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American Needle and the Future of the Single Entity Defense under Section One of the Sherman Act

34 Pages Posted: 4 Nov 2010 Last revised: 25 Apr 2011

Nathaniel Grow

Indiana University - Kelley School of Business - Department of Business Law

Abstract

In American Needle, Inc. v. National Football League, the United States Supreme Court held that the NFL’s decision to collectively license the trademarks of its thirty-two member teams constituted concerted activity subject to Section One of the Sherman Act, a provision targeting the combined activities of two or more actors. In the process, the Court rejected the NFL’s argument that its teams collectively operated as a “single entity” outside the scope of Section One.

Although much of the commentary regarding American Needle has focused on the opinion’s likely impact on the professional sports industry, this Article contends that the decision will ultimately play a more significant role in cases involving the application of the so-called “single entity defense” to other industries. Marking the first time in 26 years that the Supreme Court addressed the scope of the single entity theory under Section One, the American Needle opinion raises questions regarding the soundness of some lower court single entity precedents. However, because American Needle did not provide a straightforward analytical framework for courts to apply when delineating between independent and concerted action, lower courts will likely struggle to consistently resolve single entity cases in the future. In particular, the single entity status of certain joint ventures remains unsettled following American Needle. This article asserts that the Supreme Court could (and should) have adopted a clearer standard for future courts to apply when deciding single entity cases, in particular one that provided guidance regarding the single entity status of joint ventures.

Meanwhile, although this article takes issue with certain of the Court’s findings regarding the nature of professional sports leagues, it ultimately concludes that the decision is unlikely to have a significant impact on the antitrust regulation of the industry, insofar as American Needle largely reaffirmed the status quo.

Keywords: American Needle, Antitrust, Supreme Court, NFL, Single Entity, Sherman Act, Section One, Dagher, Joint Ventures

Suggested Citation

Grow, Nathaniel, American Needle and the Future of the Single Entity Defense under Section One of the Sherman Act. American Business Law Journal, Vol. 48, 2011. Available at SSRN: https://ssrn.com/abstract=1702644

Nathaniel Grow (Contact Author)

Indiana University - Kelley School of Business - Department of Business Law ( email )

Bloomington, IN 47405
United States

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