Yesterday, the Supreme Court decided American Needle v. NFL, overturning a 7th Circuit Court ruling and shaking things up in the world of sports and antitrust law. But how is it really important?
In the case, American Needle, a sports apparel manufacturer, challenged the decision of the NFL to give exclusive apparel licensing rights to Reebok International. The NFL teams collectively give the rights to make licensing agreements to an entity called NFL Properties. American Needle, who had had a licensing agreement with the NFL for 20 years, lost that deal when NFL Properties decided to give exclusive rights to Reebok and only have to work with one company. The company, in return, sued the NFL, NFL Properties, the teams individually and Reebok, claiming that the exclusive rights deal was a violation of the Sherman Antitrust Act. The NFL argued (and the 7th Circuit agreed) that under established law that found parent and subsidiary companies to be one entity and, thus, immune from antitrust suits, the NFL was not 32 different organizations, but a single entity, which could make licensing deals without antitrust implications. The Supreme Court disagreed.
The Supreme Court’s decision on this case will reach beyond the NFL and will change how sports leagues, in general, are viewed for antitrust purposes. I believe this to be a big victory both for companies and consumers. By opening sports leagues up to antitrust suits, competition is encouraged amongst companies seeking licensing rights to make merchandise; and this eventually brings down cost for the average consumer of sports apparel. Along with lower cost, consumers are likely to see a wider variety of sports apparel and will have the option to seek the merchandise they find most appealing and of the best quality. However, it is also true that litigation costs of antitrust suits for a league may eventually be passed on to the fans of the sport when they purchase tickets for games, the prices of which are already high.
Additionally, there is importance in the fact that the 7th Circuit was overturned on this issue. That particular court, headed by Judge Richard Posner, is largely guided by the University of Chicago Law School model of economics-and-the-law. This school of thought puts a huge emphasis on the economic impact of a decision and is highly revered in the legal world. By overturning the circuit court on an economic and antitrust matter, the Supreme Court has done some undercutting of the 7th Circuit as the be-all-end-all of economic matters. It may not all seem like a big deal, but in the wake of Citizens United, the Supreme Court is handing down more impacting decisions this year than it has in recent memory- and that's something to keep your attention on.
In the case, American Needle, a sports apparel manufacturer, challenged the decision of the NFL to give exclusive apparel licensing rights to Reebok International. The NFL teams collectively give the rights to make licensing agreements to an entity called NFL Properties. American Needle, who had had a licensing agreement with the NFL for 20 years, lost that deal when NFL Properties decided to give exclusive rights to Reebok and only have to work with one company. The company, in return, sued the NFL, NFL Properties, the teams individually and Reebok, claiming that the exclusive rights deal was a violation of the Sherman Antitrust Act. The NFL argued (and the 7th Circuit agreed) that under established law that found parent and subsidiary companies to be one entity and, thus, immune from antitrust suits, the NFL was not 32 different organizations, but a single entity, which could make licensing deals without antitrust implications. The Supreme Court disagreed.
The Supreme Court’s decision on this case will reach beyond the NFL and will change how sports leagues, in general, are viewed for antitrust purposes. I believe this to be a big victory both for companies and consumers. By opening sports leagues up to antitrust suits, competition is encouraged amongst companies seeking licensing rights to make merchandise; and this eventually brings down cost for the average consumer of sports apparel. Along with lower cost, consumers are likely to see a wider variety of sports apparel and will have the option to seek the merchandise they find most appealing and of the best quality. However, it is also true that litigation costs of antitrust suits for a league may eventually be passed on to the fans of the sport when they purchase tickets for games, the prices of which are already high.
Additionally, there is importance in the fact that the 7th Circuit was overturned on this issue. That particular court, headed by Judge Richard Posner, is largely guided by the University of Chicago Law School model of economics-and-the-law. This school of thought puts a huge emphasis on the economic impact of a decision and is highly revered in the legal world. By overturning the circuit court on an economic and antitrust matter, the Supreme Court has done some undercutting of the 7th Circuit as the be-all-end-all of economic matters. It may not all seem like a big deal, but in the wake of Citizens United, the Supreme Court is handing down more impacting decisions this year than it has in recent memory- and that's something to keep your attention on.
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