ADIDAS ANTITRUST CLAIM AGAINST NCAA DISMISSED.
Adidas America's unsuccessful motion for a preliminary injunction against
enforcement of an NCAA bylaw regulating the size of logos on player uniforms was
discussed in Volume 2, Issue 1. The case returned to the district court on the NCAA's
motion for judgement on the pleadings.
Adidas contracts with NCAA member institutions and their coaches to
advertise and promote Adidas' products. Pursuant to these contracts Adidas provides cash,
free or discounted shoes and apparel, and other goods and services to a school's teams,
coaches, or athletic program. In exchange Adidas obtains promotional rights, the most
important of which is the teams' or coach's agreement to wear Adidas' trademarked apparel
in competition, practice and other athletic activities. The association of an apparel
manufacturer's brand with a particular team, athlete or coach serves to authenticate the
brand as a high quality product that serves the high performance needs of college
athletics.
Adidas sued the NCAA claiming that it illegally restricts the sales of
such promotional rights through the enforcement of Bylaw 12.5.5 which limits the amount of
advertising that may appear on a student-athlete's uniform and equipment during
intercollegiate competition. Specifically, Adidas claimed that the NCAA unreasonably
restrained trade and engaged in a group boycott in violation of §1 of the Sherman Act and
attempted to monopolize trade in violation of §2.
As the court explained, the first step in antitrust analysis is to
define the relevant market or markets allegedly restrained by defendant's conduct. Because
it includes its own products as well as all reasonable substitutes, Adidas had to allege a
relevant market that includes all advertising vehicles that are reasonably interchangeable
with NCAA promotional rights on athletic apparel.
In regard to its §1 claim, Adidas proposed three possible relevant
markets: (1) the market for the sale of promotional rights by institutions or on their
athletic apparel and footwear used in connection with NCAA controlled athletics; (2) the
market for the sale of college uniforms and related athletic apparel and footwear; and (3)
the market for the sale of athletic apparel and footwear to the general public. In regard
to its §2 claim Adidas alleged that the relevant market was the market for the sale of
NCAA promotional rights.
Adidas alleged that there are "no other vehicles that are
interchangeable with NCAA promotional rights on athletic apparel used in intercollegiate
competition." However, while Adidas demonstrated that such rights are an excellent
advertising vehicle, it could not properly allege that such rights were themselves a
relevant market for antitrust purposes. Specifically, Adidas failed to demonstrate why
other similar forms of advertising (e.g., sponsorship with professional leagues or the
Olympics) are not reasonably interchangeable with NCAA promotional rights. Also Adidas
could not explain why such alternative sponsorships would not successfully achieve Adidas'
goals of enhancing and authenticating its brand name. Therefore, the court concluded that
the market for the sales of NCAA promotional rights is not an appropriate relevant market
for antitrust purposes under §1 or §2. Regarding Adidas' claims that the market for
apparel and footwear to consumers (i.e. the market for the sale of sports merchandise) is
a restrained relevant market, the court found that Adidas never presented any factual
allegations to demonstrate how Bylaw 12.5.5 caused it injury in this alleged market.
Because Adidas could not show the requisite anticompetitive effect in a
properly defined relevant market, and its antitrust claims against the NCAA could not be
supported, the court granted the NCAA's motion for judgement on the pleadings.
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You Make the Call. . . Index
"You Make The Call..." is a newsletter published four times per year (spring,
summer, fall, winter) by the National Sports Law Institute of Marquette University Law
School, PO Box 1881, Milwaukee, Wisconsin, 53201-1881. (414) 288-5815, fax (414) 288-5818,
munsli@vms.csd.mu.edu. (www.marquette.edu/law/sports/call.html).
This publication is distributed via fax and email to individuals in the sports field upon
request.
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Editorial Staff:
Paul M. Anderson, Editor & Designer
Kirsten Hauser, Associate Editor
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Copyright © 1999 -- All rights reserved.
