Antitrust

SportslawJargon: Antitrust

Antitrust is an intricate and complex legal niche. Based on legal and economic theory, antitrust has been applied to many different types of situations and industries, from airlines to computers.

Modern antitrust law commenced in 1890 with the passage of the Sherman Antitrust Act, which to this day creates the framework for enforcement. Essentially the law prohibits acts by two or more that restrain trade in interstate commerce and also bars monopolistic activities. Both the Justice Department and individuals can bring antitrust lawsuits. to put more teeth in the law, the damages awarded for violations are tripled.

In the area of sports, antitrust issues have been frequent. Because sports leagues are composed of a number of owners, the agreements they make amongst themselves can result in antitrust violations for uncompetitive activity. For example, decisions such as limitations on franchise relocations, actions to restrict salaries and benefits and the selection or rejection of new teams and owners can be taken as decisions by two or more in restraint of trade. Amatuer sports do not escape antitrust law, if the organizations engaged in anticompetitive activities. The NCAA was recently fined $54 million for restricting the salaries of certain assistant coaches.

The courts must weigh the nature of the restriction under a standard known as the "rule of reason." The advantages of the restrictions will be weighed against the severity of the alleged anticompetitive actions. The NFL draft, for example, may restrain the salary potential of certain players, but it would likely pass the rule of reason test since its existance is crucial for competitive balance in the game.

Until recently, Major League Baseball was the beneficiary of a complete exemption to the antitrust laws. That gave the sport unparalelled power to restrict salaries of players and to control an efficient, but intricate minor league system. Last October, President Clinton signed the Curt Flood Act, which, after 66 years, partially lifts MLB's antitrust exemption in regards to labor relations. It does not apply to relocation, league expansion or the minor leagues.