Fanatics, NFL Defeat Antitrust Case Over Merchandise Restrictions

The NFL’s licensing arm and its 32 teams, along with sports e-commerce platform Fanatics, scored a dismissal of a federal lawsuit brought by a company that insists a league policy requiring approval to sell NFL licensed products online violates the Sherman Act. 

Three years ago, Casey’s Distributing—a Nebraska-based distributor of licensed apparel, accessories, toys and other sports related novelties—sued NFL Properties (NFLP) and the other defendants in the Southern District of New York. NFLP manages the intellectual property of the league and teams, including for the licensing of apparel, merchandise and other official products. The lawsuit challenges NFLP policies that restrict the sale of NFL licensed products through Amazon and other third-party online marketplaces and that allegedly confer too much market power to the NFLPA’s chosen licensees, including Fanatics. 

Fanatics also recently scored a victory in a similar lawsuit that Casey’s brought to challenge its relationship with MLB. Last September, U.S. District Judge Andrew L. Carter Jr.—the same judge in Casey’s case against the NFL and Fanatics—dismissed the lawsuit against MLB and Fanatics.

Michael Rubin’s company, which is on pace for about $12 billion in revenue this year, has expanded rapidly into new business avenues and is facing antitrust challenges for both its apparel and itscollectibles divisions. The MLB and NFL cases present two early victories.

“We’ve said all along that these lawsuits were meritless,” a Fanatics spokesman said about the Casey’s complaints. “We’re pleased that the court agreed and dismissed the complaints.”

The NFL is also sensitive to antitrust concerns. Last year a jury in Los Angeles ruled the Sunday Ticket arrangement violated antitrust law, but the judge set aside the jury’s verdict on account jurors were misled and confused by some of the evidence and that the plaintiffs’ theory relied on “flawed methodologies.” That NFL victory, which wiped out a potential $14.1 billion damage award, is on appeal to the U.S. Court of Appeals for the Ninth Circuit. In January, the U.S. Department of Justice under then-President Joe Biden wrote an amicus brief urging the Ninth Circuit to vacate the trial judge’s dismissal of claims.

Casey’s says that in 2019, all or nearly all its products were removed from sale on Walmart.com because Fanatics agreed to become the exclusive seller of NFL products on that website. A year later, Casey’s supplier said it needed to remove products from Amazon. In 2021, Amazon allegedly told Casey’s it can’t keep selling NFL licensed products on the platform unless it becomes an NFL-authorized seller. Meanwhile, that same year Logo Brands, which manufactures officially licensed products, allegedly asked Casey’s to withdraw its listings on Amazon because of a contract with Fanatics. These and other developments stymied Casey’s opportunities to distribute NFL products.

In dismissing the lawsuit, Judge Carter reasoned that while it appears Casey’s has been financially hurt by NFL policies, that outcome doesn’t establish “an injury that antitrust laws were designed to redress.” As Carter explained, “antitrust law protects competition, not competitors.” 

The judge noted that Casey’s doesn’t establish that consumers pay higher prices as a result of NFLP policies, that is, unless those consumers “insist on buying from unauthorized retailers, like plaintiff.” In general, Carter observed, consumers aren’t forced to pay higher prices. They could simply find another way to buy. 

Carter also rebuked Casey’s contention that the NFL has a “monopoly” over determining which companies get and don’t get a license for the manufacture of NFL products. 

“This monopoly,” Carter wrote, “existed before the scheme and still exists—lawfully.” The judge reasoned the NFL can logically decide to limit the sale of its products through unauthorized retailers. 

The ruling is significant because it lends legal support for the NFL’s business model for online sales of official products. The NFL, like other leagues, tries to tightly control the licensing and distribution of its products. The victory in Casey’s Distribution v. NFL et al. should give the NFL more confidence its approach withstands legal scrutiny.