Should the Teams of the NFL Be Treated as a Single Entity Under the Sherman Act?

Section 1 of the Sherman Act prohibits concerted actions unreasonably restraining trade, but exempts collective actions by separate business entities who share a complete unity of interest.  Whether § 1 applies to the major professional sports leagues has long been a matter of debate.  On the one hand, each team is separately owned and seeks to maximize its own profits.  On the other hand, each team has an important shared interest in maintaining a full league of competitive teams — who will pay to see the Yankees if they effortlessly crush all opponents?  So, does a league potentially violate § 1 when it blocks its members from entering into individual merchandising or broadcasting deals?

Matt Mitten reviews the history of litigation addressing this issue in a new paper on SSRN.  His analysis concludes with a discussion of the Supreme Court’s most recent pronouncement on the question, American Needle, Inc. v. National Football League, 130 S. Ct. 2201 (2010).  In American Needle, the Court held that the NFL’s grant of an exclusive trademark license to a headwear manufacturer was not immune from § 1 scrutiny.  The Court wrote, “Common interests in the NFL brand partially unite the economic interests of the parent firms, but the teams still have distinct, potentially competing interests.”  Although the question is a difficult one, Matt argues that Court reached the right result.  The paper is entitled “American Needle v. NFL: U.S. Professional Clubs are Separate Economic Threads When Jointly Marketing Intellectual Property.”

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Libertarians and Liberals

It is a peculiar characteristic unique to our country that Americans talk about political issues in constitutional terms, thereby turning every policy debate into an argument over basic principles.  That was my thought when I read about Senate candidate Rand Paul and his “Constitutionalist” view that the federal government has no right to dictate the behavior of private enterprises.  Mr. Paul came under fire last week for suggesting that the Civil Rights Act of 1964 went too far when it prohibited discrimination by private businesses.  You can read more here (astute students in my Constitutional Law class will observe that Mr. Paul inspired one of the questions on my final exam this year).

Paul objects to federal policies regulating business due to his reading of the U.S. Constitution.  His political philosophy might best be characterized as extreme libertarianism.  Following the objectivist principles of Ayn Rand, he argues that the public should be left to their own devices and that greater social benefits will accrue naturally over time from the enlightened (and rational) self-interest of individuals.  Ironically, Paul’s embrace of self-interest as a moral good in itself is directly at odds with the view of the Framers of the Constitution.  The people who designed our constitutional system spent much time criticizing the biases, prejudices, and self-interested motivations of the general public.  The system of government that they created was intended to ameliorate the very aspects of human nature that objectivists like Rand Paul celebrate.

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Can Google-TV Help Liberate Cable-TV?

Tech nerds and media junkies have been buzzing lately about Google’s announcement that it will soon rollout Google-TV — a new device/platform that will turn people’s televisions into portals for online video and other web content.

Google representatives unveiled the project last week at a developers conference where they staged a Steve Jobs-like showcase that included animated demonstrations and bold statements about the end of TV as we know it.

Much of this was puffery, of course, but there is no denying Google’s determination to expand its dominion over the communications universe, nor the inevitability of the web’s eventual absorption of traditional television.

These two things terrify broadcast and cable executives. But the advent of web television might benefit traditional TV businesses –- particularly cable companies –- in one important category: First Amendment protection.

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