NFL Dealt Blow By FTC Opposition In Antitrust Case
Earlier this year, ESPN.com's Lester Munson said American Needle v. NFL "could easily be the most significant legal turning point in the history of American sports."
It involves a manufacturer named American Needle who sued the league when they unilaterally gave exclusive apparel rights to Reebok, which essentially knocked them out of the business. The argument was that the move violated the Sherman Anti-Trust Act and illegally restricted competition.
The NFL's only antitrust exemption was the Sports Broadcasting Act in 1961, which enabled them to negotiate their television contracts with whoever they pleased. So although the case was about a hat company against the league, it was really about defining whether the league was a single entity and therefore could be considered exempt from antitrust laws in all areas of its business.
If that became the case, the league could technically make decisions for its teams and the union's negotiating power could be crippled. Well, the U.S Court of Appeals for the Seventh Circuit upheld a district court summary judgment in favor of the NFL's argument that all the teams function as a single entity and therefore contracts like the Reebok contract can be negotiated without breaking monopoly laws.
The case is now in the hands of the Supreme Court, but the NFL was dealt a blow today. The Federal Trade Commission said they joined the U.S. Department of Justice in filing an amicus brief with the Supreme Court. The brief urges the court to vacate (or throw out) the previous decision. The FTC says they don't believe the league is a single entity because they compete with each other and operate separate businesses.
This will be an interesting one to watch.
Questions? Comments? SportsBiz@cnbc.com