Fanatics and Major League Baseball Antitrust Conspiracy Class Action

This antitrust class action, about the licensed merchandise of major league baseball teams, echoes another about the licensed merchandise of NFL football teams. The defendants here are the Office of the Commissioner of Baseball (or Major League Baseball) (MLB), Major League Baseball Properties, Inc., the major league teams, and Fanatics, Inc. It contends that they have entered into agreements that limit competition for sales of MLB-licensed merchandise on third-party online marketplaces (TPOMs) such as Amazon.

The class for this action is all entities or persons in the US, its territories and the District of Columbia prohibited from selling MLB licensed products through TPOMs or directly to Amazon for resale, due to MLB’s TPOM policy or similar policies, between January 1, 2016 and the time when the unlawful conduct stops.

The complaint alleges, “MLB, Fanatics, and certain horizontally competing licensees and retailers have entered into various agreements that serve to severely limit Fanatic’s and Defendants’ competition from TPOMs. These agreements violate the antitrust laws.”

The complaint alleges, “MLB aids and abets Fanatics because it has invested more than $50 million in Fanatics… As Fanatics’s value grows, so does the value of MLB’s equity share in Fanatics.” And with the Amazon TPOM having “approximately 41 percent of the market share for e-commerce,” the complaint says, it was “a logical candidate to target for Fanatics’s growth at the expense of” smaller retailers.

Fanatics so dominates the market for licensed MLB merchandise at Amazon and other TPOMs, that the complaint alleges that “at least five licensees have agreements with Fanatics … that mandate that the licensee not sell to entities that will sell the products on or to Amazon as well as to certain online retailers. Some of these agreements go so far as to mandate that the licensees’ products be sold only to Fanatics, or else the licensees’ licenses would be revoked.”

How did Fanatics get to be so powerful? The complaint claims that MLB has “recently implemented restrictions that prohibit competing retailer entities … from selling on Amazon’s TPOM, unless approved by the MLB to do so at its sole discretion.” This also restricts horizonal competition among retailers, the complaint says.

The complaint also claims that a 2019 deal with Nike gave Fanatics “the exclusive rights to design, manufacture, and distribute all Nike MLB fan gear…” Also in 2019, the complaint says, Fanatics made a deal with Walmart to become the exclusive MLB seller on Walmart.com.

As of January 2022, the complaint alleges, “Fanatics become the MLB’s exclusive master licensee for MLB Hardgoods for the U.S. and Canada, with certain exceptions” and can thus designate its competitors in the Hardgoods market.

According to the complaint, then, there exists “a horizontal antitrust conspiracy in which MLB, Fanatics, and horizontally competing licensees collude to agree to boycott sales to TPOM retailers.”

Article Type: Lawsuit
Topic: Antitrust
Tags: Anticompetitive Actions, Antitrust, Sports