Antitrust Formalism is Dead! Long Live Antitrust Formalism!: Some Implications of American Needle v. NFL
Judd E. Stone II
International Center for Law and Economics
Joshua D. Wright
George Mason University School of Law
August 23, 2010
Cato Supreme Court Review, Forthcoming
George Mason Law & Economics Research Paper No. 10-40
Antitrust observers and football fans alike awaited the Supreme Court’s decision in American Needle v. National Football League for months – inspiring over a dozen articles, and even one from the quarterback of the defending champion New Orleans Saints. Yet the implications of the Court’s decision, effectively narrowing the scope of the “intra-enterprise immunity” doctrine to firms with a complete “unity of interests,” are unclear. While some depict the decision as a schism from the last several decades of antitrust law, we explain why this interpretation is meritless and discuss the practical impact of the Court’s holding. The Court’s antitrust jurisprudence over the past several decades, including that of the Roberts Court and American Needle, has broadly embraced rules that are both relatively easy to administer as well as conscious of the error costs of deterring pro-competitive conduct. Intra-enterprise immunity potentially provided such a “filter” that enabled judges to dismiss a non-trivial subset of meritless claims prior to costly discovery. The doctrine, however, proved notoriously difficult to consistently apply in situations involving common organizational structures. Consistent with error-cost principles that have been the lodestar of the Court’s recent antitrust output, American Needle gave the Court an opportunity to effectively abandon intra-enterprise immunity in favor of the Twombly “plausibility” standard. Rather than marking a drastic change in antitrust jurisprudence, therefore, American Needle should be viewed as the Supreme Court substituting an unreliable screening mechanism in favor of a more cost-effective alternative.
Number of Pages in PDF File: 39
Keywords: Bell Atlantic v. Twombly, Copperweld, Drew Brees, franchises, Independence Tube, Iqbal, John Paul Stevens, Lear Siegler, licensing, MasterCard, Phillip Areeda, professional, Roger Goodell, Rule of Reason, Section 1, Sherman Act, single entity, sports leagues, theory of the firm, Visa, Yellow Cab
JEL Classification: K21, L41, L43, L44Accepted Paper Series
Date posted: August 25, 2010 ; Last revised: September 1, 2010
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