In the latest attempt to end Major League Baseball’s historical exemption from federal antitrust law, Rep. Jeff Duncan (R-South Carolina) introduced a bill on Wednesday that explicitly declares “professional baseball clubs shall not be exempt from antitrust laws.” Regardless of the proposal’s future, it may prove an obstacle to negotiations of MLB’s collective bargaining agreement, which is set to expire in December.
Duncan’s bill has 29 cosponsors, all Republicans, and comes on the heels of MLB’s decision to move the 2021 All-Star Game from Atlanta to Denver in response to a controversial new Georgia voting law. One of the cosponsors is Congressman Burgess Owens (R-Utah), who is a retired NFL player. Sen. Mike Lee (R-Utah) has introduced a companion bill in the Senate. Joining Lee as cosponsors are Senators Ted Cruz (R-Florida), Josh Hawley (R-Missouri), Marco Rubio (R-Florida) and Marsha Blackburn (R-Tennessee).
“Major League Baseball,” Duncan expressed in a statement obtained by Sportico, “has enjoyed constitutionally questionable antitrust protections for a century, yet it has decided to act in a partisan manner by punishing the state of Georgia for completely reasonable voter integrity and election security legislation.” He added: “Commissioner Manfred’s decision was ill-advised and will cost Atlanta small businesses, many of which are minority-owned, around $100M in economic activity . . . this is just the latest in a wave of corporate decisions to ‘Go Woke.’”
As explained in Sportico, MLB’s exemption was created by the U.S. Supreme Court in the 1922 case Federal Baseball Club v. National League and narrowed by Congress and President Bill Clinton in the Curt Flood Act of 1998.
The exemption enables MLB and its teams to conspire in ways that might otherwise run afoul of antitrust law. Teams are competing businesses. Absent an exemption from antitrust law, businesses can’t collude in ways that unduly restrain how each competes. For example, if rival gas stations or leading airlines coordinated their prices, they’d likely be participating in illegal acts.
While MLB’s exemption no longer permits teams to collectively suppress player wages, it remains in place for pacts concerning minor league baseball, the amateur draft, franchise relocation, ownership sales, umpire-league matters and the licensing of intellectual property rights.
To illustrate the significance of the exemption, consider when MLB teams agree to cap minor league players’ salaries. They are engaging in wage fixing. Similarly, when MLB teams agree to restructure the minor leagues, they are partaking in market allocation. And when they block a club from moving to a new city, they are restraining economic activity in geographic areas. Whether any of those activities violates antitrust law would require judicial scrutiny. The point of Duncan’s bill is that MLB, like other businesses and pro leagues, ought to be subject to such scrutiny.
Duncan’s proposal is tied to his objection to MLB moving the All-Star game from Atlanta. Over the last two decades, other members of Congress have proposed similar legislation for different political reasons.
For example, in 2001, Rep. John Conyers (D-Michigan) and Sen. Paul Wellstone (D-Minnesota) introduced a bill that would have stripped MLB of its exemption. Their motivation: punish MLB owners for voting to eliminate two MLB clubs, thought at the time to be the Montreal Expos and the Minnesota Twins. The bill didn’t advance and neither the Expos nor the Twins were contracted (a few years later, the Expos relocated to Washington D.C. and became the Nationals).
A loss of MLB’s historical antitrust exemption would relegate baseball’s antitrust status to that of three other major leagues—the NBA, NFL and NHL. Through the Sports Broadcasting Act of 1961, all four leagues enjoy a separate exemption from antitrust law. The exemption overrides court rulings that had declared illegal the pooling of broadcasting rights by competing NFL teams into a national TV contract. The Sports Broadcasting Act instructed that those deals are legal, provided they concern free, over-the-air games. That law therefore doesn’t immunize leagues’ national TV deals with ESPN, DirecTV, league-owned cable channels or streaming services from antitrust scrutiny.
Even if Duncan’s bill fails to become law, it could spark Congressional hearings that prove disruptive for MLB—especially since MLB’s collective bargaining agreement with the MLBPA will expire on Dec. 1. Congress can conduct investigations and use the subpoena power to compel witness testimony and disclosure of sensitive financial documents. Information gathered through a Congressional investigation could influence bargaining between MLB and MLBPA and shape public opinion on which side is “in the right” in what could become a labor dispute.