Sign Stealing and Antitrust Laws
Interesting piece by a Michigan Alumni in the Yale Journal on Regulation from November 8th. It posits that rules against in-person scouting likely violate antitrust laws, and that in recent years, NCAA rules that limit economic competition by member schools have been in serious antitrust trouble. I.e. the NCAA has lost legal cases that limited economic competition, such as NIL.
From the article:
This is a bad time for the NCAA or Big 10 to be rattling antitrust cages. The courts are already grumpy with NCAA rules that limit economic competition, and the Justice Department has shown a heightened interest in antitrust issues in sports. The sign stealing scandal may be fodder for either jokes or righteous (hypocritical?) indignation for now, but it could unleash something that no one in the NCAA or Big 10 would want.
November 9th, 2023 at 8:46 AM ^
Funny thing is that doesn't really help in this situation yet. The same schools that threw the hissy fits are the ones that would be involved in replacing the NCAA.
November 9th, 2023 at 7:57 AM ^
I served as a trial attorney in the Department of Justice's Antitrust Division's National Criminal Enforcement Section many, many years ago. The antitrust legal landscape was very, very different then. Maurice Clarett was laughed at for wanting to challenge the NFL's policy of not drafting underclassmen. It was a different era. (Also--I took Antitrust pass-fail in law school. Never imagined I would be in that practice area. And the economic principles involved in criminal antitrust are very different from civil antitrust.)
Having said that--and all respect to Professor Crane, who wrote this brief Note--I would think that the Supremes would still see a distinction between rules that affect economic competition for players (as in Alston and O'Bannon) and rules that purport to affect athletic competition on the field.
If, say, one team were to develop a HUD for the quarterback to see receiver routes overlaid on his field of vision in real time, and other teams didn't have access to that technology, I could imagine an athletic organizing association like the NCAA banning that technology from use in competition. Same thing if one team invests in a more aerodynamic lining to their footballs that other teams don't have. Such rules might limit how much a team can invest in its competitive edge in the field of athletic competition, but it doesn't limit free market economic competition, which is the focus of American antitrust (meaning: free trade and competition) law.
Then again--what Professor Crane points out is certainly valid. The current Supreme Court is far more skeptical of any authority's ability to place limits on the use of private funds in the furtherance of competitive edge. That wouldn't be my strategic choice for what Michigan should emphasize in its defense, but it might at least give the NCAA pause given their atrocious track record before the Court.
November 9th, 2023 at 8:27 AM ^
A reasoned, carefully considered response.
Are you sure you're in the right place?
November 9th, 2023 at 8:34 AM ^
Overall, that makes sense and is the likely outcome. The only counterpoint I could think of is that the rule was clearly implemented citing economic reasons.
November 9th, 2023 at 8:46 AM ^
From my understanding of what he wrote, the basis for his argument is that the in-person scouting rule was instituted specifically to provide economic parity and benefit poorer schools who couldn’t afford to send in person scouts to future opponents games, not because they provide a competitive advantage.
If the rule was instituted to provide economic parity instead of providing a competitive advantage, then it seems to me that the antitrust arguments made here could be in play.
November 9th, 2023 at 9:57 AM ^
Maybe, but--recognize that any limit on athletic competition has an economic component. That's not enough on its own to trigger an antitrust violation.
Example: one school can afford to hire full-time tutors for all its players and so can afford to expand practice time; another cannot. It's (arguably) not a unlawful restraint on trade for an organizing athletic entity to declare a limit on practice time, even though part of the justification can be seen through an economic lens.
Whereupon he went down the rabbit hole of trying to summarize antitrust law:
So--at the risk of getting out of my depth here, because I seldom practice antitrust law any more--the American antitrust law is statutory in origin but judicially developed. In other words--the antitrust statutes (principally the Sherman Antitrust Act, 15 U.S.C. 1 & 2 et seq.) use broad language to make unlawful any "restraint of trade," but don't further define what that is, and it's been left to the courts to further define.
The issue is, just about any rule that limits what ostensible competitors do can effectively serve as a "restraint of trade," as we're seeing in this case. The Supreme Court over time has developed layered tests for courts to evaluate whether a particular limitation is an unlawful restraint. Generally speaking, "naked restraints" (don't go there) like price-fixing, bid-rigging, market allocations, and the like have no pro-competitive justification and are per se illegal (and, in general, it is the per se illegal restraints that DOJ will use criminal enforcement to prosecute). Restraints that arguably have some pro-competitive justification--for example, quality standards that trade associations establish to promote public safety--courts will review under a "Rule of Reason" analysis, that is, whether the pro-competitive justification outweighs any anti-competitive effect the restraint may create.
In this case, the NCAA would argue that its rule banning in-person advanced scouting by a coach of a scheduled in-season opponent was designed to promote fairer on-field competition, and therefore enhanced the collective whole of college football's ability to deliver a better product to the consuming public. The reviewing court doesn't have to take the NCAA's word for it, but the party challenging the rule would have the burden to show that the anti-competitive effect of the rule outweighed any pro-competitive benefits from the rule.
TL;DR--that's an uphill battle for the challenging party--Michigan in this case--and not a sure winner. Possible, maybe, with a skeptical Supreme Court like the one we currently have--but would likely require years of litigation and tens of millions of dollars in legal fees to pursue to a conclusion.
