ANTITRUST
Antitrust law in the United States is a collection of federal and state government laws regulating the conduct and organization of business corporations with the intent to promote fair competition in an open-market economy for the benefit of the public. Congress passed the first antitrust statute, the Sherman Antitrust Act, in 1890 in response to the public outrage toward big business. In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act and the Clayton Act. (The Antitrust Laws. Web.)
Section 1 of the Sherman Antitrust Act prohibits the efforts of multiple firms to restrain trade by controlling prices and supply in a market (46 Case W. Res. 1033). In terms of a professional sports league, a
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In 1961, Congress passed the Sports Broadcasting Act which allowed major professional sports to pool the broadcast rights of its member clubs to negotiate television broadcast agreements that normally would have violated federal antitrust laws. (21 Jeffery S. Moorad Sports Law Journal 577) This antitrust exemption enabled the NFL to protect its primary revenue source of live attendance by negotiating with the networks as to when and where games would be televised.
Five years later, in 1966, Congress passed the Public Law 89-900 which had a major impact on how the NFL would be examined under federal law. The statue contained an antitrust provision that allowed for the merger of the National Football League (NFL) and American Football League (AFL) without the threat of an antitrust challenge under the Clayton Antitrust Act or Federal Trade Commissions Act. The act stated that: “such laws shall not apply to a joint agreement by which the member clubs of two or more professional football leagues, which are exempt from income tax under section 501(c)(6) of the Internal Revenue Code of 1954, combine their operations in expanded single league so exempt from income tax, if such agreement increases rather than decreases the number of professional football clubs so operating, and the provisions of which are directly relevant thereto.” 15 U.S.C. § 1291. The merger between the NFL and AFL represented a unique characteristic of the
To understand antitrust immunity, one must understand the different tests the United States Supreme Court has applied to state’s agencies and boards to determine immunity. Courts largely use two tests to determine whether an entity has immunity from antitrust laws. Both tests provide the same immunity, but they require the entity seeking the immunity to prove different requirements. The first test is the sovereign actor test, and it provides immunity to state actors using sovereign power. The second test, known as the Midcal test, asks whether the entity seeking immunity is following a clearly articulated state policy, and whether the entity is actively supervised by the state. Both of these tests are
American Needle Inc. filed a suit in an Illinois district court against the NFL, NFLP, NFL teams, and Reebok, claiming that this exclusive license agreement violated Section 1 of the Sherman Act, 15 § U.S.C. 1, which outlaws any “contract, combination . . . or conspiracy, in restraint of trade.” American Needle argued that because individual teams separately own their team logos and trademarks, their collective agreement to authorize NFLP to award the exclusive headwear license to Reebok, was a conspiracy to restrict other vendors' ability to obtain licenses for the teams' intellectual property.
There are three core federal antitrust laws in effect today in our US legal system. They are the Sherman Act, The Federal Trade Commission Act, and the Clayton Act
Antitrust laws are classical examples of adapting tendencies of government to the changing times. The history of competition act, 2002 is a good example of the proverb that the road to hell is paved with good intentions. The Monopolies and Restrictive Trade Practices Act, enacted in the era of restrictive economy found itself to be obsolete and redundant with the opening of Economy in 1991, was vacuum was filled by passage of Competition Act, 2002. Cartels are prohibited by most countries in most of the countries, whether they are domestic or foreign firms. Over the years, international cartels, which comprise firms more than in one country were considered to be illegal,
Economic theory introduces us to four different types of markets: perfect competition, monopolistic competition, oligopoly, and monopoly. Professional sports teams operate in an environment that is different than the typical business structure. The goal of this paper is to look at this industry, in particular the NFL, in an economics context and gain an understanding of the market structure of this unique industry. To do this I will discuss a brief history of the National Football League in the U.S. and how this organization is structured. I will also discuss typical market structures and type of
Antitrust policies are mot harmful to society than they are helpful. The Antitrust laws that were apparently focused on the restriction of monopolies for the safeguarding public welfare and just prices have instead been used by the government in ways that are more harmful to consumers than beneficial. More often than not, these laws obstruct innovation and impede competition and free trade. The main purpose of the laws is to ensure that large corporations do not take advantage of consumers, but in the process of maintaining this order, the government may be restricting companies that have the potential of being beneficial for society with fair prices in the long run. The Antitrust Acts can be seen as more of an effort to maintain and “keep the doors open” of businesses that otherwise would not be able to withstand the competition of more efficient businesses. Therefore, they can be seen more of a restriction on the development of
To protect consumers while demanding fair competition, antitrust laws were enacted. In fact “The federal government
Rather the laws are used primarily by federal authorities to rein in firms that exercise excessive market power and to the limit the way in which firms compete with one another” (cite). If a firm, Microsoft for example, is trying to run as a monopoly, the federal authorities are in charge of limiting firms who have too much market power so that other firms will be able to compete instead of having one firm that dominates the market.
