NIL) revenue with student-athletes during the 2025–26 season.

Bolstered by the Alston decision, student-athletes have now challenged not just the bylaws regulating compensation, but also those concerning eligibility, including the limits of the Five-Year-Rule.

Seeking to profit from the new revenue-sharing opportunities, Fourqurean sought to challenge the Five-Year Rule for another year of playing eligibility under Section 1 of the Sherman Act, alleging that the rule was an illegal restraint of trade because it prevented student-athletes, like Fourqurean, from competing in NCAA Division I football and preventing them from maximizing economic opportunities from NIL income.

The Court’s Analysis

The Seventh Circuit reversed the district court’s injunction, finding that Fourqurean was unlikely to win on his antitrust claim because he had not clearly defined the relevant market. An injunction served as a temporary pause on the NCAA rule to prevent unfair harm to the athlete while the case proceeded. To obtain this pause, Fourqurean needed to show he was likely to succeed on the merits of his case.

Antitrust claims under the Sherman Act are typically evaluated using one of three approaches: the per se rule, the quick-look doctrine or the rule of reason. In this case, both parties agreed that the rule of reason applies. This standard requires a court to examine whether a rule actually harms competition, whether it serves a legitimate purpose, and whether any benefits outweigh its anticompetitive effects.

To show harm, Fourqurean needed to prove that the rule was likely to prevent at least one significant competitor of the NCAA from competing in the relevant market and provide evidence of the NCAA’s market share. But the only evidence he offered was that he personally was excluded from college football. He also relied on cases where the market definition wasn’t disputed, unlike here. In antitrust law, a relevant market helps define who competes with whom and where. Its two components are (1) the Product Market: the set of products or services that are reasonably interchangeable; and (2) the Geographic Market: the area where the competition takes place. Together, these components define the “playing field” of competition, and help business and enforcers assess market power, competition, and potential consumer harm.

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Does the NBA have an antitrust problem? A rival basketball league may think so.

November 13, 2023 | Luke Hasskamp and Molly Donovan

Authors: Luke Hasskamp & Molly Donovan

NBA action is FAN-TASTIC! Unless, of course, the action is one brought by the Department of Justice in a different kind of court. But that may be exactly where the NBA finds itself: the DOJ is reportedly investigating the professional basketball association for alleged antitrust violations. The NBA’s alleged anticompetitive conduct targeted Big3, a competitive basketball league founded by Ice Cube and entertainment executive Jeff Kwatinetz (with Clyde Drexler serving as commissioner!). That conduct included allegedly pressuring team owners, current NBA players, and advertisers and partner television networks not to do business with Big3.

Big3 is an aptly named 12-team, 3-on-3 league mostly comprised of retired NBA players. Teams play an eight-week season, followed by a two-week, four-team playoff, all during the NBA’s off-season. In 2023, the Big3’s regular season was held once a week in Chicago, Dallas, Brooklyn, Memphis, Miami, Boston, Charlotte, and Detroit, and the finals were held in London, England.

We’ve previously written about antitrust laws in the sports arena, including the infamous antitrust exemption in professional baseball. But baseball is an anomaly in that regard, as all other professional sports in the United States are subject to federal antitrust laws. (Professional football, baseball, basketball, and hockey are statutorily exempted from antitrust laws for negotiating television broadcast rights. See 15 U.S.C. § 1291.) Thus, antitrust liability is fair game for the NBA.

And, as this story broke, another recent antitrust case jumped to mind: that involving the PGA Tour and LIV Golf, when the PGA Tour faced antitrust scrutiny for its decision to suspend players who played for a would-be competitor league. The NBA dispute has many parallels to the PGA Tour case, though with some notable differences too, even though most details are not public.

To consider the legal nuts and bolts a bit, let’s look at what a Section 1 and Section 2 claim against the NBA might look like.

Section 1 of the Sherman Act – Unlawful Agreements

Federal antitrust laws (Section 1 of the Sherman Act) make it unlawful for two or more actors to enter agreements (conspiracies) to restrain trade or competition in the market. Classic examples include price fixing and group boycotts.

