Wk6 2 gov1

I. REVIEW

II. ANTITRUST LAW

III. WRAP-UP

RIGHT OF PUBLICITY

Protects famous individual’s persona

Elements

Use of famous person’s name, likeness, or image

Without consent To gain commercial advantage

UNFAIR TRADE PRACTICE LAW

False advertising Balancing between competition and fairness Prior substantiation required if claim uses

experts or other reliable sources

Ambush marketing Try to dilute status of official sponsorship Hard to expel ambush marketers

SHERMAN ACT

Purpose: Promote free market capitalism

Section 1: No concerted action that unreasonably restraints trade in a relevant market

Section 2: No predatory or exclusionary conduct that is designed to acquire or maintain monopoly in a relevant market

SHERMAN ACT: SECTION 1 VIOLATION

Issues of section 1 violation

Whether there was a “concerted” action Whether it “unreasonably” restrains trades

“Concerted” action: Must not be alone

“Unreasonable” restraints: Any excuse?

SECTION 1 VIOLATION: CONCERTED ACTION?

American Needles v. NFL (2010)

NFL: “We are a single entity making one product, professional football … Therefore, what we are doing is not subject to the Section 1 of Sherman Act”

American Needles: “NFL is a group of competitors … They must be subject to the law”

U.S. Supreme Court: “NFL is a group of individual teams that must compete each other (under the Section 1 of Sherman Act)”

SECTION 1 VIOLATION: UNREASONABLE RESTRAINT?

Per se violation & rule of reason analysis case

Per se rule: Slam-dunk violation Very harmful to competitive economy If a case is characterized as per se violation,

automatically illegal (no excuse accepted)

Practices subject to per se rule Horizontal price fixing Territorial allocation Boycott

SECTION 1 VIOLATION: UNREASONABLE RESTRAINT (PER SE VIOLATION)

Horizontal price fixing

Concerted action among competitors to fix price

Per se violation Examples

- Nike & Adidas set a minimum price of sneakers

- Bally Fitness and Gold Gym set a minimum membership fee


Territorial allocation

Concerted action among competitors to allocate particular market to each member

Per se violation Example

- Bowflex and Nautilus divide geographical market into two and agree not to invade into each other’s

- Agreement between Kaplan and Barbri not to enter each other’s market


Boycott

Concerted action among competitors to expel others from the market

Per se violation Example

- AT&T and Bell South not sharing lines with others

- Suspension for rule violation decided by fellow LPGA players (Blalock v. LPGA)

SECTION 1 VIOLATION: UNREASONABLE RESTRAINT? (RULE OF REASON CASE)

Rule of Reason: Could be excusable P must show adverse effect on competition D must show pro-competitive effect P must show it is achievable by less restrictive

ways Balancing pro-competitive v. anti-competitive

Practices subject to the Rule of Reason Vertical price fixing Restriction on intra-brand competition for

inter-brand competition


Vertical price fixing

Concerted action between manufacturer and distributor to set minimum resale/retail price

Rule of Reason analysis Example

- Minimum retail price (e.g., Reebok & Dicks)- Minimum wholesale price (e.g., Texaco &

dealers)


Limits on intra-brand competition

Restricting intra-brand competition for inter-brand competition

Rule of Reason analysis Example

- PGA event qualifying school - Limiting number of televised games (NCAA

v. University of Oklahoma) - Limiting part-time coaches’ salary (Law v.

NCAA)

RULE OF REASON ANALYSIS: NCAA V. UNIVERSITY OF OKLAHOMA

Fact NCAA limits number of televised football

games High profile schools sued NCAA for Section 1

violation

Rule: Limiting intra-brand competition for inter-brand competition triggers the Rule of Reason analysis for determining section 1 violation

RULE OF REASON ANALYSIS: NCAA V. UNIVERSITY OF OKLAHOMA

Rationale

Limits on output (# of games on TV) quality control for inter-brand competition Rule of Reason

NCAA failed to justify pro-competitive effect > anti-competitive effect

Now we have BCS controlling the market instead of NCAA

RULE OF REASON ANALYSIS: LAW V. NCAA

Fact NCAA set maximum salary of part-time

coaches’ $$$ Class action against NCAA for section 1

violation

Rule & rationale Restriction for inter-competition Rule of

Reason NCAA failed to show pro-competitive effects

outweigh anti-competitive effects

SHERMAN ACT: SECTION 2 VIOLATION

Elements Whether the company has monopoly power Whether the company unreasonably acquire

or maintain monopoly power

Monopoly power Relevant market: Critical (IBM w/ MS or all

computer?) Threshold market share: 60-70%

Defense: “Our monopoly is from our good product and business sense, or just a historic accident”

HOW LEAGUES DEAL WITH ANTITRUST LAW

Seeking favorable court decision: Federal Baseball Club of Baltimore v. National Baseball Clubs (1922)

Fact- Federal league could not recruit players

because of American and National league- Sued MLB for antitrust violation

Rule & rationale - U.S Supreme Court: “To be subject to

Antitrust law, it must be related to interstate commerce … But baseball is not (very unlikely now)”

- U.S. Supreme Court loves baseball!

HOW LEAGUES DEAL WITH ANTITRUST LAW

Seek labor exemption: Limited shield Subjects in labor negotiation is out of antitrust

law Therefore, major sport leagues also need

players’ unions to get out of Antitrust scrutiny

Statutory exemption: Limited shield Lobbying the legislature to get some limited

exemption Example: NFL’s media negotiations are not

under the Antitrust law (media deal only, limited)

ANTITRUST LAW

Promote competition for market capitalism

Antitrust law: Two causes of action

Section 1: No concerted action that unreasonably restraints trade in a relevant market

Section 2: No predatory or exclusionary conduct that is designed to acquire or maintain monopoly in a relevant market

ANTITRUST LAW: SECTION 1 VIOLATION

Per se violation case Horizontal price fixing Territorial allocation Group boycott

Rule of Reason case Vertical price fixing Restriction on intra-brand competition for

inter-brand competition

ANTITRUST LAW: SECTION 2

Prohibit monopoly

Threshold question: Whether the company has monopoly power? (MKT share & relevant market)

Naturally occurred monopoly is not illegal

Wk6 2 gov1

Education

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