A recent report has revealed two class-action antitrust lawsuits filed against MLB that seek to ban the league’s blackout rules. The lawsuits, filed by eight fans, have been consolidated, and seek to ban blackout rules in MLB, the National Hockey League, and various clubs within each league. To win, the plaintiffs must convince the court that the blackout rules are an anti-competitive restraint of trade.
Baseball’s media structure is anti-competitive
In 1998, Congress passed the Curt Flood Act, rescinding the MLB’s exemption from antitrust laws in labor relations. But the Act also left intact an exemption for baseball’s media structure, which advocates say enables the league to maintain a high level of play. In addition to maintaining a high standard of play, they say, the competition for fans also keeps prices low. Ultimately, the lawsuit is likely to be successful.
A lawsuit has been filed, naming MLB, the NHL, regional sports networks, Comcast, DirecTV, and many other media outlets. The league could fight the lawsuit, which could expose the inner workings of the league’s media machine. It could also settle with the plaintiffs to avoid a lengthy trial. Regardless of how it decides to resolve the case, the lawsuit could reveal how the league finances its media machine.
It raises prices
The MLB Blackout Lawsuit is a consolidated class-action antitrust suit against the league and television providers, which aims to stop the blackout rules. Eight fans have sued the league, regional sports networks, Comcast, DirecTV, and various clubs within the leagues. The plaintiffs must prove that the blackout rules are an anticompetitive restraint on trade. In a lawsuit, the plaintiffs must prove that the blackouts are causing increased prices and depriving consumers of the services that they love.
If the MLB wins the lawsuit, the settlement may include protections for fans purchasing single-team packages, but it’s not clear whether this will prevent the league from increasing prices in the future. While the overall antitrust exemption for MLB is not at risk, the league could lose its broadcast territories exemption. If the settlement is successful, baseball fans will see lower prices for game packages this year. But if the MLB loses the settlement, the league may have to change its blackout policy in the future.
It reduces competition
Two consolidated class-action antitrust lawsuits are targeting MLB’s blackout rules. The plaintiffs claim that the blackout agreements violate the Sherman Antitrust Act by preventing competition by restricting broadcasts to an exclusive territory, forcing consumers to pay supracompetitive prices for league-specific packages. The defendants, including MLB and the National Hockey League, sought summary judgment. The court denied the motion after finding that the league’s blackout rules did not violate the antitrust laws, but upheld their territorial broadcasting rights.
The plaintiffs’ attorneys also claimed that the blackouts harm consumers and reduce competition. The court ruled that the plaintiffs had sufficient evidence to prove their claims, which included the injury to competition from regional blackout agreements. Additionally, the plaintiffs’ arguments supported the claim that these arrangements reduce competition and increase prices. Because the defendants did not challenge the claim of market power, the court did not address this issue. The court rejected the defendants’ first two justifications as insufficient and rejected their third, which claimed that competition itself is unreasonable.
It harms consumers
The problem with discounts and rebates is that they limit competition and harm consumers in the long run. The Federal Trade Commission has not yet taken action on the deal, so this one is unlikely to be blocked by the agency. The merger will benefit both Illumina and GRAIL, which do cancer tests and genetic sequencing, and it does not have any obvious competitive implications. The companies will keep their name and brand, and it is unknown whether this merger will be approved by the Federal Trade Commission.