Here, the leading legal theory may be the group boycott. Under that theory, the NBA would have entered into one or more agreements with other entities to thwart Big3’s emergence and growth in the market.

One of the improper agreements reported here is between the NBA and the owners of each of its 30 teams, with the NBA allegedly instructing owners to not invest in the fledgling competitor. (An agreement between a sports league and its individual teams can implicate Section 1 of the Sherman Act, as was the theory in the recently-settled litigation against MLB involving the contraction of minor league teams.) The reports also suggest that the NBA may have persuaded sponsors and other business partners to agree to avoid doing business with Big3.

Section 2 of the Sherman Act – Monopolization

Federal antitrust laws also make it illegal for a monopolist to preserve its dominant market position through anticompetitive conduct. And this section of the Sherman Act does not require collusion with another party—a single actor can incur liability.

Here, the NBA sure looks like a monopoly (or monopsony). It’s the dominant actor in the professional basketball market in the United States, with revenues exceeding $10 billion per year. (While we generally assume that the relevant geographic market is the United States, even if we were to consider the entire world, the NBA may still be a monopolist.) In professional basketball, there is no rival to the NBA. If you are an elite basketball player in the United States, the NBA is pretty much the only place to play (even if you include the Big3).

But the NBA’s status as a monopoly is not unlawful on its own. It’s fine for a business to emerge as a dominant market player through lawful means, such as through “a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 57071 (1966).

Instead, to implicate Section 2 of the Sherman Act, the NBA must have engaged in some “exclusionary” or “anticompetitive” conduct to protect its monopoly and harm competition—that is something other than superior product, business acumen, or historic accident. Examples of exclusionary conduct include tying, exclusive dealing, predatory pricing, defrauding regulators or consumers, or engaging in coercive conduct, such as threatening customers with retaliation if they choose to do business with the would-be competitor in order to stifle the competitor’s growth in the market.

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MMA & Monopsony: MMA Fighters Win Class Certification Bout in Employment Monopolization Case

September 27, 2023 | Luke Hasskamp and Molly Donovan

Authors: Luke Hasskamp & Molly Donovan

In yet another important labor-monopsony case, a federal court in Nevada has declared a win for MMA athletes fighting against their promoter’s alleged misuse of monopsony power in the market for acquiring fighters’ services. Class certification has been granted to MMA fighters accusing their promoter of locking them into exclusive contracts that deterred fighters’ mobility and suppressed their wages for fighting bouts. Cung Le v. Zuffa, LLC, No. 2:15-cv-01045-RFB-BNW, 2023 WL 5085064, 2023 U.S. Dist. LEXIS 138702 (D. Nev. Aug. 9, 2023).

The Facts. MMA is a combat sport—a mix of boxing, wrestling, karate and other forms of martial arts. A bout is a competition between MMA fighters in a timed round where a fighter can win by acquiring the most points or by a knockout or submission (the other fighter gives up due to “extreme pain”).

During the at-issue period (2010-2017), Zuffa (defendant) promoted MMA bouts—under the trade name Ultimate Fighting Championship.

During that time, Zuffa treated fighters as independent contractors and compensated them on a bout-by-bout basis: one payment to “show” (participate in a bout) and then another payment (typically in the same amount) to win. This method of compensation was common across all MMA fighters promoted by Zuffa except for a “very small” number of the best fighters who also may have received additional payments at times (e.g., a percentage of the revenues generated by a particular event). Fighters bore their own expenses for training and skills maintenance.

The contracts between Zuffa and fighters contained “exclusion clauses” that required athletes to fight only for Zuffa. These contracts also imposed additional clauses that gave Zuffa significant control over fighters, including (i) the exclusive ability to extend certain contracts automatically; (ii) the exclusive right to cut fighters; and (iii) the right to match a competing promoter’s offer at the expiration of a contract, essentially requiring the fighter to remain with Zuffa whenever Zuffa matched the competing offer.

