Organizing Competition and Cooperation after American Needle
The CPI Antitrust Journal, June 2010
11 Pages Posted: 25 Jun 2010
Date Written: June 24, 2010
In American Needle, Inc. v. National Football League, in a unanimous decision by Justice Stevens, the U.S. Supreme Court concluded that the NFL’s licensing activities constituted concerted action subject to Section 1 inquiry under the Sherman Act, even though the actual licensing itself was done via a separate corporate entity. In so deciding, the Court laid to rest the notion that the NFL and similarly-organized sports leagues should be treated as a single entity wholly outside of Section 1. But the Court’s opinion is substantially broader than just the relatively narrow world of sports leagues and will become the starting point for analysis of joint ventures going forward.
On the broader issues at stake in American Needle, the Court takes the next step after Copperweld. American Needle is the yin to Copperweld’s yang. Copperweld held that formally separate firms wouldn’t be treated as separate actors for Section 1 purposes if those firms had a unity of interest, as occurred there for a parent and its wholly-owned subsidiary. American Needle says that a formally single entity won’t be treated as such if in reality in represents concerted decisionmaking. Firms can’t use clever entity structuring to shield what would otherwise be concerted activity from Section 1 inquiry.
For Section 1 of the Sherman Act, jointness isn’t a sterile, formal inquiry. The question is one of, as Justice Stevens puts it, “competitive reality”. Separate entities might have enough of a unity of interest that they should be treated as one firm for Section 1. That was Copperweld. American Needle considers whether a single entity can be treated as a collective and as capable of joint action notwithstanding its formal status as a freestanding single firm and concludes that it can. Copperweld shrank the operation of Section 1, while American Needle not only doesn’t extend Copperweld to entities like the NFL, but it instead expands the range of Section 1 by picking up joint ventures like NFL Properties.
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