Antitrust and Unfair Competition Law

Competition: Spring 2015, Competition Vol. 24, No. 1

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THE BASEBALL EXEMPTION: AN ANOMALY WHOSE TIME HAS RUN

Philip L. Gregory and Donald J. Polden1

Both the United States District Court for the Northern District of California and the Ninth Circuit recently upheld the time-worn "baseball exemption" in a case filed by the City of San Jose2 that concerned its efforts to attract the Oakland A’s professional baseball team to a new stadium in downtown San Jose.3 Both decisions were fundamentally premised on the 1922 decision of the United States Supreme Court, Federal Baseball Club v. National League4 a decision decided on the now defunct argument that the business of baseball is an entirely intrastate affair. As Justice Oliver W. Holmes wrote, "the business is giving exhibitions of base ball, [sic] which are purely state affairs" and therefore not in interstate commerce notwithstanding "the fact that . . . the Leagues must induce free persons to cross state lines."5 A product of a bygone era, Federal Baseball is the most widely criticized of the Supreme Court’s antitrust decisions. Justice Harry Blackmun referred to the baseball "exemption" as an "anomaly" and "aberration," writing that "[w]ith its reserve system enjoying exemption from the federal antitrust laws, baseball is, in a very distinct sense, an exception and an anomaly."6 Justice Douglas added that "[t]his Court’s decision in Federal Baseball Club. . . is a derelict in the stream of the law that we, its creator, should remove."7

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The so-called "exemption"8 from the reach of the antitrust laws continues today even through it has been acknowledged by a majority of the Supreme Court justices in another opinion as "unrealistic, inconsistent, or illogical."9 "[W]ere we considering the question of baseball for the first time upon a clean slate, we would have no doubt[ ]" that professional baseball would be subject to the federal antitrust laws.10 In fact, professional baseball is the only sport—amateur, professional, collegiate—that is exempt from the reach of the nation’s competition laws.11

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