The Proposed Bout Class. All persons who competed in live UFC-promoted MMA bouts in the United States from 2010 to 2017.

Predominance. Predominance has become the “main event” in antitrust class certification inquiries—the round where a plaintiff can win it or lose it all. To establish predominance, plaintiffs must show (i) conduct that violates the antitrust laws; (ii) that the conduct was commonly applied to the class; (iii) it led to common injury in the class; and (iv) measurable damages provable with evidence common to the class.

Illegal conduct. The class alleges a violation of Section 2 of the Sherman Act, i.e., that Zuffa sought to maintain its monopsony power in the relevant market through exclusionary conduct. In a lengthy analysis, the court held that plaintiffs showed that Zuffa enjoyed monopsony power in a relevant antitrust market—the market for elite professional MMA fighter services. An expert testified that, during the relevant time, Zuffa’s share was between 70 and 90% in the labor-input market. And this market also had significant barriers to entry, including Zuffa’s own “coercive” contracts that “artificially restricted” competitors’ access to fighter talent. As for exclusionary conduct, the court ruled that the required exclusivity and other oppressive contractual provisions (along with related “coercive” conduct by Zuffa) “locked up” fighters, restricting their mobility and suppressing their wages. The court also pointed to Zuffa’s history of horizontal acquisitions as further evidence of a willful intent to maintain market dominance.
Common application to the class. The court found that the relevant contractual provisions applied to all class members, as did Zuffa’s coercive conduct used “consistently” “to induce fighters into re-signing contracts or risk punishment.”
Common injury. Plaintiffs’ expert submitted a regression analysis to show that class members’ wages were artificially suppressed by Zuffa’s conduct. The court ruled that analysis was sufficiently reliable at the class certification stage to establish common injury—rejecting defendant’s “small” criticisms of specific variables and particular data decisions.
Finally, the court held that plaintiff’s expert presented a “coherent methodology for establishing class-wide damages that predominates over any individual damages analysis.”

Total Knockout? No. While the court certified that “bout class,” it declined to certify a separate “identity class” consisting of every fighter whose identity was “expropriated or exploited by the UFC” from 2010 to 2017. The court held that, unlike the bout class, plaintiffs had not presented sufficient expert analysis supporting a connection between the relevant exploitative conduct and suppressed compensation. The court also found it important that the merchandising rights were voluntary and non-exclusive and that fighters in the class varied in notoriety—a difference difficult to capture in an objectively-defined variable. Finally, the court said there was no evidence of an “internal pay structure” for identity rights that was consistently applied across the proposed class.

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Antitrust for Kids: As Rivals Become Friends, The Government Gets Angry (The PGA Mini-Golf Tale Continued)

July 5, 2023 | Molly Donovan and Luke Hasskamp

Authors: Molly Donovan & Luke Hasskamp

You may recall Liv, age 8—the new kid. Last we heard, Liv was getting pushed around by Paul, Greg and Adam (“PGA” for short) because she dared to build a mini-golf course in an attempt to challenge PGA’s longstanding position as the best and only mini-golf in town.

PGA was not happy about the new competition and unilaterally announced that any kid who played with Liv would be banned from the PGA’s more reputable course.

As we ended things last time, the town kids spoke with an antitrust lawyer and ultimately forced PGA to end the boycott. We thought that would be this story’s end, but what happened next was a real shock.

Liv and PGA were unsatisfied with the resolution forced upon them by the players. They each lawyered up as Liv accused PGA of abusing its dominant position in the mini-golf world causing Liv tens of dollars in antitrust damages. Turns out, the lawyer fees started adding up fast, and PGA could not continue to the fight.

As Liv and PGA spoke privately about how to resolve their dispute, they came up with a surprising idea that (they believed) would end PGA’s legal fees and satisfy Liv’s desire for a meaningful seat at the mini-golf table that could end her “new kid” stigma: why not merge? Liv and PGA could join forces permanently, becoming a mini-golf behemoth that would end the rivalry and potentially increase profits for all.

