Second Circuit Reaffirms Association Rules Are Concerted Conduct Subject To Section 1

• Jurisdiction: United States,Federal
• Law Firm: MoginRubin
• Subject Matter: Antitrust/Competition Law, Media, Telecoms, IT, Entertainment, Antitrust, EU Competition , Sport
• Author: Timothy LaComb
• Published date: 22 March 2023

Competing businesses remain competitors with independent economic interests despite membership in associations or leagues.

On March 7, 2023, the Second Circuit U.S. Court of Appeals revived an antitrust lawsuit brought by Relevant Sports LLC ("Relevant"), a soccer promoter, against FIFA and the United States Soccer Federation (the "USSF"). In doing so, the Second Circuit reaffirmed longstanding antitrust law that a rule enacted by an association that governs member conduct is concerted activity subject to Section 1 of the Sherman Act.

Background

FIFA is the international governing body for soccer. It is a membership-based association of more than 200 national associations. Each national association is also membership-based and comprises professional soccer leagues and teams in each respective nation. National associations, and their members by extension, are required to comply with FIFA rules. The USSF is the national association for the U.S.

In 2018, Relevant attempted to organize regular season games in the U.S. between teams in the Spanish La Liga - the top professional soccer league in Spain. In response, the FIFA Council "issued a policy prohibiting FIFA's National Association members, including USSF, from sanctioning any official season games held outside of the participants' home territory" (the "2018 Policy"). This policy prevented Relevant from holding the La Liga games. As a result, Relevant filed suit against FIFA and the USSF challenging the 2018 Policy as an anticompetitive market division agreement that prevented competition among professional leagues and teams.

Section 1 Pleading Standard and Decision by the SDNY

In general, a plaintiff bringing a claim under Section 1 of the Sherman Act must allege (i) concerted action (ii) that unreasonably restrains trade. To plead concerted action (which is the only element at issue in this case), a plaintiff must allege facts that reasonably tend to show the defendants "had a conscious commitment to a common scheme designed to achieve an unlawful objective." United States v. Apple, Inc., 791 F.3d 290, 314-15 (2d Cir. 2015). This can be demonstrated through "direct evidence that the defendants entered into an agreement" or "circumstantial facts supporting the inference that a conspiracy existed." Id.

Here, the United States District Court for the Southern District of New York dismissed Relevant's complaint, finding it did not adequately plead concerted action. The SDNY adopted defendants' proposed rule...