Shutting the Black Door: Using American Needle to Cure the Problem of Improper Product Definition

Section 1 of the Sherman Act is designed to protect competition by making illegal any agreement that has the effect of limiting consumer choice. To make this determination, courts first define the product at issue and then consider the challenged restraint’s impact on the market in which that product competes. When considering § 1 allegations against sports leagues, courts have tended to define products according to the structure of the leagues. The result of this tendency is that harm to competition between the leagues’ teams is not properly accounted for in the courts’ analyses. This, in turn, grants leagues a form of immunity to which they are not entitled under any statutory or doctrinal rule. In reaching this conclusion, this Note reviews the business structure of sports leagues and explains why they present such a difficult challenge for courts. It then examines a number of cases in which courts, struggling with those challenges, improperly defined the product according to league structure. For each case, the Note explains the mistake that was made and how that mistake granted leagues de facto immunity. This Note concludes by arguing that the Supreme Court’s recent decision in American Needle can serve as the impetus for correcting this mistake if courts broadly interpret the meaning of the case by looking to the logic that animates it.