Sherman Act Case Study

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To prove that the defendant (NCAA) violated section 1 of the Sherman Act, a plaintiff must establish three elements regardless of the practice challenged: (1) a conspiracy, combination or contract among two or more separate entities (2) that unreasonably restrains trade.

The NCAA in conjunction with the two broadcast networks American Broadcasting Company and Columbia Broadcasting System maintained output restriction, such that, it is limiting the ability of colleges and universities to control their supply of live college football games. This is done by restraining; (1) the amount of maximum number of times that a collage football team can appear on live television each season; (2) the maximum amount that a team can earn or negotiate for, …show more content…
Also the NCAA does not allow colleges and universities to negotiate their own contract as they seem fit, consequently they are restraining trade. By restraining trade, the consumers and university both are harmed since, the consumer is not able to consume what the otherwise free market would provide given a choice. The university is harmed by not receiving the exposure needed to promote its product, in this case live college football games. This creates a situation where we have dead weight loss of live CFA college football games revenue from college football games not being broadcasted. This also created a case were by fixing prices and restricting the competitive freedom of its members, the NCAA created a price structure that was unresponsive to consumer preference and not related to free market …show more content…
The broadcasting networks have no intention of bidding the price above the set fee, and the universities are not able to threaten to sell their right to another network, because this would mean that they would be in violation of NCAA rules. The NCAA is limiting the university’s ability to compete with other college football university for television revenue, potential student, student athletes and fans.

To prohibit the ability to negotiate a contract with other broadcast networks, other than American Broadcasting Company and Columbia Broadcasting System is Horizontal restraint of trade, since the agreement that the NCAA made with the broadcasters reduces actual or potential competition with the other broadcasters, such as the National Broadcasting Company. This is per se illegal on its own. Even if we use the rule of reason for such restriction as in the Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. (1979) is used, we still have the fact that, In that case, it did not involve a fix-set maximum amount that can be
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