Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases Chicago Bd. of Trade v. United States, 246 U.S. 231 (1918) 1

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases National Soc'y of Prof'l Eng'rs v. United States, 435 U.S. 679 (1978) 2

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979) 3

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases NCAA v. Board of Regents, 468 U.S. 85 (1984)  Facts " NCAA Football Television Plan“  Nearly 600 institutional members of NCAA (including all "major" football powers) agreed to market all of the broadcasting rights to their football games through the NCAA  With very limited exceptions, NCAA members may sell broadcast rights to their games only to ABC, CBS and TBS.  ABC and CBS share exclusive first rights to negotiate with NCAA members regarding the live broadcast of football games  14 “live” exposures per season per network for "minimum aggregate compensation" of $131,750,000 over the four-year contract period  Networks to negotiate individually with schools and to pay schools for broadcasting rights  Any shortfall in payments to schools against minimum to be paid to NCAA  Schools limited to a maximum of six appearances every two years, with a maximum of four the first year and five the second. Appearances must be divided evenly between ABC and CBS  During 1982 and 1983, TBS permitted to broadcast over its Atlanta superstation 19 games not selected by ABC or CBS for a minimum aggregate compensation of $17,696,000 Effect  Limited number of games broadcast  Limited number of times a school could appear Proffered justifications  Intended to reduce the adverse effects of live television upon football game attendance.by limiting the number and distribution of games broadcast  Preserve competitive balance among football teams 4

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases NCAA v. Board of Regents, 468 U.S. 85 (1984) (con’t)  Held, Clear “restraint of trade”: Rules limited members’ freedom to negotiate and enter into their own television contracts Has usual per se characteristics  Horizontal agreement  Reduces output (measured by number of games broadcast)  Sets prices (minimum floors become ceilings) But per se rule not applicable  Horizontal restraints on competition are essential if the product (college football) is to be produced at all  Justifications for general NCAA rules have superficial plausibility in achieving arguably legitimate goals  Lack of judicial experience with this type of arrangement in context Violates rule of reason  Restraint on price and output → presumption of unreasonableness  Both prices and quantity unresponsive to consumer preferences (e.g., viewer demand)  Schools lose freedom to market their product to suppliers of their choosing and on own terms  Requires a competitive justification—”Heavy burden”  No market power justification rejected—both factually and legally irrelevant  BMI/cooperative joint venture justification rejected—does not create a new product or service  Adverse effect on game attendance—rejected as factually unsupported  Competitive balance among teams—rejected as “"not even arguably tailored” to serve this interest  TV plan reduces TV output (measured in number of games broadcast) → not procompetitive within meaning of antitrust laws even if plan promotes athletic balance 5

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases FTC v. Indiana Federation of Dentists, 476 U.S. 447 (1986) 6

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases California Dental Ass'n v. FTC, 526 U.S. 756 (1999) 7

Antitrust Law Fall 2014 Yale Law School Dale Collins Rule of Reason Cases FTC v. Actavis, Inc., 133 S. Ct (2013) 8