Great solution! Everything is neatly wrapped up and most importantly, by all accounts, Liv and PGA are seemingly good friends.

Wrong! The town government hates the idea. Why should the only two competitors in the mini-golf market be allowed to team up? Liv and PGA—now referred to as PGA Plus*—couldn’t stop the lawyer-fee-bleed after all. They had to keep their antitrust lawyers on retainer to gear up for their next battle: this time, against the town.

But is it really plausible that Liv and PGA want to be BFFs, living hand-in-hand in perpetuity? Is some contingent secretly going behind closed doors encouraging the government to tank the deal?**

If the new alliance is legit, how will PGA Plus defend the merits of a merger that unquestionably eliminates all existing (and probably all possible) competition?

We’ll wait and see as events continue to unfold in this thrilling antitrust tale.

Moral of the Story: One antitrust problem can lead to another. A dominant company like PGA can raise the specter of antitrust scrutiny by engaging in unilateral anticompetitive conduct or by collaborating or combining with another horizontal firm.

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Federal Court Denies Golfers’ Request for Order to Play in the FedEx Cup Playoffs

August 10, 2022 | Luke Hasskamp

Author: Luke Hasskamp

Two days before the FedEx Cup Playoffs—a federal court in San Francisco denied three players’ requests for an order allowing them to participate in the marquee event. Those three players—Talor Good, Hudson Swafford, and Matt Jones—had asked the court to immediately enjoin their recent suspensions, handed down by the PGA Tour, but District Court Judge Beth Labson Freeman denied the request, holding the players did not meet their legal and evidentiary burden to show that they would be “irreparably harmed” if barred from the sport’s end-of-season playoff series.

By way of background, the PGA has banned from PGA Tour events any player who chooses to participate in events held by rival upstart league LIV Golf.

The ban includes the FedEx Cup Playoffs—a three-tournament series to conclude the PGA Tour’s season. The top 125 tour players are eligible to participate in the playoffs, which represent a significant accomplishment and “gateway” for players. Not only is lots of money at stake in the playoffs themselves, but there are important implications for a player’s future career. After the playoffs, the top 30 players qualify for next year’s Tour Championship and all four Major Championships, while the top 70 players qualify for all Tour events.

Only three of the 11 plaintiffs in the PGA Tour lawsuit—Gooch, Swafford, and Jones—sought the temporary injunction (called a “TRO”) because these three would have otherwise qualified for the FedEx Cup Playoffs but for their suspensions. Indeed, when the players launched the lawsuit, Gooch was ranked 20th, Jones was 62nd, and Swafford was 63rd, all comfortably within required standings.

In considering a request for a TRO, courts generally consider four elements: (1) whether the players are likely to succeed on the merits; (2) whether the players are likely to suffer irreparable harm without injunctive relief; (3) whether the balance of equities tip in the players’ favor; and (4) whether the injunction is in the public interest. The players requesting the TRO needed to establish all four elements to be entitled to the relief.

In general, TROs are hard to get because courts are typically reluctant to grant quick, injunctive relief on a limited evidentiary record. And as to irreparable harm in particular, a loss of money by itself is not considered irreparable harm, meaning if money damages could make a party whole, injunctive relief is not appropriate.

Here, after a hearing lasting more than two hours, featuring extensive argument by attorneys for the players and the PGA Tour, the court found that the players failed to show that they would suffer irreparable harm without immediate injunctive relief.

Although Judge Freeman agreed that the FedEx Cup Playoffs were important, marquee events, she cited, on the other hand, the substantial money that the players were making as part of their contracts with LIV Golf, plus the fact that the players’ contracts with LIV Golf specifically contemplated they would lose significant money if they had to miss out on the FedEx Cup playoffs (and other PGA Tour events). The players understood that risk, and, indeed, it was part of their negotiations with LIV Golf—allowing them (arguably) to extract more money from LIV Golf because of the possibility of a PGA ban. Judge Freeman also noted that the players would make significantly more money as part of the LIV Golf series than they might make in the FedEx Cup playoffs. Thus, she could not see how the players would suffer irreparable harm.

