Baseball’s anti-trust exemption and last week’s sideshow
Vail, CO, Colorado
Why is Congress investigating baseball?
“Well, there’s this little matter about steroids, HGH and other performance-enhancing drugs,” you might be thinking. And right you are. But if you and I were shooting steroids at our respective workplaces, would Congress get involved? Don’t flatter yourself.
What, then, is different about baseball?
First, the apparent hero-worship of Rep. Elijah Cummings of Maryland notwithstanding, it’s not about hero-worship. Well, not primarily, anyway. It’s not about representatives wanting to get up close and personal with starts. Mostly. Actually, it’s more about two guys, one named Sherman, the other, Clayton.
Sherman and Clayton? Let me explain.
John Sherman, strangely nicknamed “The Ohio Icicle,” was first a U.S. Representative, then Senator from Ohio during the Civil War and into the late 19th century. Most famously, perhaps, and certainly most relevantly to this column, John Sherman was an expert on the regulation of commerce and principal author of the Sherman Antitrust Act. More on that in a moment.
Henry De Lamar Clayton, Jr. was elected to Congress from Alabama in 1897 and served nine terms until 1914. He is chiefly remembered as the author of the Clayton Antitrust Act, passed in 1914, which was intended to amend, clarify and supplement the Sherman Act.
The Sherman Antitrust Act was the first legislation enacted by Congress to reign in concentrations of economic power that interfere with trade and competition. Its main purpose is to outlaw business combinations which restrain trade between states or with foreign nations. A second key provision is to make illegal all attempts to monopolize or otherwise concentrate commerce in the United States. In case you hadn’t noticed, Major League Baseball has the scent of a monopoly.
The Clayton Antitrust Act consists of a hodgepodge of amendments and clarifications to the Sherman Act. Among its many provisions are those which regulate price-cutting to freeze out competitors, prohibit interlocking corporate directorates and prohibit exclusive sales contracts. Initially, there were also provisions affecting unions but those have been substantially weakened over time.
Any business that operates across state lines is presumed to be participating in interstate commerce and is subject to antitrust legislation.
The Sherman and Clayton Acts first intersected with Major League Baseball in 1922 when the United States Supreme Court heard the case of Federal Baseball Club of Baltimore, Inc. v. National Baseball Clubs. The Baltimore baseball club, a member of the Federal League, sued the National and American Leagues, alleging that the Federal League’s inability to sign players was due to antitrust violations. Speaking for the court, Justice Oliver Wendell Holmes ruled that even though there was scheduling across state lines, the games were intrastate events since travel from one state to another was “not the essential thing.”
The Baltimore case, coupled with decades of reluctance by the courts to overrule it,
has left major league baseball exempt from antitrust legislation.
Why, then, does Congress, get to put the likes of Roger Clements on the hot seat?
The answer is, simply, it’s tit for tat. In exchange for its continuing antitrust exemption, baseball long ago entered into a Faustian bargain with Congress. Because the antitrust exemption is maintained at Congress’ pleasure (in 2001, a bill known as the “Fairness in Antitrust in National Sports” proposed to amend the Clayton Antitrust Act and strip baseball of its antitrust exemption; although the bill ultimately foundered, it, or something like it, could be easily be resurrected), Congress holds a hammer over baseball’s head and is invested with certain regulatory powers over the national pastime.
If baseball wishes to maintain its special status, then it must, in turn, agree to subject itself to special scrutiny and special regulation, and to offer up its menagerie of players, coaches, trainers, excuse-makers, and commissioners when Congress comes calling.
In other words, when Congress says to Baseball, “batter up,” Baseball must play ball.
Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley. He is a member of the Colorado State Bar Association Legal Ethics Committee and is a former adjunct professor of law. Robbins lectures for Continuing Legal Education for attorneys in the areas of real estate, business law and legal ethics. He may be heard on Wednesday nights at 7:00 p.m. on KZYR radio (97.7 FM) as host of “Community Focus.” He may be reached at 926.4461 or by e-mail at firstname.lastname@example.org.