Opinion ID: 195635
Heading Depth: 2
Heading Rank: 2

Heading: Ancillary Benefits

Text: The NFL next argues that even if its public ownership policy injures competition in a relevant market, it should be upheld as ancillary to the legitimate joint activity that is NFL football and thus not violative of the Sherman Act. We take no issue with the proposition that certain joint ventures enable separate business entities to combine their skills and resources in pursuit of a common goal that cannot be effectively pursued by the venturers acting alone. See, e.g., Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979). We also do not dispute that a restraint that is ancillary to the functioning of such a joint activity -- i.e. one that is required to make the joint activity more efficient -- does not necessarily violate the antitrust laws. Broadcast Music, 441 U.S. at 23-25; Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, -22- at 223-24 (D.C. Cir. 1986), cert. denied, 479 U.S. 1033 (1987); see also Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 295-96 (1985). We further accept, for purposes of this appeal, that rules controlling who may join a joint venture can be ancillary to a legitimate joint activity and that the NFL's own policy against public ownership constitutes one example of such an ancillary rule. Finally, we accept the NFL's claim that its public ownership policy contributes to the ability of the NFL to function as an effective sports league, and that the NFL's functioning would be impaired if publicly owned teams were permitted, because the short-term dividend interests of a club's shareholder would often conflict with the long-term interests of the league as a whole. That is, the policy avoids a detrimental conflict of interests between team shareholders and the league. We disagree, however, that these factors are sufficient to establish as a matter of law that the NFL's ownership policy does not unreasonably restrain trade in violation of 1 of the Sherman Act. The holdings in Broadcast Music, Rothery Storage, and Northwest Stationers, do not throw the rule of reason out the window merely because one establishes that a given practice among joint venture participants is ancillary to legitimate and efficient activity -- the injury to competition must still be weighed against the purported benefits under the rule of reason. See, e.g., Broadcast Music, 441 U.S. at 24 (holding only that a particular ancillary restraint did not constitute a per se -23- violation of the Sherman Act and remanding for a determination of the case under a rule of reason analysis); Northwest Stationers, 472 U.S. at 293-98 (same); see also SCFC ILC, Inc. v. Visa U.S.A. Inc., 819 F. Supp. 956, 979-80 (D.Utah 1993) (finding that the existence of a joint venture may save a restraint from per se illegality but not from the normal rule of reason scrutiny). One basic tenet of the rule of reason is that a given restriction is not reasonable, that is, its benefits cannot outweigh its harm to competition, if a reasonable, less restrictive alternative to the policy exists that would provide the same benefits as the current restraint. L.A. Coliseum, 726 F.2d at 1396. The record contains evidence of a clearly less restrictive alternative to the NFL's ownership policy that would yield the same benefits as the current policy. Sullivan points to one proposal to amend the current ownership policy by allowing for the sale of minority, nonvoting shares of team stock to the public with restrictions on the size of the holdings by any one individual. Dividend payments, if any, would be within the firm control of the NFL majority owner. Under such a policy, it would be reasonable for a jury to conclude that private control of member clubs is maintained, conflicts of interest are avoided, and all the other benefits of the NFL's joint venture arrangement are preserved while at the same time teams would have access to the market for public investment capital through the sale of ownership interests.