Other Threshold Matters in Sherman Act Cases

• Pages: 17-30

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CHAPTER II

OTHER THRESHOLD MATTERS IN

SHERMAN ACT CASES

A.Introduction

Courts often are asked to consider two additional threshold issues in

determining whether federal antitrust law applies tosports-related

restraints. First, is the restraint “commercial,” and therefore subject to the

Sherman Act? Several sports cases, particularly those involving

amateurism rules in college sports, have held that a challenged restraint

is“noncommercial”in nature, and thus outside the substantive reach of

the Sherman Act. Second, does the challenged conduct govern the “rules

of the game”? Based on long established case law, rules governing on-

field sports competition generally fall outside the scope of the federal

antitrust laws.

B.Noncommercial Restraints

The Sherman Act only applies to“commercial”restraints.

1

As the

Supreme Court noted in Klor’s, Inc. v. Broadway-Hale Stores, Inc.,

2

“[t]he Act is aimed primarily atcombinations having commercial

objectives and is applied only to a very limited extent to organizations . .

. that normally have other objectives.”

3

Subsequent decisions have

clarified, however, that the Sherman Act’s reach extends to nonprofit

organizations insofar as they conduct “commercial” activities.

4

Cases

1

. See Apex Hosiery Co. v. Leader , 310 U.S. 469, 492-93 (1940). This

inquiry is distinct from the Sherman Act’s jurisdictional requirement that

the conduct in question involv e interstate commerce. See Tanaka v. Univ.

of S. Cal., 252 F.3d 1059, 1062 (9th Cir. 2001).

2

. 359 U.S. 207 (1959).

3

. Id. at 213 n.7.

4

. See Goldfarb v. Va. State Bar, 421 U.S. 773, 787-88 (1975); Nat’l

Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S.

85, 100 n.22 (1984) (Board of Regents) (“There is no doubt that the

sweeping language of § 1 applies to nonprofit entities . . . .”); Minn. Made

Hockey, Inc. v. Minn. Hockey, Inc., 789 F. Supp. 2d 1133, 1141, at *3

(D. Minn. 2011) (rejecting the argument that a hockey league’s nonprofit

status immunized it from antitrust liability).