Sports Organizations Must Prove Market Share in Antitrust Cases

A recent ruling by the U.S. Court of Appeals for the Sixth Circuit has set a high standard for demonstrating market share for sports organizations that bring lawsuits alleging anti-competitive practices. This ruling in Kentucky Speedway v. NASCAR means plaintiffs must define the relevant market with sound economic evidence supported by expert testimony. "Even where the relevant market appears obvious, with clear anticompetitive effects on customers and markets, simply stating this will not be enough," says Michael S. Denniston, a partner in the Antitrust and Competition practice group at Bradley Arant Boult Cummings LLP (Birmingham, Ala.). "Plaintiffs will now be held to a rigorous, expert-driven market definition." Kentucky Speedway v. NASCAR involved allegations by Kentucky Speedway (KYS) against NASCAR that the stock car organization violated antitrust laws both by not sanctioning a premiere Sprint Cup race at KYS's racetrack, and by preventing KYS from purchasing other tracks that already hosted a Sprint Cup race. The suit further alleged NASCAR favored another racetrack company, ICS, in sanctioning Sprint Cup races. NASCAR's owners have an ownership stake in ICS. "The Sixth Circuit ultimately ruled against KYS, finding fault with the evidence of relevant market that it provided," says Denniston. "Specifically, it found that the expert's evidence establishing relevant market was unacceptable because it was not peer reviewed, accepted by the relevant community, or capable of being tested." Adds Denniston, "What this case means for both plaintiff and defendant sports organizations is that they must give substantial thought not only to the appropriate relevant market definition, but also to the expert testimony that will support it. Parties on both sides should be wary of proceeding without expert testimony on the market definition issue."

Denniston noted further that while this case involved stock car racing, it has an impact on competition issues for sports law in general. "In reaching its ruling, the Kentucky Speedway court extended the analysis of other courts that had addressed market definition issues in other sports, including college basketball, professional basketball, and professional hockey. " Denniston is available to discuss the impact of Kentucky Speedway v. NASCAR on antitrust suits involving sports organizations. [02/03/2010]