The Lichfield Group

This interview with Jim Williams appeared in the May 3, 2005 issue of the Washington Examiner.

With Congress breathing down Major League Basebal’s back on a number of issues, it raises the question: Is the antitrust exemption in trouble?

When you need help in matters like this, one seeks an expert. There are few better than Bruce Fein. Fein is a nationally acclaimed expert on constitutional law. He has more than 25 years of legal experience in fields ranging from antitrust to communications to national security law. He is former Associate Deputy Attorney General in the Department of Justice and former General
Counsel of the Federal Communications Commission (under President Reagan).He also served as research director for the minority on the Joint Congressional Iran Contra Committee, and at the Justice Department as assistant director in the Office of Legal Policy and special assistant to the assistant attorney general for antitrust. He has been a visiting fellow for constitutional studies at the Heritage Foundation, an adjunct scholar at the American Enterprise Institute, and frequent lecturer on constitutional and communications law for Brookings Institute.

Jim Williams: For those of us who are not legal scholars please explain in layman’s terms what the antitrust law is?

Bruce Fein: The antitrust laws generally prohibit businesses that compete from agreeing to fix prices or divide markets that deprive consumers of choices that would be available if the businesses were independently competing for their dollars or patronage. For example, if two competing basketball teams agreed to fix the price of attending a game, an antitrust violation would occur.

JW: Why is baseball exempt from the law?

BF: Baseball has a limited exemption from the antitrust laws because of a flukish ruling of the United States Supreme Court in 1922 holding that baseball does not involve interstate commerce— a requirement for applying federal antitrust law. Every other major professional sports league (NFL, NBA and NHL) has been found to operate in interstate commerce and the antitrust laws apply to them. The Supreme Court declined to overrule its 1922 folly in a 1972 case brought by baseball star Curt Flood. Congress, however, enjoys the power to repeal by legislation any exemptions to the antitrust laws and it did so with respect to conduct impacting the employment of Major League Baseball players when it passed the Curt Flood Act of 1998. Today, the scope of the baseball exemption to the antitrust laws is a bit murky, as courts have divided on the question of how broadly the exemption applies. Indeed, one court has held that the exemption does not apply to conduct impacting local baseball radio broadcasting. My very considered opinion on this is that the exemption from the antitrust laws is a very narrow one and does not cover the kind of collusion that MLB and [Orioles owner Peter] Angelos have struck. Indeed, no other business in America could get away with the kind of deal that Angelos has demanded in seeking to control both such an important revenue source and marketing power of his principle competitor.

JW: In the year 2005 does it make sense that MLB, or any sport for that matter, be exempt from the law?

BF: No. The fact that other professional leagues have flourished despite application of the anti-trust laws discredits the concocted fear that applying the antitrust laws to MLB would destroy the competitiveness of the league and its ability to function profitably. It reflects what the market would otherwise support, and certainly cannot be in the interest of the Nationals or the local fans. Remember further that he did not buy the Nationals television rights at arm’s length, but rather at what could be seen as a fee that was significantly discounted by MLB.

JW: With the number of public issues like the drug policy, public funding of sports venues, etc, do you feel that the MLB — antitrust exemption is in jeopardy?

BF: The MLB antitrust exemption is in jeopardy in Congress. MLB has displayed arrogance over its drug-testing debacle and disdain for the free enterprise principles that govern other professional sports and business in general. The exemption is a glaring legal anomaly that is unlikely to survive congressional or judicial scrutiny. Anti-competitive actions like the MLB-Orioles collusion certainly increase the likelihood that Congress will finally rid the law of the baseball exemption anomaly.

Well, class, that is your legal lesson for the day. Many thanks to Bruce Fein and remember not to be late for class tomorrow.

Jim Williams is a seven-time Emmy award winning TV producer, director and writer.