NCAA AND ANTITRUST

NCAA v Okla Regents: THE Major Antitrust Precedent for College OR Pro Sports 1> Sherman Act only bars unreasonable restraints of trade 2> use Rule of Reason because this "involves an industry in which horizontal restraints on competition are essential if the product is to be available at all" 3> KEY R/R EXPOSITION: Price is higher and output lower than they would otherwise be, and both are unresponsive to consumer preference.“ 4> THUS: "these hallmarks of anticompetitive behavior place upon petitioner a heavy burden of establishing an affirmative defense which competitively justifies this apparent deviation from the operations of a free market"

REVIEW: the Rule of Reason First, pltf establishes actual anticompetitive effect Direct evidence re price or output Indirect evidence of defts’ market power Second, deft demonstrates pro-competitive justifications Third, pltf can rebut by showing that restraint is unnecessarily restrictive

Application of the Rule of Reason to Bd of Regents How would you apply the Rule of Reason to the NCAA’s television agreement? What are the NCAA’s legitimate justifications? What are the real motivations for the NCAA’s agreement?

Fundamentally different approaches of majority and dissent Stevens: NCAA as a distinctive commercial product White: NCAA’s non-commercial goals are “central”

NCAA’s Non-Profit Status Does the NCAA act any differently than it would if it were profit-maximizing? What non-commercial goals are furthered here?

NCAA’s special role /2 Professional Engineers rejected non-economic justifications for restraints of trade by commercial enterprises; BRW says that this principle should not apply to non-profit institutions –Do you agree that, while only Congress should be able to allow for-profit companies to restrain trade to achieve socially worthy goals, non-profit institutions should be able to argue to a court that it’s non- economic goals are legitimate justifications for trade restraints under the Rule of Reason? Should NCAA be able to take surplus profits from football and men’s basketball to cross-subsidize non- revenue sports?

DISTINGUISHING NON- COMMERCIAL RESTRAINTS Smith v NCAA [918] is an important precedent: non-commercial restraints do not ‘restrain trade’ No clear restraint in any relevant commercial market No suggestion that intent or effect of rule is to enhance revenues Can’t apply “output responsive to consumer preference” criterion to non-revenue sports, since if responded to consumer preference wouldn’t offer the sport!

COMMERCIAL/ NON- COMMERCIAL Why is Smith’s challenge to graduate school participation not analyzed as a restraint of trade?