| Laura Alexander, Randy Stutz, Berk Bahceci
Buyer Power, Collusion, Labor, Horizontal Restraints
AAI has filed an amicus brief urging the U.S. Supreme Court to categorically reject the NCAA’s arguments seeking to overturn a Ninth Circuit ruling that upheld an antitrust challenge to the NCAA and its member institutions’ limitations on student-athlete compensation. After a class of players successfully challenged the NCAA’s and schools’ compensation rules as an illegal trade restraint in the labor market for athletes’ services, the appellate court issued a compromise ruling that allows the athletes to be paid in excess of their tuition and grants-in-aid, but not unlimited sums.
In the district court the NCAA and its member institutions had argued that their compensation rules benefit the athletes, schools, and consumers of college sports products. However, on appeal to the Ninth Circuit, they waived the argument that the rules benefit the athletes, choosing to focus instead on the benefits to schools and sports fans. In December 2020, they successfully petitioned the Supreme Court to review the Ninth Circuit’s ruling, continuing to press the argument that benefits to schools and universities should offset any competitive harms to athletes. They also argued that the lower courts erred by refusing to accord deference to what amounted to the product-design decision of a beneficial joint venture to produce college sports products.
AAI’s brief urges the Court to categorically reject the NCAA’s and its member institutions’ arguments. First, federal courts are not permitted to engage in “multi-market balancing.” The antitrust laws protect competition in upstream markets, which benefits workers, on equal terms that they protect competition in downstream markets, which benefits consumers. And under the statutory terms of the Sherman Act, a century of precedent, and the national Congressional policy favoring competition as the rule of trade, federal courts have neither the authority nor any practical ability to trade-off the value of competition in one market against the value of competition in another market. This is a policy question reserved for the legislative branch, and Congress answered the question already by enacting the antitrust laws.
AAI also argues that the Court should reject the invitation to create a “product-design” exception to the ancillary restraints framework that governs joint ventures under the rule of reason. Substantive and economic realities have always guided judges in antitrust cases. Courts do not inquire as to a joint venture’s preferred label for a restraint, but rather whether the restraint, as a factual and economic matter, is necessary to effectuate the procompetitive purpose of the joint venture.
The brief was written by AAI Vice President of Legal Advocacy Randy Stutz and AAI Vice President of Policy Laura Alexander, with assistance from AAI Research Fellow Berk Bahceci.
Two professors on AAI’s Advisory Board, Michael Carrier and Chris Sagers, also filed an amicus brief in support of the Student-Athletes on behalf of 65 professors Law, Business, Economics, and Sports Management. The professors’ brief, signed by numerous other members of AAI’s Advisory Board, explains why the NCAA’s arguments misapply the rule of reason and wrongfully assume the power to justify trade restraints on the basis of values other than their competitive effects.