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Antitrust for Kids: No Traitors Allowed: Golf and Monopolization

August 4, 2022 | Luke Hasskamp and Molly Donovan

Authors: Molly Donovan & Luke Hasskamp

Liv is 8. She just moved to town from out of state and has 3 new neighbor friends Paul, Greg and Adam (“PGA”). The PGA kids seem very nice and well mannered. They wear pastels. And the coolest thing about them: they have a mini-golf course they built in their backyard years ago. It is touted as the best and most exclusive place for kids to play golf and rightly so. All the best mini golfers play there and only there. Frankly, there is no real competition for mini golf in the county.

Even though Liv is new to town, she thinks she has the chops to build a mini-golf course that rivals her neighbors’. Her house is bigger, her backyard is bigger, her parents will buy better equipment, and Liv is going to award the winner of each round a very fancy prize. Kids are thrilled—and one by one, even the best mini golfers start trying Liv’s course.

PGA is not happy. Stunned that Liv would challenge their longstanding position as the best and only course in town, they unilaterally announce that any kid who chooses to play in Liv’s yard will be banned from their original and still most popular and reputable course. Players must choose: one course or the other, but not both.

(The antitrust lawyer is growing concerned. This sounds like a monopolist trying to bully an emerging competitor by cutting off access to customers. What’s worse, Paul and Greg might be depriving kids of meaningful choice when it comes to mini golf.)

And for sure, the kids are upset, but they’re also a bit confused. On the one hand, any business owner has the right to choose with whom they will deal, right? On the other hand, PGA’s decision to punish kids who want to play at Liv’s every once in a while seems wrong.

The kids call their antitrust lawyer, and here’s what she says: you all should file a class action on behalf of every kid in town who wants to play at both courses and have a real choice when it comes to mini golf competition. The PGA contingent is not competing on the merits, that is, they are not getting mini golfers to come to their course by making it better. Instead, they are monopolists who are using their dominance unfairly to box out a nascent competitor. I’ll represent you, although I’m not sure what your monetary damages are. We could try to get an injunction but I’ll need a retainer for that.

Unable to raise enough funds for the retainer, the kids simply call up PGA demanding that their ban be ceased or else nobody will sit with them at lunch or play with them at recess. That did the trick and the ban was called off immediately. Now kids can play at both mini golf courses!

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Is the PGA’s Suspension of 17 Players Out of Bounds Under the Federal Antitrust Laws?

June 16, 2022 | Luke Hasskamp and Molly Donovan

Authors: Luke Hasskamp and Molly Donovan

We often write about sports and antitrust and have previously written about professional golf, and, specifically, the legal implications of a competitor golf league trying to break onto the scene:

The new league, LIV Golf, seeks to compete with the PGA Tour, as well as the European tour (known as the DP World Tour). Indeed, LIV Golf held its first event this past weekend in London, which included 48 participants. Of those, 17 players were members of the PGA Tour. Charl Schwartzel emerged as the winner of the “richest tournament in golf history,” taking home $4.75 million in prize money, which was more than he won during the last four years combined.

In response, the PGA Tour handed down harsh discipline to those 17 players who joined LIV Golf, suspending them indefinitely. The PGA Tour also promised to suspend any other players that participate in future LIV Golf events. It’s a dramatic step, and surely not the last word on the matter.

Now, let’s say you’re one of those 17 players who has been suspended, or you’re a member of the PGA Tour considering playing for LIV Golf but you’re facing such a ban. There are many things to consider, of course. But let’s focus on your legal options. Would the PGA Tour’s ban of a player that chooses to participate in a competitor’s event be lawful? Do the federal antitrust laws in the United States provide you any remedies? Potentially. Let’s take a closer look.

