Tuesday, August 28, 2012

Arbitral Rejection of Soccer Promoter’s Antitrust Claim Confirmed, Suit Fails

This posting was written by E. Darius Sturmer, Editor of CCH Trade Regulation Reporter.

An arbitral decision resolving an antitrust suit brought by a defunct soccer match promoter against the United States Soccer Federation (USSF) and Major League Soccer (MLS) in the defendants’ favor was enforceable and was, therefore, confirmed by the federal district court in Chicago. The defendants’ motions to exclude crucial expert testimony and for summary judgment on the antitrust claim also were granted.

The suit claimed that the USSF—the association recognized by the sport’s international governing body, Fédération Internationale de Football Association (FIFA), as the entity responsible for regulating men's soccer in the United States—had engaged in an unlawful antitrust conspiracy with MLS by charging excessive sanctioning fees to the promoter for soccer exhibitions involving international teams and by requiring it to obtain unreasonable performance bonds.


The arbitral decision, reached by a standing committee of FIFA that acted as its dispute resolution body, found that under FIFA statutes and regulations:

(1) USSF had the authority to require matches between foreign national or club teams on U.S. soil to be sanctioned by it;

(2) USSF had the right to charge sanctioning fees for such matches and require the posting of a bond securing those fees; and

(3) USSF had the right to notify FIFA if a FIFA-licensed match agent refused to pay its sanctioning fees or post performance bonds in connection with such games.
The arbitral award did not fall outside of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the court said, because the relevant commercial relationship was not entirely between citizens of the United States, given the necessary involvement of FIFA in the matter. Not only had FIFA issued the match agent license underlying the contracts at issue, but it also had a broad stake in the relationship, the court noted. The federal court was a proper venue in which to confirm the award, pursuant to the forum selection clause in the governing arbitration agreement.

The court rejected arguments by the plaintiff promoter that it was unable to present its case due to alleged discovery violations by USSF, that the arbitral procedure was not in accordance with the laws of the country where the arbitration took place because review was not de novo, and that enforcement of the decision would have violated public policy.

Summary Judgment

The promoter’s antitrust claim could not survive summary judgment because it failed to introduce sufficient evidence in support of its market definition, the court determined. The plaintiff’s market definition largely rested on expert testimony that was inadmissible, the court explained. With that testimony excluded, the promoter failed to carry its burden on the threshold requirement of demonstrating a cognizable relevant market and concomitant market power in the defendants.

The promoter’s market definition expert opined that the relevant market in the case was the promotion of men’s professional, first-division, international soccer matches in the United States. However, the testimony was unreliable and unhelpful in its analysis of both its product and geographic market dimensions. Too great a gap in logic existed between the regression analysis conducted by the expert measuring the effect of a nearby soccer match on attendance at a Major League Baseball game in order to delineate the markets for those products and the conclusions the expert purported to draw from that test, in the court’s view.

As the expert himself noted, other sports and non-sport entertainment were imperfect substitutes for a particular sporting event. Given the considerably smaller size of soccer’s fan and financial base as compared to baseball’s, the expert should have tested substitutability from the perspective of soccer fans rather than baseball fans, namely by measuring whether an increase in the price of soccer match tickets would lead consumers to select other entertainment events.

Further, the expert’s identification of "practical indicia" that a separate market or submarket existed was not sufficiently thorough. It was indisputable that his market definition opinion rested almost entirely on his conclusion that MLS and its marketing affiliate, USSF, and the complaining promoter thought that MPFI match promotion was a separate market. Where an expert focused almost entirely on evidence that an industry recognized a submarket, courts had excluded their testimony as unreliable.

In addition, the geographic scope of the market alleged in the suit—the United States—was not sufficiently coherent from both the supply and demand sides, the court remarked.

The decision is ChampionsWorld, LLC v. United States Soccer Federation, Inc., 2012-2 Trade Cases ¶78,023.

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