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Competition Law as a Constraint on Monopolistic Exploitation by Sports Leagues and Clubs

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  • Stephen F. Ross

Abstract

The sports industry is characterized by dominant leagues and clubs exercising economic power unconstrained by rivals or the threat of entry, often featuring market-division schemes. Leagues and clubs can raise price, lower output, and lower quality to fans, create an artificial scarcity of top-tier teams resulting in publicly subsidized stadiums, and impose labour-market restraints that significantly harm consumers by misallocating players, most obviously by inhibiting low-quality teams' quick improvement. Business decisions made by club-run leagues feature significant transaction costs, resulting in even greater inefficiency than would occur if leagues were controlled by a single entity. Many countries have employed settled principles of competition law, originating in the common law of restraint of trade, as a useful and meaningful constraint on the abuses of economic power in sports. Courts have prohibited agreements between clubs or leagues that distort prices or output, or render output unresponsive to consumer demand, unless the agreement is shown to be demonstrably necessary to achieve a pro-competitive goal. In this paper, I argue that consumers and sports fans will benefit from a more ambitious enforcement of these established principles of competition law. Copyright 2003, Oxford University Press.

Suggested Citation

  • Stephen F. Ross, 2003. "Competition Law as a Constraint on Monopolistic Exploitation by Sports Leagues and Clubs," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 569-584, Winter.
  • Handle: RePEc:oup:oxford:v:19:y:2003:i:4:p:569-584
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    Citations

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    Cited by:

    1. Oliver Budzinski, 2011. "The Institutional Framework for Doing Sports Business: Principles of EU Competition Policy in Sports Markets," Working Papers 108/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    2. repec:bla:coecpo:v:36:y:2018:i:1:p:215-233 is not listed on IDEAS
    3. Budzinski, Oliver & Pawlowski, Tim, 2014. "The behavioural economics of competitive balance: Implications for league policy and championship management," Ilmenau Economics Discussion Papers 89, Ilmenau University of Technology, Institute of Economics.
    4. Stewart, Bob & Nicholson, Matthew & Dickson, Geoff, 2005. "The Australian Football League's Recent Progress: A Study In Cartel Conduct And Monopoly Power," Sport Management Review, Elsevier, vol. 8(2), pages 95-117, September.
    5. Budzinski, Oliver & Müller-Kock, Anika, 2016. "Market power and media revenue allocation in professonal sports: The case of formula one," Ilmenau Economics Discussion Papers 102, Ilmenau University of Technology, Institute of Economics.
    6. repec:oup:jcomle:v:11:y:2015:i:2:p:409-429. is not listed on IDEAS
    7. Philippe Cyrenne, 2009. "Modelling Professional Sports Leagues: An Industrial Organization Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 193-215, May.
    8. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    9. Philippe Cyrenne, 2013. "Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League," Departmental Working Papers 2013-04, The University of Winnipeg, Department of Economics.
    10. Humphreys, Brad R. & Zhou, Li, 2015. "Sports facilities, agglomeration, and public subsidies," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 60-73.
    11. Oliver Budzinski & Stefan Szymanski, 2015. "Are Restrictions Of Competition By Sports Associations Horizontal Or Vertical In Nature?," Journal of Competition Law and Economics, Oxford University Press, vol. 11(2), pages 409-429.

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