9th Circuit Antitrust Ruling Threatens NFL, Free Enterprise

By Orrin G. Hatch | Wednesday, September 23, 2020

Millions of Americans are cheering the return of National Football League games and the sense of normalcy it conveys. Professional football games are some of the most-watched television programs in the country, and this year's season opener between the Kansas City Chiefs and the Houston Texans was no exception.

That's because for so many fans, football is more than a sport — it's a source of community and a salve in difficult times. And thanks to unique TV bundles like NFL Sunday Ticket, families can watch more games today than ever before.

But all that could change if the U.S. Court of Appeals for the Ninth Circuit Court has its way.

A recent decision by the Ninth Circuit in NFL v. Ninth Inning Inc. concluded that Sunday Ticket violates antitrust laws and that it is anti-competitive for the NFL, rather than individual teams, to offer such programming. The court went further by arguing that individual teams should have to market their own games.

The NFL has asked the U.S. Supreme Court to intervene, and sports fans, businesses and consumers across the country should hope that the decision is overturned.

The case against the Ninth Circuit's ruling is a strong one. Because one team cannot play a game by itself, NFL franchises have always acted jointly to create and distribute games. This broadcast policy has been expressly sanctioned by Congress and has existed for half a century. As a result, fans all over the country have had access to three or four games every week for free.

In 1994, viewers gained access to more games when the NFL created Sunday Ticket in partnership with DirecTV. Sunday Ticket allows them to access out-of-market contests not otherwise available on broadcast TV. It also allows sports bars to show multiple Sunday afternoon games at once. By providing the public with additional viewing options, Sunday Ticket is clearly pro-consumer and pro-competitive.

Nevertheless, a group of class action plaintiffs' attorneys filed an antitrust case, asserting that the NFL and DirecTV harm competition by working jointly to create and sell Sunday Ticket. A trial court dismissed the litigation as lacking merit under antitrust laws. But the Ninth Circuit resuscitated the claims by ruling, in essence, that joint ventures are presumptively anti-competitive unless they can prove otherwise.

The decision is troubling. It is illogical to conclude, as the Ninth Circuit did, that providing fans with additional content and expanded choice through Sunday Ticket is anti-consumer simply because the product is the result of a joint venture. And it is absurd to suggest, as the Ninth Circuit did, that the law requires each NFL team separately to sell its own broadcast of games that it jointly produces with the NFL and its 31 partner teams.

Modern antitrust doctrine recognizes what businesses have long known: Joint ventures are often the most efficient, if not the only, way to launch new products and services. We read every day about the joint ventures that are responding to the COVID-19 pandemic, including collaborations among pharmaceutical companies to develop vaccines, testing and cures. Joint ventures such as these not only help American families but even save lives.

That's why the Ninth Circuit's decision is so problematic. If our understanding of antitrust law is unable to accommodate business partnerships that ultimately benefit consumers, then it's not just the NFL that's in trouble — it's businesses in all industries, from broadcasting and transportation to technology and health care.

That is why the U.S. Chamber of Commerce, along with a group of prominent antitrust scholars and economists, has objected that the Ninth Circuit's decision puts the joint-venture model — a driving force behind innovation in this country — in jeopardy. As they have recognized, class action plaintiffs should not be able to launch burdensome and costly antitrust litigation based on a mere assumption that a joint venture has harmed competition.

There's a lot at stake here, and it goes far beyond sports. The NFL and DirecTV have asked the Supreme Court to review and reverse the Ninth Circuit's decision. The court should do so. This is the only way to overturn a dangerous precedent that would imperil joint ventures throughout our economy.

Orrin G. Hatch is chairman emeritus of the Orrin G. Hatch Foundation. A Utah Republican, he served in the US Senate from 1977 to 2019.

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