The U.S. Supreme Court ruled against the National Football League in a case where the NFL claimed it was entitled to broad antitrust exemption. The Supreme Court ruled 9-0 against the NFL. Tulane University sports law professor Gabriel Feldman called the ruling a "a sweeping defeat for the league" effecting "all commercial deals."
The decision is a only a partial victory for American Needle Inc., an Illinois company that brought an NFL antitrust challenge under the Sherman Act to the league's exclusive marketing agreement with Reebok for hats. The Court ruled that the exclusive agreement deprived the marketplace of competition. The facts of the initial case by American Needle Inc. must still be analyzed under a standard known as the "rule of reason."
American Needle Inc. will now have a chance to try to prove that the actions of the NFL were an illegal "restraint of trade."
Justice John Paul Stevens delivered the opinion of the Court and began by explaining the situation with remarkable clarity by Supreme Court standards:
Every contract, combination in the form of a trust or otherwise, or, conspiracy, in restraint of trade" is made illegal by §1 of the Sherman Act...
The question whether an arrangement is a contract, combination, or conspiracy is different from and antecedent to the question whether it unreasonably restrains trade. This case raises that antecedent question about the business of the 32 teams in the National Football League (NFL) and a corporate entity that they formed to manage their intellectual property.
Stevens and the Court strongly rebuffed the NFL's argument that it was a single entity, stating unequivocally that the mere fact that NFL teams share a common goal in making the league successful does not mean that the actions of the NFL fall outside of "concerted activity" under the Sherman Antitrust Act.
- Full Opinion: American Needle, Inc. v. National Football League et al. (FindLaw)
- N.F.L. Fails in Its Request for Antitrust Immunity (NYTimes)
- Court: NFL is 32 teams, not one entity (ESPN)
- Antitrust & Trade Regulation (FindLaw)
- Sherman Anti-Trust Act (LawBrain)