NFL Denied Anti-Trust Exemption

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Attempting to obtain a deal similar to Major League Baseball, the NFL today lost a landmark Supreme Court decision dealing with anti-trust legislation.

American Needle, INC. sued the NFL on the grounds that the league violated anti-trust law when all 32 teams collaborated together on an exclusivity 10-year helmet making deal with Reebok. American Needle lost in the lower courts and subsequently appealed. The Supreme Court ruled that American Needle can sue on those grounds and “the 9-0 decision sends the case back to the lower courts to examine whether the NFL’s interest in acting collectively through National Football League Properties (NFLP) in the production of jerseys, hats, and other items is in compliance with antitrust laws.”

Justice Stevens stated that, “Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that deprived the marketplace of independent centers of decision making and therefore of actual or potential competition.”

Thus the idea is that all the competing teams are potential competing suppliers of valuable trademarks — 32 teams, not a single business. 

So naturally the ruling compromised the NFL’s appeal to be seen legally as one big entity. If the NFL were to have won their bid, they could have as one business implement the salaries of the coaches and players of all teams. Conversely, this is now seen as a big victory for the NFLPA. Now there are hopes this will jump start labor talks and prevent the dreaded lockout in 2011. 

The NFL could still win this particular case in the district court, but not as being seen as one business entity. 

Always interesting to see these rare anti-trust lawsuits of this caliber. Hopefully this will jump start some intellectual discussion on the role of government in the market. 

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