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A new lawsuit is challenging MLB’s antitrust exemption

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It’s about time this exemption was relegated to the dustbin of history.

Al Yellon

Major League Baseball has been exempt from federal antitrust laws for over a century, when the Supreme Court concluded, in the 1920 case Federal Baseball Club vs. National League, that baseball was not “interstate commerce.”

On its face that conclusion was ridiculous 101 years ago and it’s ludicrous now, when the entity known as Major League Baseball has multiple tentacles that stretch across state lines. (Note, I am not a lawyer, but I’m guessing most lawyers would agree with my contention here.)

Many efforts have been made over the years since the Federal Baseball case (incidentally, our SB Nation Washington Nationals site takes its name from that case) to strike down this exemption — which exists for no other professional sport — but all have failed.

Now, a lawsuit is being filed on behalf of four minor league teams, former MLB club affiliates, challenging MLB’s reorganization of the minor leagues:

The teams — former affiliates of the New York Yankees, Houston Astros, San Francisco Giants and Detroit Tigers — said this was a horizontal agreement between the MLB and its 30 franchises that violates the Sherman Act.

According to the complaint, big league baseball teams are meant to compete with one another for affiliations with the minor league outfits that feed them players. By conspiring to reduce that competition pool, the minor league teams alleged, the MLB and its teams effectively engaged in a group boycott in order to cut costs.

You get the idea, even though “the MLB” is not a thing.

As noted above, this could represent a challenge to MLB’s antitrust exemption:

The 33-page complaint argued that the move, announced last year, was a “naked, horizontal agreement to cement MLB’s dominance over all professional baseball,” and possibly set the stage for the U.S. Supreme Court to reconsider a 1922 decision holding that baseball leagues were not subject to the Sherman Act.

As we have noted here at BCB a number of times, including here, here, here and here, and the general consensus was that it wasn’t good for the minor leagues, and largely that’s turned out to be true. In all, 42 minor league team affiliations were eliminated, though some of those clubs wound up in independent leagues or in newly-created summer college leagues, and in the end the number of players in MLB organizations was reduced. Sure, MLB teams are now paying minor leaguers more — but that’s mostly because there are fewer of them.

In the first linked BCB article above, from November 2019, I posted this quote from an unnamed major league official, in an article by Bill Madden in the New York Daily News:

“I don’t see any way we can do something like this,” a major league official told me. “My God, we’ll be sued all over the place from these cities that have built or refurbished ballparks with taxpayer money, and this will really put our anti-trust exemption in jeopardy. It’s crazy.”

Welp. Looks like that’s happening now, and perhaps the antitrust exemption really is in jeopardy. I hope so — that exemption has hurt baseball players for over 100 years. It’s time for it to come to an end. This brief history of the antitrust exemption was written here by Sara Sanchez in December 2019, if you’d like more detail, and if you’d like to read the entire legal complaint from the new lawsuit noted in this article, click here.

As always, we await developments, and assuming this case comes to trial, the developments should be interesting indeed.