Eleven professional golfers (now ten) recently filed an antitrust lawsuit against the PGA Tour to challenge their suspensions from the league. Due to the suit's size and high profile, the outcome of this suit could cause a ripple effect across professional sports generally.
The lawsuit, filed with the US District Court (or the Northern District of California), contends that the PGA Tour is unfairly controlling players - with anti-competitive restraints to protect its own long-standing monopoly in professional golf.
The plaintiff players have been suspended from playing in the PGA Tour over their involvement with the Saudi-backed LIV league.
The eleven esteemed golfers (originally including Carlos Ortiz, who has subsequently withdrawn his name from the suit) are just some of the sixty plus golfers who have signed a LIV contract. The golfers have said that the PGA Tour’s restrictive policies are anti-competitive, and that the PGA has made threats to agents, sponsors and vendors in an attempt to coerce them to abandon LIV. The ten remaining golfers state that the actions of the PGA “serves no purpose other than to cause harm to players” and it was an attempt to “foreclose the first meaningful competitive threat” that the PGA Tour has faced in “decades”.
The PGA Tour responded to the claims on unequivocal terms that the players have acted “knowing full well they would breach Tour Regulations and be suspended for doing so” by joining a competitor league.
In the short term, three of the golfers requested that the court grant an injunction; to permit them to start in the first round of the PGA Tour events (which they had previously qualified for) whilst the proceedings to determine whether PGA Tour’s actions constitute anti-competitive practices progressed. The inability to play in the events would be a missed opportunity to accumulate points and boost sponsorship opportunities.
An injunction hearing took place on 9 August, with which found that the three LIV golfers had failed to prove they would be “irreparably harmed” by being denied opportunity participate in the first round. In particular, that there was no “emergency” as purported by the golfers because the time constraints were of “their own making”.
This was a small win for the PGA Tour. However, there is much left at play and the material fight will come when the parties take to trial over whether the PGA Tour is violating antitrust laws.
What are antitrust laws and how are they likely to play out in this context?
Antitrust laws are in place to protect consumers from predatory business practices and to ensure fair competition.
There is a similar concept in the laws of England and Wales known as “unreasonable restraint of trade”. This notion renders a contractual term purporting to restrict an individual’s freedom to work for others or carry out their trade or business (i.e. a restrictive covenant) void, unless it is designed to protect legitimate business interests and is no wider than is reasonably necessary in circumstances.
In this context, antitrust law prohibits businesses from maintaining monopoly power over a certain industry or field, and in particular, utilising that power to shut down challenges from competitors.
To succeed in their claim, the golfers must prove that the PGA Tour has control over the professional golf market and its practices in suspending players from the league for defecting the LIV league are anti-competitive. Whilst the PGA Tour’s approach thus far is to blame, the personal choices of the defecting golfers knew the repercussions of their actions. It will be interesting to see whether they eventually turn the tables to argue that the LIV league is itself engaging in antitrust behaviour.
Arguably, there is financial harm caused by the LIV league to golfers who choose to remain with the PGA Tour. Indeed, one of the most shocking revelations from the injunction hearing this week was that the three golfers seeking injunctive relief had earned more in just two months of the LIV league, than their entire PGA Tour career!
One question that will almost certainly need to be answered is why PGA Tour would wish to ban some of the world’s most famous, and best, golfers from its tournaments. With the evidence available at this time, the only conclusion one can arrive at is PGA Tour are taking these steps to make defecting from the PGA Tour seem as unattractive as possible to extinguish competition.
Business practice of sacrificing profits in the short-term, for long-term monopoly gain, is often seen as indicative evidence of antitrust behaviour.
There is a huge amount of money at stake here, and no doubt other professional sports who may be toying with the idea of new leagues, will watch the proceedings unfold with interest.
We are someway off seeing how this will all pan out, with Judge Freeman setting a date for the trial in September 2023.
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