Ross, Stephen F. --- "Competition Law and Labor Markets" [2011] ELECD 821; in Nafziger, A.R. James; Ross, F. Stephen (eds), "Handbook on International Sports Law" (Edward Elgar Publishing, 2011)

Book Title: Handbook on International Sports Law

Editor(s): Nafziger, A.R. James; Ross, F. Stephen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847206336

Section: Chapter 12

Section Title: Competition Law and Labor Markets

Author(s): Ross, Stephen F.

Number of pages: 28

Extract:

12 Competition law and labor markets
Stephen F. Ross



1. INTRODUCTION
Shortly after the first professional sports league (Baseball's National League) was created
in 1876, and years before enactment of the Sherman Antitrust Act, baseball's founders
openly admitted that the principal justification for agreements among clubs to restrain
competition for players was the desire to hold down salaries and increase profits. After the
enactment of federal legislation subjecting antitrust violators to liability for treble
damages, baseball officials changed their tune, arguing that labor restraints were essential
to promote competitive balance among the teams.1 Since then, there has been an ongoing
debate about the proper application of competition law to labor market restraints.2
Competition law can constrain the ability of sports leagues to restrain trade in the
market for player services. Many sports leagues have market power in both labor and
output markets. Where such power exists, restraining competition inter sese is likely to
yield monopsony profits. Imposing contract terms that limit the ability of players to be
employed elsewhere has the potential to exclude a sports league's potential rivals. Even if
these schemes harm the consumer attractiveness of their product, the lack of reasonable
substitutes for sports fans means that `market retribution will [not] be swift.'3
At the same time, well-organized sports competitions may find that imposing some
fetters on a wholly competitive labor market improves the quality and public appeal of
their product. Courts have accepted the potential need to restrain trade ...