NEW YORK - (Mealey's)Four
baseball fans filed a putative class action in federal court in New York on May
9 against Major League Baseball Enterprises Inc. (MLB), several MLB member
clubs and several cable and Internet providers, alleging that live-game video
offerings violate antitrust laws (Fernanda Garber, et al. v. Office of the
Commissioner of Baseball, et al., No. 12-cv-3704, S.D. N.Y.).
The fans - Fernanda Garber, Marc Lerner, Derek Rasmussen and Robert Silver -
filed the lawsuit in the U.S. District Court for the Southern District of New
York, contending that the 30 separately owned and operated baseball clubs that
comprise Major League Baseball entered into unlawful exclusive license
agreements that "eliminate competition in the distribution of games over
the Internet and television."
The MLB member clubs named as defendants are the owners and/or operators of the
Oakland Athletics, Seattle Mariners, Chicago Cubs, Chicago White Sox, Colorado
Rockies, New York Yankees, Philadelphia Phillies, Pittsburgh Pirates and San
The television defendants are Directv LLC and its subsidiaries, Comcast Corp.
and its subsidiaries and Yankees Entertainment and Sports Networks LLC.
Exclusive License Agreements
The MLB member clubs "divide the live-game video presentation market by
assigning an exclusive territory to each team and its television partners. In
exchange for being granted anticompetitive protections in its own home market,
the team and its partners expressly agree not to compete in the other teams'
exclusive territories," the fans say.
Consumers can watch video presentations of other teams only through
"out-of-market" packages - MLB.TV, which is available through the
Internet, or MLB Extra Innings, which is available through cable and satellite
providers. The "in-market" games are blacked out to protect the local
television partner, the fans say.
"In addition, the Defendants have colluded to sell the 'out of market'
packages only through the League. The League Defendants are then able to
exploit their illegal monopoly by charging supra-competitive prices. As a
result of this monopoly, moreover, the League is able to require purchasers of
MLB.TV or MLB Extra Innings to buy all 'out-of-market' games of all the
League's teams even if the fan is only interested in a particular team or a
No Antitrust Exemption
The fans contend that "[a]greements with third parties to restrain
competition in the television and internet industry are well outside the narrow
exemption to the antitrust laws recognized in Flood
v. Kuhn, 407 U.S. 258 (1972). (available to lexis.com subscribers) Nothing about these agreements reflect
anything unique to baseball; they are essentially identical to those in other
major sports, and baseball itself has long understood that broadcasting does
not fall within the exemption, as has Congress."
The fans say that the agreements have restrained horizontal competition and
have substantially lessened competition in the relevant markets.
The fans allege that the defendants violated Sections 1 and 2 of the Sherman
Market, Class Definitions
The fans define the relevant product market as the provision of major league
baseball contests in North America and the live presentations of major league
baseball games over media such as cable and satellite television and the
Internet. The relevant geographic market is defined as North America.
The fans define a television class as "[a]ll individuals who purchased
television service from Directv and/or Comcast, or their subsidiaries, at any
time within four years prior to the filing of this complaint and until the
effects of the anti-competitive conduct end, that included channels carrying
video presentations of live major league baseball games that were not available
through a sponsored telecast (as that term is used by the Sports Broadcasting
Act, 15 U.S.C. ? 1291, et seq.)."
The Internet class is defined as "[a]ll individuals who purchased IvILB.tv
in the United States directly from any of the League Defendants or their
subsidiaries at any time within four years prior to the filing of this
complaint and until the effects of the anti-competitive conduct end."
The fans are represented by Michael M. Buchman of Pomerantz Haudek Grossman
& Gross in New York and Edward Diver, Howard Langer and Peter Leckman of
Langer, Grogan & Diver in Philadelphia.
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