Second Circuit Finds Binding Trade Agreement Itself Sufficient To Allege Concerted Action
Antitrust Litigation
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  • Second Circuit Finds Binding Trade Agreement Itself Sufficient To Allege Concerted Action

    On March 7, 2023, the United States Court of Appeals for the Second Circuit vacated and remanded the lower court’s dismissal of Relevant Sports, LLC’s (“Plaintiff”) claim that United States Soccer Federation, Inc. (USSF) and Fédération Internationale de Football Association (FIFA) (“Defendants”) violated Section 1 of the Sherman Act’s prohibition on unreasonable restraints of trade.  Relevant Sports, LLC v. United States Soccer Federation, Inc., 2023 WL 2375884 (2d Cir. Mar. 7, 2023).  The Second Circuit held that where an association rule itself is the alleged anticompetitive agreement challenged, the existence of a binding association rule is sufficient direct evidence of concerted action to survive a motion to dismiss for failure to state a claim under Section 1 of the Sherman Act.  Plaintiff “need not allege an antecedent agreement to agree” to move forward on its antitrust claim.

    Plaintiff, a U.S.-based soccer promoter, alleged that Defendants USSF and FIFA, two governing bodies of soccer, adopted and enforced a geographic market division policy that prohibited soccer clubs from playing official games outside of their home territory, in violation of Section 1 of the Sherman Act.  Specifically, Plaintiff alleged that the policy:
    1. Is part of FIFA’s rules and regulations with which all national associations, including USSF and its members, must comply;
    2. Requires match organizers, like Plaintiff, to obtain national association, and consequently FIFA, approval before organizing matches in the U.S. between FIFA-sanctioned soccer clubs from other countries;
    3. Has prevented Plaintiff from hosting official season games in the U.S. for clubs from international soccer leagues; and
    4. Is an agreement among direct competitors to restrain competition.
    The lower court took issue with Plaintiff’s final argument that the policy itself established that Defendants had entered into an agreement to restrain competition and found that Plaintiff needed to plead facts sufficient to show that Defendants agreed to enact the policy.  The Second Circuit, however, disagreed, finding that the lower court misapplied the reasoning established in N. Am. Soccer League v. U.S. Soccer Fed’n, 883 F.3d 23 (2d Cir. 2018) (“NASL”).  The Second Circuit explained that, like in NASL, where “the plaintiff alleges that a policy or rule is in service of a plan to restrain competition, then it must allege enough additional facts to show that agreement to such a plan exists.”  Relevant, 2023 WL 2375884, at *5.  However, where Plaintiff alleges that the policy or rule is itself the agreement to restrain competition, then no further proof is necessary.

    The Second Circuit concluded that the policy in Relevant fell into this second category and that it was therefore not necessary for Plaintiff to allege an antecedent agreement to enter into the policy.  The Second Circuit reasoned that “the adoption of the policy, combined with the member leagues’ prior agreement, by joining FIFA, to adhere to its policies, constitutes an agreement … to adhere to the announced restriction on competition.”  Thus, it did not matter whether USSF voted in favor of the policy or not.  Id.  Because USSF, by joining FIFA, “surrendered” itself to the control of FIFA and its policies, Plaintiff’s allegations of a binding association rule designed to prevent competition constituted “direct evidence of concerted action.”  Id. (emphasis in original).

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