This paper will discuss the antitrust law, specifically the Sherman Act of 1870. A claim was filed against the NCAA by the Governor of Pennsylvania for reasons that violate this act. It will also discuss monopolies and oligopolies,
In the beginning of professional football, in the 1920’s, the American Professional Football Association formed at a meeting in Canton where fourteen original teams joined, and Jim Thorpe was unanimously elected president because he appointed the committee of owners to actually run APFA. forty-four different franchises existed, but only four of the franchises still exist today. This shows how inconsistent franchises were, how easily they were established, and how hard it must have been to create a game schedule.
In USA, the antitrust law is cascade into two major categories, the federal antitrust laws, and state antitrust laws. The first antitrust law in USA was the Sherman Act of 1890. This law mainly address the “unreasonable restraints of trade” which are perceived to be monopolizing with foreign entities and restraint of businesses from operations in the form of contracts and conspiracies in business combinations.
Under Competition Law, anti-competitive agreement is the most common arrangement caughtby Ch.I Prohibition CA98. This is because an infringement could be found merely on the basis of the undertakings’ anti-competitive behaviour and the impacts of the behviour on the market, without having to consider whether or not the undertakings hold a dominant position in the relevant market.
Competitive markets provide the economy with opportunity for entrepreneurship and innovation. Competitive markets allow the small business environment to compete with other small businesses. With a competitive market, American consumers gain more innovative products, better quality goods and services and lower prices. Having more innovative products is a positive effect of the competitive market because innovation allows new businesses to enter the marketplace with the demand of new products at competing prices. Competitive markets seek out innovation, because without innovation from competing small businesses competitive markets would have nothing to compete against. The Antitrust Division makes sure that the economy and the competitive market are protected by an enforcement program that pursues illegal cartels, anticompetitive mergers, monopolizations, and competition advocacy (Barnett, 2008 page 2). The Antitrust Division makes sure that cartels do not control the price or the availability of the critical inputs small businesses need to manage business and to create the products. The Division actively ensures that mergers do not harm the local market of competition and encourages businesses to stay competitive with other small businesses. In the small business sector, monopolizations can harm the
Per-se illegality and the rule of reason are two approached commonly used to evaluate the legality of agreements under competition law. The distinction between per se illegality and the rule of reason is fundamental in the U.S. for the application of Section 1 of the Sherman Act , and has been adopted in other jurisdictions. A per se violation requires no further inquiry into the actual effects of the practice on the market or the intention of individuals engaged in the practice. By contrast, under the rule of reason, in addition to proving the existence of the alleged conduct, its anti-competitive effects need to be shown to outweigh any alleged pro-competitive effects. The application of per-se rule was considered appropriate in those cases
It is true that antitrust laws that are aimed to curb monopolistic behaviors help to promote competition in the market. Antitrust laws endeavor to encourage competition and promote the production of