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Antitrust Formalism is Dead! Long Live Antitrust Formalism!: Some Implications of American Needle v. NFL


Judd E. Stone II


Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.

Joshua D. Wright


Federal Trade Commission; George Mason University School of Law

August 23, 2010

Cato Supreme Court Review, Forthcoming
George Mason Law & Economics Research Paper No. 10-40

Abstract:     
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, L44

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Date posted: August 25, 2010 ; Last revised: September 1, 2010

Suggested Citation

Stone, Judd E. and Wright, Joshua D., Antitrust Formalism is Dead! Long Live Antitrust Formalism!: Some Implications of American Needle v. NFL (August 23, 2010). Cato Supreme Court Review, Forthcoming; George Mason Law & Economics Research Paper No. 10-40. Available at SSRN: http://ssrn.com/abstract=1663850

Contact Information

Judd E. Stone II
Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. ( email )
Joshua D. Wright (Contact Author)
Federal Trade Commission ( email )
601 New Jersey Ave., NW
Washington, DC 20580
United States
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
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