NCAA v. Alston - 141 S. Ct. 2141 (2021)

Rule:

Firms deserve substantial latitude to fashion agreements that serve legitimate business interests—agreements that may include efforts aimed at introducing a new product into the marketplace. But none of that means a party can relabel a restraint as a product feature and declare it immune from Sherman Act 15 U.S.C.S. § 1, scrutiny. In any suit, the district court has to determine whether the defendants’ agreements harmed competition and whether any pro-competitive benefits associated with their restraints could be achieved by substantially less restrictive alternative means.

Facts:

Plaintiffs, current and former student-athletes brought the present antitrust lawsuit, alleging that the National Collegiate Athletic Association (NCAA) and certain of its member institutions violated the Sherman Act by agreeing to restrict the compensation colleges and universities may offer the student-athletes who play for their teams. Following a bench trial, the district court issued an opinion refusing to disturb the NCAA’s rules limiting undergraduate athletic scholarships and other compensation related to athletic performance. At the same time, the court found unlawful and thus enjoined certain NCAA rules limiting the education-related benefits schools may make available to student-athletes. Both sides appealed. The Ninth Circuit affirmed in full, holding that the district court struck the right balance in crafting a remedy that both prevented anticompetitive harm to Student-Athletes while serving the pro-competitive purpose of preserving the popularity of college sports. The NCAA appealed, seeking immunity from the normal operation of the antitrust laws, and argued, in any event, that the district court should have approved all of its existing restraints.

Issue:

Did the district court err in enjoining certain NCAA rules limiting the education-related benefits schools may make available to student-athletes? 

Answer:

No.

Conclusion:

The court affirmed the judgment of the district court, finding that the National Collegiate Athletic Association (NCAA) violated the Sherman Act, 15 U.S.C.S. § 1, by limiting the education-related benefits schools could offer student-athletes, such as rules limiting scholarships for graduate or vocational school, payments for academic tutoring, or paid post-eligibility internships. According to the court, the district court properly applied a rule of reason analysis which did not require the NCAA to show that its compensation rules constituted the least restrictive means of preserving consumer demand, and it was only after finding that the restraints were stricter than necessary to achieve demonstrated pro-competitive benefits that the district court declared a violation of the Sherman Act.