PGA Tour Wins First Round in Antitrust Legal Fight with Players

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On August 9, 2022, a federal judge hearing the antitrust lawsuit filed by 11 professional golf players against the PGA Tour ruled against three of the players who had sought a temporary restraining order. The order, if granted, would have allowed those three players who had qualified for the PGA Tour’s playoffs to play in this weekend’s FedEx Cup. Judge Beth Labson Freeman determined that the players knew the potential consequences of joining the rival LIV Golf circuit and thus emergency injunctive relief was not warranted. Further, because the players had already been compensated by LIV Golf, the Court found that they had failed to establish irreparable harm in being unable to play in the PGA Tour’s post-season.

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Is antitrust liability in the future for the PGA Tour, and beyond?

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On August 3, 2022, 11 professional golfers, led by Phil Mickelson, filed an antitrust complaint in the Northern District of California against the PGA Tour for the actions it took against the golfers – including suspension from PGA Tour events – for their participation in events for the new Saudi-backed LIV Golf Invitational Series (LIV Golf). It is no secret that the new LIV Golf league seeks to compete with the PGA Tour, having publicly offered nine-figure payments to players joining its tournaments.

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Baseball’s Antitrust Exemption Marks Its 100th Anniversary with a New Challenge

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For more than a century, minor league baseball and Major League Baseball (MLB) have thrived in a symbiotic relationship. Minor league teams affiliate with major league teams for financial support and access to major league staff. In exchange, major league teams receive a share of minor league revenue and access to budding talent. The year 2020 marked the expiration of an agreement governing these affairs. According to a case filed in the Southern District of New York, Nostalgic Partners v. Office of the Commissioner of Baseball, a new agreement capping the number of minor league affiliates at 120 is alleged to constitute a group boycott in violation of the Sherman Act § 1. 

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Decision Benefits Franchise Businesses and Finds Alston Bars Challenge to No-Poach Agreements

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In June 2021, the Supreme Court reaffirmed in NCAA v. Alston that antitrust claims under Section 1 of the Sherman Act “presumptively” call for rule-of-reason analysis and that only the rare case merits “quick look” or per se treatment. __ U.S. __, 141 S.Ct. 2141, 2151 (2021). Recently, in Deslandes v. McDonald’s USA, LLC, Judge Jorge Alonso of the U.S. District Court for the Northern District of Illinois applied that guidance in dismissing claims that no-poach agreements between McDonald’s franchises and corporate-owned locations violated Section 1, holding that, under the rule-of-reason analysis, the plaintiffs’ failure to allege a relevant market doomed those claims. No. 17 C 4857, 2022 WL 2316187, at *2 (N.D. Ill. June 28, 2022). Judge Alonso also determined that the plaintiffs were not entitled to rely on a “quick look” approach to escape the required analysis of markets and competitive effects under the rule of reason. Judge Alonso’s reliance on Alston to reject the quick-look approach illustrates the difficulty of prosecuting no-poach cases in the context of a franchise or other legitimate business arrangement. Even in a time of increased Federal Trade Commission (FTC) scrutiny of no-poach agreements, plaintiffs must still plead and prove a relevant geographic market when seeking to invalidate no-poach agreements under Section 1 of the Sherman Act and thus face significant burdens in bringing such claims.

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West Virginia v. EPA and ‘Major Questions’ Facing the Competition Agencies

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The U.S. Supreme Court’s June 30 decision in West Virginia v. Environmental Protection Agency[1] will reverberate throughout the administrative state, inviting challenges to agency actions on major policy issues – including those in the competition arena – that Congress has not directly addressed in legislation.

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Baby Formula Shortage Subject of FTC Scrutiny

Young mother hands pouring powder of milk formula and mixing with water in plastic bottle. Opened container on light blue table background. Baby feeding. Closeup. Point of view shot. Top down view.

On May 23, 2022, the Federal Trade Commission (FTC), at the prompting of President Joe Biden, announced that it will launch a civil investigation into the ongoing shortage of baby formula throughout the country. The FTC is hoping to unearth the factors that have contributed to market consolidation in light of the pressing supply chain issues affecting the baby formula industry. Frequently, investigations such as these impact players up and down the supply chain, including ingredient manufacturers and suppliers, distributors, and retailers.

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Antitrust Division Announces Newfound Intent to Pursue Monopolization Cases Criminally

Plan leading strategy of successful business competition leader concept, Hand of player chess board game putting white pawn.

This week, during a panel discussion at the American Bar Association’s annual National Institute on White Collar Crime, Antitrust Division Deputy Assistant Attorney General Richard Powers sent shockwaves through the defense bar with a surprising revelation. Speaking about the Antitrust Division’s plans for vigorous enforcement, he revealed that the Division intends to use its power to criminally prosecute violations of Section 2 of the Sherman Act, i.e., monopolization cases –something the department has not done in four and a half decades, when antitrust crimes were prosecuted as misdemeanors.

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New Executive Order Targeting Noncompete Agreements Foreshadows Significant Issues for Employers

Paper that says Non-Compete Agreement.

On July 9, 2021, President Biden issued a sweeping Executive Order aimed at promoting competition in the American economy. Within the Executive Order, President Biden specifically encourages the Federal Trade Commission (FTC) to regulate noncompetition agreements (generally referred to as “noncompetes”).

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Franchise No-Poach Agreements: Is Reform on The Horizon?

In 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued Joint Guidance for Human Resource Professionals warning that no-poach agreements restricting employee hiring may violate the antitrust laws.[1] That guidance, along with pre-guidance litigation, has established some clear ground rules. Naked no-poach agreements are per se illegal under §1 of the Sherman Act,[2] while ancillary no-poach agreements, those related to legitimate, procompetitive joint ventures[3] and corporate acquisitions,[4] are subject to the rule of reason, which considers whether the agreement is, on balance, anticompetitive.

Yet, four years later, there remain stubborn pockets of disagreement—for example, no-poach clauses in franchise agreements. Federal courts are struggling to reach a consensus on how to analyze them under the antitrust laws. And there’s a lot at stake. Statistics show more than 8 million Americans work in the franchise sector. The stakes are high for employers too. If the rule of reason applies, private litigation may be financially impractical; the necessity of proving a relevant geographic market in applying the rule of reason makes it difficult, if not impossible, to certify sizable class actions.[5] If the per se rule applies, the Sherman Act’s treble damages and attorneys’ fees provisions can prove disastrous. Continue Reading

NCAA, COVID and Paying Players: Negotiating Payment in the Midst of a Pandemic

In May, three judges on the U.S. Court of Appeals for the Ninth Circuit ruled unanimously against the NCAA in its appeal of the lower court decision, finding that the organization’s policies that prohibit student-athletes from being compensated are, in fact, anticompetitive.

Last year we examined the decision in Alston v. NCAA, an opinion by U.S. District Judge Claudia Wilken of the Northern District of California holding that the NCAA was in violation of Section 1 of the Sherman Act, and therefore the organization could not fix or limit the amount of compensation paid to players unless the money offered to the students was “related to education.”

In May, three judges on the U.S. Court of Appeals for the Ninth Circuit ruled unanimously against the NCAA in its appeal of the lower court decision, finding that the organization’s policies that prohibit student-athletes from being compensated are, in fact, anticompetitive. Of course, there are miles to go with this litigation, as the NCAA has already planned to appeal the decision to the U.S. Supreme Court, which would hear the case in its October 2020 term if certiorari is granted. Continue Reading

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