Thursday, April 18, 2013

Pennsylvania governor's antitrust lawsuit is without merit and illustrates the "antitrust standing" requirement.

Oral argument is set for May 1, 2013, in Pennsylvania governor Tom Corbett's antitrust lawsuit against the NCAA. The oral argument is over a motion to dismiss, filed by the NCAA against the governor's claim. Corbett is seeking to overturn and remove the penalties levied against Penn State University in connection with the Jerry Sandusky sex-abuse scandal. Penn State signed a consent decree with the NCAA, so it is interesting that the governor is bringing suit. Simply put, Corbett's lawsuit has virtually zero chance of success. In fact, I would be surprised if it is not dismissed after May's oral argument.

I discussed antitrust standing in a previous post. It is hard to see how the governor would have standing to bring the suit in the first place. To have standing, the governor must have suffered an antitrust injury due to anticompetitive conduct. The state must have suffered the type of injury that the antitrust laws were designed to prevent. Corbett argues that the NCAA's penalties against Penn State are anticompetitive. For a multitude of reasons, Corbett's argument has no merit.

For one, the antitrust laws protect competition, not competitors. In the context of collegiate athletics, Penn State is a "competitor." Harming Penn State does not harm other schools. Second, Penn State would seemingly have to bring the lawsuit, not the governor. Even though Penn State is a state-funded institution, it is hard to fathom how the governor is harmed by the penalties that must be paid by the athletic department. Third, consent decrees are valid and enforceable in court. Fourth, the NCAA is a single-entity that promulgates rules for effective competition. In order for an antitrust violation here, concerted action would be needed. "Concerted action" requires multiple entities. So, it would have to be other schools that made the decision to penalize Penn State, which is not true. The NCAA levied the penalties against Penn State. The NCAA is pretty clearly a separate entity from the schools that comprise its membership.

This would not be the first time the governor has been opportunistic. Eight days before Jerry Sandusky was indicted, he and his staff rented hotel rooms in State College, so he could be front-and-center when the Sandusky story broke. So, bringing a lawsuit without merit is about par for the course for him.

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