In
American Needle, Inc. v. NFL, 2010 U.S.
LEXIS 4166 (U.S. May 24, 2010), the Supreme Court unanimously held
that the National Football League's (NFL) teams and National Football League
Properties (NFLP) could not be considered a single entity incapable of engaging
in concerted activity within the Sherman Act's meaning. American Needle suggests that a broad range of decisions on what
constitutes concerted activity will need to be revisited. In this Analysis, Maureen
McGuirl examines American Needle and
discusses the inquiry regarding concerted activity. She writes:
A.
Legal Context Of The Ruling
Section 1 of the Sherman Act, 15
U.S.C. § 1, prohibits contracts, combinations and conspiracies that
unreasonably restrain trade. Section 1 prohibits only concerted activity and
does not reach unilateral conduct. (Unilateral conduct falls within the purview
of Section 2 of the Act, 15
U.S.C. § 2, which proscribes monopolization and attempted
monopolization, as well as conspiracies to monopolize.) A violation of Section
1 requires proof of two elements: concerted activity and a restraint that
unreasonably impairs trade.
In a number of circumstances, antitrust
defendants have argued that no concerted action is involved, rendering Section
1 inapplicable. At one time, courts treated all agreements between legally
separate entities as involving concerted activity even when the separate
entities were affiliated or integrated under common ownership. This treatment,
often labeled the "intra-enterprise conspiracy doctrine," was
questioned in a number of decisions by the Supreme Court, which finally
rejected the doctrine in a 1984 decision. In Copperweld Corp. v. Independence Tube Corp. [467
U.S. 752 (U.S. 1984)], the Court held that a corporation and its
wholly-owned subsidiary were incapable of conspiring with each other and should
not be treated as separate entities for purposes of Section 1. (Interestingly,
Justice Stevens authored the dissent in Copperweld.)
. . . .
In its opinion, the Supreme Court
emphasized that "substance, not form, should determine whether an entity
is capable of conspiring under § 1." The Court emphasized that the
following does not determine whether concerted activity is present: (1) whether
there are legally distinct entities, and (2) whether "two legally distinct
entities have organized themselves under a single umbrella or into a structured
joint venture." Rather, the Court said the question is whether or not
there is a contract, combination or conspiracy among "separate economic
actors pursuing separate economic interests," with the result that an
agreement "'deprives the marketplace of independent centers of decisionmaking,'
... and therefore of 'diversity of entrepreneurial interests' ... and thus of
actual or potential competition, ...". The Court stated that if an
agreement "joins together 'independent centers of decisionmaking' ... the
entities are capable of conspiring under § 1."
Applying these facts to the NFL
arrangement, the Court noted that each team was a "substantial,
independently owned, and independently managed business" whose corporate
actions were determined by "separate corporate consciousnesses" and
whose objectives were not common. The Supreme Court noted the teams competed
with one another not only on the playing field but also to attract fans, gate
receipts, managers and players. Further, the Court found that the teams were
"potentially competing suppliers of valuable trademarks." While
noting that the NFL teams had a common interest in promoting the NFL brand, the
Court noted that the teams were "still separate, profit-maximizing
entities, and their interest in licensing team trademarks are not necessarily
aligned." Later in its opinion, the Court noted that there did not seem to
be anything that would prevent the teams from making their own decisions
regarding the marketing and licensing of their individually owned intellectual
property.
(footnotes
omitted)
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Decision Refocuses The Inquiry On What Constitutes Concerted Activity with your
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Maureen McGuirl, a member of the New York and California bars, is in private practice in New York. A co-author of von Kalinowski, Sullivan & McGuirl, Antitrust Laws and Trade Regulation (2d ed., Matthew Bender), she has practiced in the antitrust field for thirty years.
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See
also: American
Needle: What's The Big Deal?