November 9th, 2023 at 10:52 AM ^
In this case, the NCAA would argue that its rule banning in-person advanced scouting by a coach of a scheduled in-season opponent was designed to promote fairer on-field competition, and therefore enhanced the collective whole of college football's ability to deliver a better product to the consuming public.
This is the key argument after Alston right? And given the history of the rule being based on reducing the financial harm on smaller schools and the NCAA 2021 proposal saying "rerecorded game film are readily available in the digital age" and that there is "minimal competitive advantage gained by scouting future opponents in-person" that's a difficult argument to make that it's about on-the-field rather than purely economics.
November 9th, 2023 at 12:50 PM ^
Fair! That the NCAA has already documented how little they think this rule truly affects on-field competition--and apparently cited only to economic effect--certainly would undermine its defense of the rule.
Again, IMHO, it's not a slam-dunk on either side. But (also IMHO) I don't think this screams "restraint of trade" the way that player compensation does. In those cases, there was a clear economic harm to an affected class--namely, the players--with little justification other than "amateurism." Here, it's less clear what "antitrust harm" arises from the rule--and Michigan would also have to concede that it gained little from Stalions's little adventurism.
November 9th, 2023 at 2:46 PM ^
That's more logistical evaluation than I gave it. My thought screams "this makes sense in my head" but ultimately getting that argument and winning on it is a lot more difficult and probably more questionable than how I analyzed it.
November 9th, 2023 at 8:26 AM ^
This is unrelated to the thread, but I have 2 tickets available for the game this weekend. The two other people that I was going to be going with can't make it anymore. I still plan on going and would would prefer to sell the tickets to two Michigan fans. Anybody know the safest/best way to do this?
For those that may be interested, the tickets are in section WJU, Row 58. For some reason the seats are separated by one (i.e. the seats are for seat 28 and seat 26), but I am sure it won't be a problem to switch over one seat with someone.
November 9th, 2023 at 8:36 AM ^
Don't be so sure about that if they're among Penn State fans. Emotions are running high.
November 9th, 2023 at 9:34 AM ^
Good view of the PSU sideline?
November 9th, 2023 at 9:51 AM ^
Haha I actually will have a pretty good view of their sideline. I have my telescope lens ready for my phone.
November 9th, 2023 at 8:39 AM ^
the next antitrust action that the feds take toward anything sports-related will be the first.
November 9th, 2023 at 8:47 AM ^
Seems like the argument presented could also be used to claim NFL salary cap rules violate antitrust laws.
November 9th, 2023 at 9:31 AM ^
That is collectively bargained.
November 9th, 2023 at 10:09 AM ^
If bargaining can allow NFL to violate what otherwise would be antitrust, wouldn't B1G schools have signed something that agrees to bylaws which also would've otherwise violated antitrust?
November 9th, 2023 at 2:57 PM ^
Collective bargaining is about labor (employee) rights, so it's not applicable to organizations like universities acting to form a conference.
November 9th, 2023 at 6:34 PM ^
But, the rationale of the argument in the OP is that the NCAA dictating how a university can allocate its resources is what violates antitrust laws.
Wouldn't NCAA = NFL and university = nfl team in my analogy?
November 9th, 2023 at 10:04 AM ^
Yep. And similar analysis applies.
Note that, for historical reasons, major league baseball has an antitrust exemption, but the NFL does not. There have been rumblings from time to time of disgruntled players or teams challenging the NFL's rules--but in the end, it amounts to nothing because they all recognize the side of their bread that's getting buttered by the highly profitable league.
One might think that the Big Ten might similarly recognize which conference teams butter its bread. Hmm....
November 9th, 2023 at 2:55 PM ^
Fun fact for the non-lawyers out there: the NFLPA did briefly decertify and file an antitrust suit in 2011 after negotiations broke down. But to Koop's point, it's all a labor negotiating tactic really, because it's too beneficial to both sides overall.
https://www.nfl.com/news/lawyers-nfl-players-settle-antitrust-suit-two-other-cases-09000d5d820fd3c6
November 9th, 2023 at 9:34 AM ^
Pssst: NCAA, this is a really bad time legally to be you. The vultures are circling.
Do you really want to waste time and resources on trying to make a parking ticket offense look like a jail time offense? There is nothing in it for you.
You have bigger fish to fry. In fact you may be the fish that's going to be fried. Why waste precious effort on this trivial non-issue?
November 9th, 2023 at 10:06 AM ^
To be fair: I don't think the NCAA has yet made a big deal out of Signgate. It's Michigan's Big Ten competitors, and the Big Ten conference, that have made an embarrassing spectacle of themselves.
November 9th, 2023 at 10:22 AM ^
I would not say
"unleash something that no one in the NCAA or Big 10 would want."
I can think of one University that would not mind unleashing on the NCAA/B1G
November 9th, 2023 at 10:23 AM ^
I don't get it -- they've conspired to agree not to permit sign stealing ... and that's somehow an antitrust violation? How?
They've also conspired to agree that you have to go 10 yards in four downs to get another series of downs and that the games should run for four 15-minute quarters. Also antitrust violation?
November 9th, 2023 at 11:59 AM ^
I guess you didn't read or understand the antitrust professor's argument. Or did you learn something different when you took antitrust law?