This other sports law your best very nice

regards
Hrithik Roshan

 kutty -- 8/20/2008 3:06 AM  

Even if this is the right outcome, I agree that the logic is flawed. Sure, with some things the NFL must act together - broadcasting rights (but not preseason, as local networks do that), games, etc.

But to say that it can ONLY act that way is illogical. Why can't each team control marketing its own trademarks? It's own website? (until recently the NHL did) It's own cap licensees? This might not be the BEST way to do it (hence your rule of reason comment), but the ONLY way? I doubt it. The NCAA doesn't seem to have that problem - conferences act together to schedule games but schools manage their own marks.

 Michael Risch -- 8/20/2008 7:49 AM  

Gabe,

Very interesting post. I think it's the wrong decision for two reasons: (1) The single entity defense has been widely-rejected by numerous courts, and I think for very good reasons, and (2) this case involves entirely an economic/commercial issue on its face as opposed to an issue regarding sport governance (similar to the ancillary restraints doctrine, although I am willing to go a little further than merely rules of the game). In my opinion, this case should go to a jury and I can't even begin to speculate what result.

So I agree with you that this decision is wrong on the single entity issue, but I don't understand your further position that the NFL should probably win anyways because "this would have been a relatively easy rule of reason win for the NFL". In the end, if that's your position, is it really significant how it gets dismissed? I seem to recall your position on the ATP case as somewhat similar -- i.e. that the ATP should have won the case under a rule of reason. I guess I don't understand how you can possibly conclude as a matter of law that any party should prevail under a rule of reason analysis, because it becomes a fact intensive inquiry involving very complex questions of product and geographic markets and economics (including its extremely confusing application to sports).

So to put it a different way, maybe I'm wrong but it just seems to me that you believe that the NFL and ATP should prevail for some reason other than a weighing of the procompetitive and anticompetitive affects on the market (because I don't know how one could possibly make a rule of reason determination without hearing all of the evidence and expert witness testimony). If I'm right, then what's the reason? If I'm wrong, then I look forward to discussing it with you more at the next sports law conference....

 Rick Karcher -- 8/20/2008 9:53 AM  

Rick--

There’s no question that this decision goes against the grain. The Seventh Circuit did foreshadow the rebirth of the single entity doctrine in the WGN cases, but I’m not sure this even fits into the hybrid structure suggested in those cases.

As for your question, I think it’s tremendously significant how the case gets dismissed, even if the result is the same. My argument is just the opposite of what you suggest. I think these cases should all be determined by the net competitive effect of the agreement. I just think there are certain types of agreements where it seems relatively clear that the procompetitive benefits outweigh the anticompetitive effects. To me, this seems like one of those cases (particularly if the relevant market really is all forms of entertainment). Of course, a judge or jury could very well disagree with me (which is why I prefaced my answer with “probably” and “relatively”).

I am all for creating shortcuts to more easily determine net competitive effects or create rebuttable presumptions of net competitive effects (which is why I am intrigued by your ATP proposal), but I don’t think sports leagues should be given blanket immunity from antitrust scrutiny. At the end of the day, their agreements may very well prove to be legal, but I’d like to see that determination tied to competitive effects.

 Gabe Feldman -- 8/20/2008 11:48 AM  

Just to clarify a statement from Professor Feldman's last comment, even if a sports league is granted single entity status, that does not equate with a blanket grant of immunity from antitrust law. The single entity status only shields the league from Sherman Act section one. Other antitrust provisions would still apply, most notably Sherman Act section two.

 Anonymous -- 8/20/2008 12:01 PM  

o.k., then why is it "relatively" or "probably" clear?

 Rick Karcher -- 8/20/2008 12:12 PM  

Unfortunately, that's quite a disingenuous "clarification" from Anonymous at 12:01 p.m. Although single entity treatment is not "a blanket grant of immunity from antitrust law," it's pretty darn close. Section 2 only deals with monopolies. Immunity from Section 1 would mean they could take any anticompetitive steps they want short of monopolization -- up to and including price fixing. Saying they're still subject to Section 2 means next to nothing in the real world.

 Anonymous -- 8/20/2008 12:16 PM  

Anon-- Thanks. Excellent clarification. I should have written: "but I don’t think sports leagues should be given blanket immunity from Section 1 antitrust scrutiny."

 Gabe Feldman -- 8/20/2008 12:18 PM  

Anon 12:16:

To be accurate, Sherman section two deals with more than just monopolies, and specifically addresses attempted monopolization.

As for the price-fixing concern, that really is only an issue in the media markets housing multiple NFL franchises (i.e., NYC and SF/Oak). Otherwise, it's hard to discern what Green Bay and New England would have to gain by agreeing to set ticket prices at a certain level, considering the two teams don't realistically compete for ticket sales.

