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Department of Justice Takes Aim at MLB’s Immunity From Antitrust Law

Department of Justice Takes Aim at MLB’s Immunity From Antitrust Law

It’s open season on Major League Baseball’s century-old exemption from antitrust law.

In a filing siding with three former minor league teams suing the MLB, the Department of Justice on Wednesday urged a federal court to limit the scope of the baseball’s carveout to “conduct that is central to the offering of professional baseball exhibitions.” The Justice Department called the exemption “aberrational,” claiming it “does not rest on any substantive policy interests that justify players and fans losing out on the benefits of competition.”

Baseball’s immunity from antitrust law — the only professional league to be conferred such a status — is a recurring source of contention and litigation. In March, Sen. Bernie Sanders introduced legislation that would eliminate it. This followed Republican lawmakers introducing last year a similar bill in Congress that’s still being considered.

The exemption effectively locks teams into the cities they’re based in unless they consult the league on relocating. It also suppresses salaries for minor league players by preventing them from pursuing opportunities in other leagues.

The suit the Justice Department weighed in on was brought by teams that were ousted when the MLB orchestrated an agreement allegedly in violation of antitrust law to eliminate their affiliation with 43 minor league teams. They claimed the consolidation of the minor leagues was nothing less than a “naked, horizontal agreement to cement MLB’s dominance over all professional baseball.” MLB’s franchises are supposed to compete against each other, but they collectively decided to boycott the teams, according to the complaint.

On dismissal, the MLB relied on its exemption from antitrust laws, among other arguments. “Plaintiffs’ claim should be dismissed because it is plainly barred by baseball’s exemption from the antitrust laws, first recognized by the Supreme Court 100 years ago and now effectively codified by Congress with respect to the minor league relationships at issue here,” reads the motion.

The Justice Department, however, questioned whether baseball’s immunity from antitrust law should remain in place amid courts’ increasingly skeptical view of the carveout for the league. It pointed to the Supreme Court last year recognizing that the exemption is an “exception and an anomaly” and an “aberration confined to baseball.” Exemptions for other sports, including the National Football League and International Boxing club, have been rejected.

Federal prosecutors urged lower courts, in this case a federal court in New York, to narrowly interpret the exemption to the “business of baseball.”

The exemption came under renewed scrutiny with the high court’s opinion in an antitrust lawsuit against the National Collegiate Athletic Association. In what may signal the Supreme Court’s willingness to eliminate the carveout for baseball, Justice Neil Gorsuch wrote, “Whether an antitrust violation exists necessarily depends on a careful analysis of market realities… If those market realities change, so may the legal analysis.”

The MLB and the Advocates for Minor Leaguers didn’t immediately respond to requests for comment.

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