The notorious saga first became famous in 2004 when American Needle, Inc. sued the N.F.L. The suit stems from a 2000 decision by the N.F.L. to enter into an exclusive apparel trademarking and manufacturing contract with Reebok for headgear, thereby ending American Needle’s 20-year tenure as a vendor for the N.F.L. This infuriated American Needle because, in their history, the N.F.L. had always granted nonexclusive contracts to companies like American Needle. They argued that the exclusive contract with Reebok violated the “Sherman Act’s prohibition on any ‘contract, combination or conspiracy in restraint of trade.’” Essentially, American Needle alleged that the 32 N.F.L. teams conspired together to reach an exclusive deal with Reebok because the teams make up 100% of the market power.
The case made its way all the way to the Supreme Court in 2010, which held that the N.F.L. was made up of 32 different that are considered 32 independent businesses and therefore are subject to antitrust regulation under Section One of the Sherman Act. The Court rejected the N.F.L.’s plea that it be granted broad antitrust immunity and ruled that while the teams have certain common interests, they are separate entities interested in profit maximization. The Supreme Court remanded the case and in 2014 a U.S. District Court rejected the N.FL.’s motion for summary judgment, setting the stage for a heated trial. This decision was largely due to the evidence that American Needle submitted showing that the wholesale prices of hats rose significantly shortly after Reebok’s exclusive contract came to fruition.
Based upon the continued ligation and American Needle’s win, all signs pointed to an antitrust trial. However, most unceremoniously, it was announced recently that American Needle agreed to settle their lawsuit against the N.F.L. The settlement agreement was not disclosed and we may never know the terms, but it is likely that the N.F.L. will be paying a large sum of money to American Needle. While the decision to settle is understandable, many people are disappointed. The case would have set precedent for many antitrust lawsuits involving sports leagues that involve very similar issues; both the National Hockey League and Major League Baseball are under similar antitrust scrutiny. Because there will be no trial, sports leagues are free to continue issuing similar contracts that resemble consorted efforts. Because practices remained largely unchanged since American Needle’s initial win, another trial was desperately needed.