Supreme Court Says Antitrust Law Applies To The NFL; No Exclusive Licensing Allowed

from the good-move dept

Earlier this year, we mentioned the Supreme Court was reviewing a lawsuit over whether or not the NFL had the right to have an exclusive license for its apparel. A company, American Needle, who had supplied apparel to various NFL teams, sued the NFL after it had entered into a long-term exclusive contract with Reebok to handle all team apparel. American Needle claimed that this was a clear anti-trust violation, as all of the teams had colluded to exclude everyone else from the market. The NFL argued, instead, that the entire league should be viewed as a single company. Today, the Supreme Court ruled against the NFL, saying that each team should be viewed as a separate company. The case then gets sent back down to be reconsidered: The details of this particular case are somewhat unique, in that it really only applies to situations where there are sports leagues (Major League Baseball is the only sports league that has an official exemption from Congress for antitrust issues -- though it's not clear why the different treatment). However, the decision by retiring Justice John Paul Stevens highlights the importance of competition, and the problems of letting organizations team up, just because teaming up makes better financial sense for all of those organizations:

Directly relevant to this case, the teams compete in the market for intellectual property. To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks. When each NFL team licenses its intellectual property, it is not pursuing the "common interests of the whole" league but is instead pursuing interests of each "corporation itself," Copperweld, 467 U. S., at 770; teams are acting as "separate economic actors pursuing separate economic interests," and each team therefore is a potential "independent cente[r] of decisionmaking," id., at 769. Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that "depriv[e] the marketplace of independent centers of decisionmaking," ibid., and therefore of actual or potential competition.

This makes a lot of sense. Otherwise, you could argue that any particular industry could set up an organization of which all the companies in that industry are a "member" and allow that single organization to negotiate exclusive deals, with the argument that it's "for the common interests of the whole." But, that's obviously collusion, with the intent to harm consumers. Thankfully, the Supreme Court saw through the flimsy claim that such a structure makes companies immune to antitrust law.

Filed Under: antitrust, supreme court, trademark
Companies: american needle, nfl, reebok