Markets Wired

The Federal Trade Commission has joined the U.S. Department of Justice in filing an amicus brief in the U.S. Supreme Court in the matter of American Needle, Inc. v. National Football League, No. 08-661 (U.S. S. Ct.). This case concerns whether the NFL and its member teams’ collective actions can be exempt from antitrust review under Section 1 of the Sherman Act, which prohibits unreasonable restraints of trade.

The joint amicus brief, which can be found on the FTC’s Web site and as a link to this press release, urges the Supreme Court to vacate the judgment of the U.S. Court of Appeals for the Seventh Circuit. The Court of Appeals had upheld a district court’s summary judgment in favor of the NFL and its separately owned teams on the grounds that they function as a “single entity” when licensing and marketing their logos and trademarks under an exclusive licensing agreement with Reebok International Ltd.

The brief states that the conduct of joint ventures, such as the NFL, is generally concerted action under Section 1. In discussing whether a sports league and its member teams should be deemed to function as a “single entity” for purposes of Section 1’s concerted action requirement, the brief demonstrates that such treatment is only appropriate if two conditions are satisfied. First, the teams and the league must have effectively and legitimately merged the relevant aspect of their operations, thereby eliminating actual and potential competition among the teams and between the teams and the league in that operational sphere; and second, the challenged restraint must not significantly affect actual or potential competition among the teams or between the teams and the league outside their merged operations.

In addition to asking the Supreme Court to vacate the judgment, the brief asks that the case be remanded for further proceedings and application of the correct legal standard for single-entity analysis.

The vote approving joint filing of the amicus brief was 3-0, with Commissioner J. Thomas Rosch recused. It was filed on September 25, 2009. (FTC File No.P082105; the staff contact is John F. Daly, Office of General Counsel, 202-326-2244; see related press release dated May 29, 2009 at http://www.ftc.gov/opa/2009/05/nflwf.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 44.2009.wpd)