Section 2 of the Sherman Act – Monopolization

Federal antitrust laws make it illegal for a monopolist to preserve its dominant market position through anticompetitive conduct. Here, the PGA Tour sure looks like a monopoly. It’s the dominant actor in the professional golf market in the United States, with revenues well exceeding $1 billion per year. If you are an elite professional golfer in the United States, it’s pretty much the only place to play. (Actually, the PGA Tour, in this context, looks more like a monopsony, as it’s the dominant purchaser of labor in the professional golf market.)

But being a monopoly is not illegal by itself. Instead, there must be some anticompetitive or exclusionary conduct that harms competition in the market.

Typical examples of procompetitive conduct include lowering prices, improving quality, enhancing services, or, in the labor market, raising wages and improving benefits. Antitrust laws like these types of behavior because they enhance competition and are good for consumers. A monopoly that holds onto its dominant market position by offering the lowest prices and the best product is generally a good thing and something antitrust laws seek to encourage. Similarly, a monopsony employer that attracts and retains the best employees by paying the highest wages, offering the best benefits, and otherwise creating the most attractive work environment is the type of outcome that is perfectly acceptable from an antitrust perspective.

Anticompetitive conduct can be harder to define, but can include things like threatening customers or employees, an exclusionary boycott, bundling, tying, exclusive dealing, disparagement, sham litigation, tortious misconduct, and fraud. We’re looking for improper attempts by a monopolist to box out a competitor.

When we look at the current PGA Tour dispute and its decision to suspend players who play for LIV Golf, it seems at least arguable that the PGA Tour’s conduct is anticompetitive. They are not attempting to retain the best golfers by raising compensation, creating more opportunities, or otherwise enhancing the work environment for its players. Instead, the PGA Tour is punishing players who choose to participate in a rival’s events. The conduct appears designed to stifle a would-be competitor.

Section 1 of the Sherman Act – Agreements

Federal antitrust laws also analyze agreements by two or more parties that restrain trade in the market. And agreements between horizontal competitors are closely scrutinized under the per se standard.

Consider professional baseball’s long and storied antitrust history. Those antitrust disputes started (more than 100 years ago) because teams had collectively agreed not to sign each other’s players. Back then, baseball contracts included a “reserve clause,” which reserved a team’s right to a player in perpetuity. Thus, once a player signed with that team, he was only able to re-sign in following years with that same team (unless the team released him). All teams agreed to honor each other’s reserve clauses by agreeing to not sign another team’s players, even if his contract had expired. The reserve clause intentionally suppressed competition by, in essence, preventing free agency. It suppressed players’ salaries. With only one team competing for a player’s services, rather than a full league, teams avoided bidding wars and players had little recourse but to accept the amount offered by their team.

Here, we’d ask whether the PGA Tour has entered into any agreements (formal or otherwise) with another party that restrain trade in the market for professional golf services. There is at least some indicia of such agreements. The European tour (the DP World Tour) has hinted that it may follow the PGA Tour’s approach to dealing with members would participate in LIV Golf. This may stem from the PGA Tour’s “strategic alliance” with the DP World Tour. This sure looks like it could be a horizontal agreement between competitors. Other entities may also be considering similar agreements with the PGA Tour, including the PGA of America, which runs the PGA Championship, one of golf’s four majors, as well as the Ryder Cup, a wildly popular team competition between players from the United States and Europe. The PGA of America, a separate entity from the PGA Tour, has suggested that it is likely to not permit LIV Golf players to participate in the PGA Championship or Ryder Cup.

Of course, sometimes competitors will follow each other’s policies, prices, or practices without an agreement of any sort. That is called conscious parallelism and is not an agreement in restraint of trade because there is no agreement. We don’t know whether there is an agreement here or the European Tour is merely following the PGA Tour in a round of conscious parallelism.

Remedies

A plaintiff prevailing on an antitrust claim has a right to treble damages, which is three times their actual damages, as well as attorney fees.

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