Term
| Anti-trust law, Sherman Act (section 1) |
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Definition
-Section 1 of the Sherman Act prohibits concerted action (joint action btwn 2 or more parties) that unreasonably restrains trade
-Promotes freetrade/capitalism/competition
-Prevents monopoly
-Professional sports leagues; teams have an interest in not competing too heavily with rival teams
-Must maintain competitive balance
Why?
-Requires collective action
-This keeps playing competitive, but limits economic competiveness |
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Term
| Anti-trust law, Sherman Act (section 2) |
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Definition
-Section 2 of Sherman Act prohibits predatory behavior by which a competitor attempts to establish a monopoly
Example: company buys up competitors
-Companies that have a superior product or business model and have naturally developed a monopoly; not a violation
Example: NFL
-Teams in leagues compete with each other for $, but this competition is limited by agreements designed to maintain economic health of all teams
Example: draft rules, salary cap, free agency, revenue sharing |
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Term
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Definition
-Per se violations- obvious improper restraints on free trade
-Example: companies fix prices so that they are not underselling one another or dividing market into exclusive business territories
-Professional leagues require exclusive business territories, which would normally be per se violations
Courts have decided to use rule of reason analysis rather than applying per se analysis to sport |
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Term
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Definition
-Rule of reason analysis- court balances procompetitive (economically) effects against anticompetitive effects
-If net effect reduces economic competition in the relevant market, rather than promoting it; violation of Antitrust Law |
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