Scheindlin March 3, 2014 Page 2 restrictions, on balance, beneficial to competition.
There are a number
reasons why these arguments are inappropriate for summary adjudication. First, even
Defendants can establish the existence
their proposed procompetitive benefits, they must show that those benefits outweigh the direct harm to
competing economic effects that cannot be done as a matter
Second, as noted, Defendants have the burden
proof on establishing the existence
procompetitive benefits, something they cannot
through summary judgment. In fact, the record overwhelmingly establishes that there are
procompetitive benefits cognizable under the antitrust laws for these restraints. Plaintiffs have produced a thorough report by Roger Noll, a leading expert in sports economics for decades. While it is not Plaintiffs' burden to refute the Defendants' purported procompetitive justifications at this point, Dr. Noll concluded:
Defendants' unsupported assertions
efficiency contradict the most basic principles
economics; protection from competition does not incentivize the clubs and their partners to increase output. Monopoly reduces incentives to make a product more attractive to consumers, and leads to
consumer satisfaction, not more. 2) The territorial systems
competitive balance by locking teams into territories
unequal value. Economic studies also overwhelmingly show that centralized sales and revenue sharing do not improve competitive balance, but even
they did, direct revenue sharing is a far less restrictive means
equalizing revenue than the restraints in this case. 3) There is no basis for the concern that free-riding would reduce output in the absence
these restrictions (a position Defendants have never articulated in any meaningful way), and
output were reduced, it could easily be addressed with less restrictive means by imposing a tax
the benefits supposedly obtained by free riders. 4) The territorial restraints have no bearing on whether the parties would be able to reach separate reciprocal agreements concerning home and away broadcasts.
t is an issue, it could easily be handled by a league rule addressing that concern directly (as both leagues did long before the territorial systems were in place). Defendants have not challenged these well-supported conclusions or indicated what evidence they believe conclusively proves them to be incorrect. Moreover, their own defenses are often
The NHL also argues that it is protected by a general rule that joint venturers are entitled to agree not to compete with the venture. There is no such blanket allowance for suppressing competition by separate products with the products
a joint venture. Indeed, the Supreme Court rejected this argument in
468 U.S.at 114 n.58 ( Ensuring that individual members
a joint venture are free to increase output has been viewed as central in evaluating the competitive character
oint ventures. );
see also e.g. . Needle Inc.
560 U.S. 183,
Polygram Holding Inc.
416 F.3d 29, 38 (D.C. Cir. 2005) (applying FTC Act).
The leagues have apparently abandoned their
in pre-motion letters last
they are entitled to summary judgment under a novel, defensive quick-look theory by which they could prevail simply by showing the existence
any procompetitive benefit at any level.
NHL Letter, June 28, 2013; MLB Letter, July 2, 2013. That argument would have allowed any procompetitive benefit to trump countervailing harms to competition, even when the overall harm to competition was profound, a result that finds no support in the law.
Case 1:12-cv-03704-SAS-MHD Document 236 Filed 03/03/14 Page 2 of 4