- 12:01

 Anonymous -- 8/20/2008 12:49 PM  

Rick:

I am in agreement with Gabe on this one. The reason it is significant how the case ultimately gets dismissed (single entity defense versus Rule of Reason), is because if this 7th Cir. version of the single-entity defense holds up, it creates case law that in future matters might allow a court to determine behavior is per se legal, even if the net effects would be found anticompetitive upon full analysis.

My fear is that this decision opens the door for courts to allow certain concerted behavior in sports based on public policy, rather than based on competitive effects. This outcome runs against the Supreme Court's clear intent in both Radovich (NFL subject to antitrust laws) and Professional Engineers (antitrust is not about public policy).

I understand that we will be on the same panel at Seton Hall, discussing NFL commissioner suspensions for off-the-field misconduct. This is one of the areas where I am concerned the NFL will next try to apply American Needle (presuming the non-statutory labor exemption does not apply), even though there are more obvious net anticompetitive effects in that setting.

 Marc Edelman -- 8/20/2008 6:03 PM  

Guys, you're missing my point. I'm just simply questioning Gabe's assertion that "this would have been a relatively easy rule of reason win for the NFL." He made the same remark in regards to the ATP case. I'm also questioning Gabe's position, which he has stated more than once, that "there are certain types of agreements where it seems relatively clear that the procompetitive benefits outweigh the anticompetitive effects." Sorry, but I just don't understand how the answer to a full rule of reason analysis, which is extremely complex and fact intensive, can be "relatively clear" without hearing any of the evidence and expert witness testimony concerning markets and economics.

 Rick Karcher -- 8/21/2008 7:25 AM  

Rick:

Thanks for the clarification. As I re-read your 9:53 A.M. post, I see where you are coming from.

Anyway, glad to see double digit comments (and interesting discussion) on the blog.

Best,
Marc

 Marc Edelman -- 8/21/2008 8:24 AM  

Rick,

Not to speak for Professor Feldman, but I'm assuming his analysis is based on more of a truncated rule of reason analysis, ala NCAA. Are you arguing that any case involving professional sports leagues inherently requires a full-blown rule of reason analysis? If so, I'd have to disagree.

 Anonymous -- 8/21/2008 8:44 AM  

Rick—
To address your second point first, I’m merely making the argument that some agreements—on their face—appear to have insignificant anticompetitive effects and significant procompetitive benefits. I think easy examples of those types of agreements include schedules for leagues, rules of the game, etc. I don’t think a complicated analysis is necessary to figure out that there are no real anticompetitive effects of agreeing on the number of timeouts per game. The further away we get from rules of the game to more economic/off-the-field agreements, the more difficult the analysis likely becomes, but, from that point, it is just a matter of degree. That was the point I was making in the comments to your ATP post (not that the ATP should have won that case easily). In other words, just as some agreements appear to be inherently net anticompetitive (horizontal price fixing, and other per se violations), other agreements appear to be inherently net procompetitive.

For this case, I think that’s exactly what both the district court and Seventh Circuit were really saying in their opinions. Although they (in my mind) incorrectly couched it in terms of the single entity defense, the courts were really holding that the NFL’s exclusive licensing agreement does not violate the laws because it had obvious procompetitive benefits and minimal anticompetitive effects. As the district court explained:

Why the NFL should opt for that structure is obvious. To require that 32 teams each take total responsibility for the protection and marketing of its own logos and trademarks in a nationwide market would cause each to be at a competitive disadvantage with other leagues with integrated marketing. Sharing the revenues (or tax deductions), despite some teams being in much larger markets, serves the interest in having the teams relatively competitive.

Coupled with the Seventh Circuit’s incredibly broad quasi-definition of the relevant market (which is consistent with the district court’s conclusion), I think it would be very difficult for American Needle to allege any real anticompetitive effects. That’s why I think this would have been a relatively easy win for the NFL. Could I have been proved wrong by a full blown rule of reason? Of course, just as facially inherently anticompetitive agreements can turn out to have procompetitive benefits.

 Gabe Feldman -- 8/21/2008 11:07 AM  

Sorry to wake a sleeping giant, but there is something I just don't understand about the 7th circuit's opinion. Even if the NFL can be considered a single entity for the purposes of licensing intelectual property, why is the contract/combination/conspiracy between the NFL and Reebok not subject to section 1 review? The court seems to easily dismiss the combination under the analysis of the section 2 claim. However, aren't section 2 claims only for unilateral/single entites? Isn't the exclusive contract between Reebok and the NFL exactly the type of activity section 1 seeks to police? Although the exclusive license to Reebok may have withstood a rule of reason examination, Shouldn't the court have applied this analysis because clearly the NFL and Reebok are separate entities? Any thoughts for a confused law student?

 John O. -- 10/13/2008 12:51 PM  

very nice

 halk bilimi -- 1/28/2009 11:36 AM  

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