antitrust law fall 2014 yale law school dale collins rule of reason cases chicago bd. of trade v....

Antitrust LawFall 2014 Yale Law SchoolDale Collins

Rule of Reason Cases Chicago Bd. of Trade v. United States, 246 U.S. 231 (1918)

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Rule of Reason Cases National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679 (1978)

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Rule of Reason Cases Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979)

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Rule of Reason Cases NCAA v. Board of Regents, 468 U.S. 85 (1984)

Facts "1982-1985 NCAA Football Television Plan“

Nearly 600 institutional members of NCAA (including all "major" football powers) agreed to market all of the broadcasting rights to their football games through the NCAA With very limited exceptions, NCAA members may sell broadcast rights to their games only to

ABC, CBS and TBS. ABC and CBS share exclusive first rights to negotiate with NCAA members regarding the live

broadcast of football games 14 “live” exposures per season per network for "minimum aggregate compensation" of

$131,750,000 over the four-year contract period Networks to negotiate individually with schools and to pay schools for broadcasting rights Any shortfall in payments to schools against minimum to be paid to NCAA Schools limited to a maximum of six appearances every two years, with a maximum of four the

first year and five the second. Appearances must be divided evenly between ABC and CBS During 1982 and 1983, TBS permitted to broadcast over its Atlanta superstation 19 games not

selected by ABC or CBS for a minimum aggregate compensation of $17,696,000 Effect

Limited number of games broadcast Limited number of times a school could appear

Proffered justifications Intended to reduce the adverse effects of live television upon football game attendance.by limiting the

number and distribution of games broadcast Preserve competitive balance among football teams

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Rule of Reason Cases NCAA v. Board of Regents, 468 U.S. 85 (1984) (con’t)

Held, Clear “restraint of trade”: Rules limited members’ freedom to negotiate and enter into their

own television contracts Has usual per se characteristics

Horizontal agreement Reduces output (measured by number of games broadcast) Sets prices (minimum floors become ceilings)

But per se rule not applicable Horizontal restraints on competition are essential if the product (college football) is to be produced at all Justifications for general NCAA rules have superficial plausibility in achieving arguably legitimate goals Lack of judicial experience with this type of arrangement in context

Violates rule of reason Restraint on price and output → presumption of unreasonableness

Both prices and quantity unresponsive to consumer preferences (e.g., viewer demand) Schools lose freedom to market their product to suppliers of their choosing and on own terms

Requires a competitive justification—”Heavy burden” No market power justification rejected—both factually and legally irrelevant BMI/cooperative joint venture justification rejected—does not create a new product or service Adverse effect on game attendance—rejected as factually unsupported Competitive balance among teams—rejected as “"not even arguably tailored” to serve this interest TV plan reduces TV output (measured in number of games broadcast) → not procompetitive

within meaning of antitrust laws even if plan promotes athletic balance

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Rule of Reason Cases FTC v. Indiana Federation of Dentists, 476 U.S. 447 (1986)

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Rule of Reason Cases California Dental Ass'n v. FTC, 526 U.S. 756 (1999)

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Rule of Reason Cases FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013)

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antitrust law fall 2014 yale law school dale collins rule of reason cases chicago bd. of trade v....

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