Throwing the Rule Book at the NFL

By The New York Times
July 1, 2010


The National Football League does not condone gambling, but it lost a giant bet this week when the Supreme Court firmly rejected its contention that it is not subject to the nation’s antitrust laws. The court’s unanimous decision sends a conspicuous message to other sports leagues — except Major League Baseball — that when it comes to selling merchandise, charging for parking and paying players, they have to play by the rules.

The NFL was sued for restraint of trade by American Needle, a company that makes team-logo clothing, after the league gave Reebok exclusive rights to make caps with logos of all 32 professional football teams. The NFL argued it did not violate the Sherman Antitrust Act because it was a single entity, not a group of teams conspiring to restrain trade and inhibit competition.

That argument prevailed before the United States Court of Appeals for the Seventh Circuit, in Chicago, in 2008. When American Needle appealed to the Supreme Court, the NFL took the audacious step of agreeing that the court should hear the case, hoping a conservative-majority court would give it a free pass from antitrust rules.

Instead, the league was trounced. As Justice John Paul Stevens wrote, the teams are independent entities that compete with each other. If competing companies could fix prices by simply claiming to be part of a larger entity, he wrote, then any cartel could evade the antitrust laws the same way. The case goes back to the lower courts to hear American Needle’s claims on the merits.

The company could still lose, but the case is about bigger things than the price of caps. (Which went up, by the way, after Reebok’s deal.) Had the NFL won an antitrust exemption, similar to the one Congress gave to baseball, it could fix a wide variety of prices, from hot dogs to video games. Players’ unions would have had a harder time bargaining. Basketball and hockey would have sought similar rulings, along with other joint ventures, like health care networks.

Antitrust lawyers say this is the first Supreme Court victory by an antitrust plaintiff since 1992. The public won, too.

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