Report of the Competition & Antitrust Committee

Energy Law Journal, January 1, 2011 | Go to article overview

Report of the Competition & Antitrust Committee


This report summarizes antitrust and competition developments of particular interest to energy law practitioners that occurred in the year 2010.*

I. COURT CASES

A. American Needle, Inc. v. National Football League

Section 1 of the Sherman Act declares unlawful, "every contract, combination . . . or conspiracy made in restraint of trade."1 Antecedent to whether there is a "contract, combination or conspiracy" is the question of whether there is concerted, rather than unilateral, conduct. Prior to 2010, the last time the United States Supreme Court addressed this question directly was in Copperweld Corp. v. Independence Tube Corp.,2 where it held that a parent corporation and its wholly owned subsidiary "are incapable of conspiring with each other for purposes of [section] 1 of the Sherman Act."3 In American Needle, Inc. v. National Football League,4 the Court addressed the concerted action requirement in the context of a joint venture that did not involve a parent-subsidiary relationship. Specifically, the thirty-two teams of the National Football League (NFL) formed a corporate entity, National Football League Properties (NFLP), to manage their intellectual property, such as trademarked logos, and claimed that those licensing activities constituted the actions of a single entity, viz., unilateral conduct, thus escaping section 1 scrutiny.5 A unanimous Supreme Court held that the NFL teams' intellectual property licensing activities constituted concerted action that is not categorically beyond the reach of section 1 of the Sherman Act because those activities join together separate, self-interested decisionmakers.6

1. Factual Background

The NFL is an unincorporated association that currently includes thirty-two separately owned teams, each of which has its own colors and logo, and owns related intellectual property.7 In 1963, the teams formed NFLP to develop, license, and market their intellectual property. Most of the revenues generated from selling caps, jerseys, and other team-branded items have been shared equally among the teams or given to charity.8 The teams can, and at times have sought to, withdraw from the arrangement.9

Starting in 1963, NFLP granted nonexclusive licenses to a number of vendors that would manufacture and sell apparel with team colors and logos.10 American Needle was one such licensee.11 In December 2000, however, the teams voted to authorize NFLP to grant exclusive licenses, and NFLP granted a ten-year exclusive license to Reebok International Ltd. (Reebok) for the manufacture and sale of trademarked headwear for all thirty-two teams.12 As a result of this decision, NFLP declined to renew the former nonexclusive license to American Needle.13

2. The Underlying Decisions

American Needle filed a complaint alleging that the exclusive agreement between and among the NFL, its teams, NFLP, and Reebok violated section 1 of the Sherman Act.14 Respondents argued that they were incapable of conspiring to restrain trade within the meaning of section 1 because they were a single economic enterprise with respect to the conduct challenged. The district court granted summary judgment, concluding that, in the particular facts of their operations involving the exploitation of intellectual property, respondents had "so integrated their operations that they should be deemed a single entity rather than joint ventures cooperating for a common purpose."15

The United States Court of Appeals for the Seventh Circuit affirmed.16 Ascribing importance to factual context, the court of appeals limited its inquiry to the particular conduct at issue - i.e., licensing of the teams' intellectual property - and examined whether that conduct "deprives the marketplace of the independent sources of economic control that competition assumes."17 Noting that the game of football can only be carried out jointly - at least in the sense that it takes two teams to play a football game - the court found that the teams "can function only as one source of economic power when collectively producing NFL football. …

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