September 12, 2012

U.S. Soccer Federation Scores Summary Judgment On Antitrust Claims

Judge Harry Leinenweber of the U.S. District Court for the Northern District of Illinois has granted the United States Soccer Federation and Major League Soccer summary judgment on antitrust claims that they conspired to drive promotion company ChampionsWorld out of business.

The U.S. Soccer Federation represents American soccer on the international scale through the U.S. Olympic Committee and the Fédération Internationale de Football Association (“FIFA”).  One of the U.S. Soccer Federation’s functions is organizing a national professional soccer league, and since 1994 it has relied on Major League Soccer to maintain the teams and ticket sales.   

ChampionsWorld worked to promote international teams by organizing matches for an American audience.  However, the U.S. Soccer Federation only sanctioned matches between the teams if ChampionsWorld and other promoters of international soccer paid allegedly high fees and bonds.

The U.S. Soccer Federation did offer lower sanctioning fees, but only if the international match was accompanied with an MLS match as a double header.  

Although ChampionsWorld filed its complaint in ChampionsWorld LLC v. United States Soccer Federation Inc. et al. in 2006, the Court granted a motion to stay the case so it could be arbitrated in two different international sports organizations.

FIFA’s Players’ Status Committee and the Switzerland based Court of Arbitration for Sport  both concluded that under FIFA’s standards, the U.S. Soccer Federation does have the right to sanction and charge fees for the international matches played in the U.S.

In addition to confirming the arbitral award, Judge Leinenweber ruled ChampionsWorld failed to state the relevant product and geographic markets necessary for an antitrust claim.

The court rejected the testimony of plaintiff’s expert, University of Michigan professor Rodney Fort, who suggested that the closest product substitute for the international soccer matches was Major League Baseball.  The court noted that “[s]occer has a smaller fan and financial base in the United States than, baseball. Given this differentiation, Fort should have tested substitutability from the perspective of soccer fans rather than baseball fans.”

The court also rejected Fort’s definition of the relevant geographic market as national, not local.  The court faulted the plaintiff’s expert’s heavy reliance on the distribution of games, which is done on a nationwide basis.  The court held that a market’s geographic scope “must be studied from both supply and demand sides,” and that the “ultimate customers” are the ticket buyers, who “make their entertainment choices locally.”

Categories: Antitrust Litigation

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