This week, the Supreme Court gave college basketball and football players a modest victory over the National Collegiate Athletic Association but one that, in the long run, may make life harder for proponents of vigorous antitrust against dominant corporations.
The Court, in a unanimous decision authored by Justice Neil Gorsuch, upheld a lower court ruling that invalidated the NCAA’s prohibition on education-related benefits to athletes. Despite the headlines declaring a defeat for the NCAA, the Court only affirmed a limited win for college athletes. It did not strike down the NCAA’s prohibition on paying a salary to players who generate billions for their colleges and universities.
In its ruling in NCAA v. Alston, the Court rejected the NCAA’s pleas for lenient antitrust treatment or an outright antitrust immunity. The NCAA asserted that a 1984 Supreme Court decision, which invalidated NCAA rules on television broadcasts, immunized its rules on capping player compensation because the Court noted the “revered tradition of amateurism in college sports.” The NCAA also claimed that it and its member schools are not “commercial enterprises.” These arguments gained no traction, and the Court ruled that the granting of antitrust immunities is the province of Congress, not the judiciary.
The Court, however, declined to revisit the trial court’s analysis that robbed the players of a complete victory against the NCAA. Although the players sought an end to NCAA’s collusive prohibition on player compensation, Judge Claudia Wilken, following a bench trial, struck down only the NCAA’s rules on education-related payments. In preserving the NCAA’s general prohibition on paying players, she concluded that some viewers may watch and attend college basketball and football games because the players are not paid like professionals. In its amicus briefs in support of the players in the Ninth Circuit and Supreme Court, the Open Markets Institute, where I work, argued that this “cross-market” balancing of harm to workers against benefits to consumers (whether theoretical or real) is bad law and bad policy.
The Court, however, declined to squarely address this issue because the players and their counsel gave it an easy out. The opinion stated that “the student-athletes do not question that the NCAA may permissibly seek to justify its restraints in the labor market by pointing to procompetitive effects they produce in the consumer market.” Although the Court punted on this question, law professor John Newman noted that the Court approved of Judge Wilken’s analysis and so appeared to implicitly bless such balancing.
In addition to failing to directly address cross-market balancing, the Court loosened antitrust rules on business conduct and showed skepticism toward antitrust enforcement in general. “Some restraints may be so obviously incapable of harming competition that they require little scrutiny,” the Court asserted. The Court said these restraints could be blessed without examining their effects on competitors, producers, and consumers and with just an abbreviated analysis. This was a bold move. Whereas courts had previously limited this abbreviated or “quick-look” antitrust analysis to facially problematic restraints (for instance, practices that resembled price fixing among rivals) and condemn them without a full antitrust analysis, the Court said that quick-look review could be used to approve certain restraints too. The Court also sounded a theme of caution in judicial application of the antitrust laws to business practices. The Court wrote that “antitrust courts must give wide berth to business judgments” and warned about judges serving as “central planners.” The Court further (incorrectly) suggested that markets exist apart from law and affirmed the ahistorical consumer welfare ideology, which conflicts with the broader economic and political aims expressed by the members of Congress who drafted the antitrust laws. Justice Gorsuch stated, “Judges must remain aware that markets are often more effective than the heavy hand of judicial power when it comes to enhancing consumer welfare.”
Justice Brett Kavanaugh expressed the most suspicion toward the NCAA. In a separate concurrence, he wrote that the NCAA system appears illegal because, through collusion among colleges and universities, it caps compensation of players and prohibits payment of wages and salaries. He observed that college basketball and football generate billions and enrich “[c]ollege presidents, athletic directors, coaches, conference commissioners, and NCAA executives.” The group excluded are “the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds.” He condemned the NCAA’s amateurism defense as “circular and unpersuasive” and demonstrated its absurdity by adding, “Hospitals cannot agree to cap nurses’ income in order to create a ‘purer’ form of helping the sick.” Yet, his concurring opinion has its faults. He wrote, “Price-fixing labor is price-fixing labor.” Notable for his strong hostility toward labor unions, Kavanaugh did not distinguish employer cartels, such as the NCAA, from unions and insinuated that a “free market in which individuals can otherwise obtain fair compensation for their work” features neither employer collusion nor unionization among workers.
Alston preserved a narrow win for college basketball and football players but largely left the NCAA’s collusive exploitation intact. It also continued its 40-year practice of giving trial judges who are skeptical of antitrust claims plenty of ammunition. Dominant firms like Amazon, Tyson Foods, and Uber may be able to impose restraints on workers, farmers, and other producers and defend themselves by pointing to purported benefits to consumers, just as the NCAA did. In delivering a battlefield win for college basketball and football players, the high court also appears to help corporations win their war against antitrust strictures.