The Major Anti-trust Laws and Their Impact on Professional Sports Essay

Submitted By ijecila
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Antitrust and labor issues in sports addresses how labor issues have affected sports and how courts have treated the application of antitrust rules to the sports industry, particularly to the situation involving a professional sports union that negotiates with owners of a league. While the concepts of antitrust and labor law are often considered distinct subjects on their own, in the sports industry, these areas of the law are quite often interrelated. This paper will outline the key antitrust laws and their impact on professional sports.

Anti-Trust Laws
There are three core federal antitrust laws in effect today in the United States legal system. They are the Sherman Act, The Federal Trade Commission Act, and the Clayton Act ("Antitrust", n.d.). The Sherman Antitrust Act (Sherman Act, July 2, 1890, ch. 647, 26 Stat. 209, 15 U.S.C. § 1–7) is an antitrust law primarily aimed at prohibiting the formulation of monopolies by making them a felony offense. Violations of the Sherman Act fall into one of two categories: rule of reason or per se. Rule of reason was the standard by which courts tested the legality of business conduct while per se rules forbid a range of restrictive agreements, including price fixing and market allocations. It was the first piece of legislation that made monopolies illegal, but the punishment was only a misdemeanor. However, in 1974, the punishment was changed from a charge for a misdemeanor to a felony charge. At that time, they raised fines and distinguished a difference in punishment based on weather an individual or a corporation was charged. Initially, the act was not strictly enforced, as there was no clear definition of trust. Over the past few decades as the Sherman Act evolved, the United States Supreme Court has decided that monopolies in and of themselves are not bad and do not automatically violate the Sherman Act. Instead, it is the particular actions taken to obtain or maintain monopolistic positioning that is illegal ("Sherman", 2008). The Federal Trade Commission Act (15 U.S.C. § 45: US Code - Section 45: Unfair methods of competition unlawful; prevention by Commission) has a primary duty of prohibiting actions within commerce that are deemed unfair to competition ("15 U.S.C. § 45", n.d.). The Clayton Act (15 U.S.C.A. § 12 et seq. [1914]) is an addition to the antitrust laws primarily used today to prohibit certain types of business practices making them illegal when their usage severely restricts competition and/or creates a monopoly. The practices specifically addressed in the Act are price discrimination, making it illegal to sale the same product to different people in the same market at different prices; tying and exclusive dealing contracts, making it illegal to forbid a shopper from shopping with competitors; corporate mergers, the acquisition of competing head to head companies by one company; and interlocking directorates, the members of which are common members on the boards of directors of competing companies ("Clayton act", 2008).

Anti-Trust & Monopoly in Sports When assessing the existence of a monopoly, one examines what level of control and power a certain firm or group has over its market. In the sports world, the Major League Baseball, National Football League, and the National Basketball Association, for example, all dominate their respective professional markets. While there exist other smaller leagues within the same sports that draw attention, there is really no competitive threat to these leagues. With this level of market power, these leagues have the ability to set prices where they want, without worrying about their fans taking business to the competition. As discussed in last week’s class, team owners within a league come together to set regulations and rules of their league, and act collectively to do so. It would seem as if these leagues should be considered collectively acting monopolies, and should be brought to antitrust court and tried against the…