The Unreasonableness of Coerced Cooperation: A Comment upon the NCAA Decision's Rejection of the Chicago School

• Date: 01 December 1986
• DOI: 10.1177/0003603X8603100406
• Published date: 01 December 1986
• Subject Matter: Domestic Antitrust

The Antitrust Bulletin/Winter 1986

The unreasonableness

of

coerced

cooperation: acomment upon

the NCAA decision's rejection

of

the Chicago school

BY JAMES F. PONSOLDT*

Introduction

1003

The Supreme Court's decision in the

NCAA

case,' holding that

the NCAA's mandatory rules controlling the exclusive sale

of

television rights to intercollegiate football violate section 1

of

the

Associate Professor

of

Law, University

of

Georgia School

of

Law. The author was

of

counsel to the respondents in National

Collegiate Athletic Association v. Board

of

Regents

of

the University

of

Oklahoma.

AUTHOR'S

NOTE: The author expresses appreciation for the research

assistance

of

Jesse Barrow, J.D. 1985, University

of

Georgia School

of

Law.

1Board

of

Regents

of

the University of Oklahoma and the Univer-

sity

of

Georgia Athletic Association v. National Collegiate Athletic

Association, 546 F. Supp. 1276 (D.C.W.D. Okla. 1982), a/I'd, 707 F.2d

1147 (10th Cir. 1983),

aff'd

sub nom. National Collegiate Athletic

Association v. Board

of

Regents of the University

of

Oklahoma, 104 S.

Ct. 2948 (1984).

©1987 by Federal Legal Publications, Inc.

1004 The antitrust bulletin

Sherman

Antitrust

Act,'

is

important

for

several

reasons.

First,

it

is

among

but

a few decisions

to

hold

that

a

restraint

of

trade

although

not

per

se illegal' is economically

unreasonable

under

the

rule

of

reason.

Second,

its implied questions

about

the

goals

and

relevance

of

antitrust

enforcement

coincide

with

questions

about

the

governmental

regulation

of

business

now

addressed

in

law reviews,

editorial

pages,

and

by congressional

committees.'

Last,

it

may

resolve

warring

antitrust

ideologies

and

reaffirm

economic

freedom

as an

enforcement

goal.

215 U.S.C. §1 (1976) provides, in relevant part: "Every contract,

combination in the form of trust or otherwise, in restraint of trade or

commerce among the several states, or with foreign nations, is declared

to be illegal. . . ."

See, e.g., Lipner, Antitrust's Per Se Rule: Reports

oj

Its Death

Are

Greatly Exaggerated, 60

DENVER

L.J. 593 (1983). One of the most

often cited descriptions of the per se rule was written by Justice Black in

Northern Pac. Ry. Co. v. United States, 356 U.S. 1 (1958). "However,

there are certain agreements or practices which because of their perni-

cious effect on competition and lack of any redeeming virtue are

conclusively presumed to be unreasonable and therefore illegal without

elaborate inquiry as to the precise harm they have caused or the business

excuse for their use. This principle of per se unreasonableness not only

makes the type of restraints which are proscribed by the Sherman Act

more certain to the benefit of everyone concerned, but it also avoids the

necessity for an incredibly complicated and prolonged economic investi-

gation into the entire history of the industry involved, as well as related

industries, in an effort to determine at large whether a particular

restraint has been

unreasonable-an

inquiry so often wholly fruitless

when undertaken. Among the practices which the courts have hereto-

fore deemed to be unlawful in and of themselves are price fixing,

division

of

markets, group boycotts, and tying arrangements." 356 U.S.

at 5 (citations omitted).

4Compare Lester Thurow, Let's Abolish the Antitrust Laws, New

York Times Business Section, October 19, 1980, with Reader Comment,

New York Times Business Section, November 2, 1980; compare Fred

Smith, Why

Not

Abolish Antitrust?,

REGULATION,

Jan.-Feb. 1983, with

Reader Comment,

REGULATION,

May-June, 1983; compare Ernest

Gellhorn's editorial regarding the tenure of William Baxter as chief

antitrust enforcer, Wall Street Journal Editorial Page, January 6, 1984,

Acomment upon NCAA 1005

The NCAA's Chicago school defense is premised on the idea

that

government should normally defer to the presumptively

efficient decisions

of

business, especially those that enhance

economic integration and cooperation. Because

of

private

economic coercion in the marketplace and economic rivalry in

our

political system, this idea is flawed. Fortunately, the

NCAA

decision reaffirms

that

the Sherman Act was enacted to prohibit

the private exercise

of

economic coercion

that

undermines

economic freedom and diminishes market rivalry.5

with Reader Comment, Wall Street Journal Editorial Page, January 27,

1984;

compare Ponsoldt, Antitrust: When Law Clashes With a Truth,

New York Times Editorial Page, January 3, 1984, with Eizenstat, A

New Antitrust Law, New York Times Editorial Page, April 22, 1984;

compare Ponsoldt, Reagan's Anti-Regulatory Stand Politicizes Policy

on Mergers, New York Times Editorial Page, October 13, 1983, with

James C. Miller, 3rd, The Proper Question in Adjudicating a Merger,

New York Times Editorial Page, October 23, 1983.

See, most recently, H. 2735, approved by the House Committee on

the Judiciary on June 14, 1985, which would establish stricter standards

for the approval of business mergers, and the accompanying subcom-

mittee record. As examples of the academic debate, compare Landes &

Posner, Market Power in Antitrust Cases, 94

HARV.

L.

REV.

937 (1981),

with Sullivan, Antitrust, Microeconomics, and Politics: Reflections on

Some Recent Relationships, 68

CALIF.

L.

REV.

1 (1980). See also

Ponsoldt, Reagan Circuit Judges Assault the Rule

of

Law, National

Law Journal Editorial Page, February 7, 1983, quoted in Shafer v . Bulk

Petroleum Corp., 569 F. Supp. 621, 625-26, n.4 (E.D. Wis. 1983).

5The alleged choice between economic freedom and regulatory

order was poorly framed from the beginning. Unregulated private

conduct can curtail freedom and achieve a kind

of

"order" to a greater

degree than can democratically imposed government regulation. The

correctly identified political choice is not between freedom (noninter-

vention by government) and order (government regulation), as the

Reagan enforcement policies and economic theory have implied, but

rather between concentrations of power not responsive to citizen con-

trol, whether public or private, and a legitimately functioning democ-

racy with sufficient public regulation to check private trusts (whether

corporate, financial, or labor union) and sufficient internal control to

avoid bureaucratic tyranny. The

NCAA

decision confirms that the

Sherman Act was designed to promote freedom from private abuses

of

power.