This March, we're shining a spotlight on sports law! Check back throughout the month to read posts about a variety of legal issues in sports and visit the library to see our book display!
Most antitrust law in the United States is based on the Sherman Act. Passed in 1890, this act bans any anti-competitive behavior that restricts interstate commerce. It’s no surprise that this law is often leveraged against sports leagues.
But what about baseball?
In the early years of American professional baseball, there were multiple leagues that were in competition. The two largest, the National League and the American League, made an agreement that they would work together to form the Major League. This cooperative two-league structure still exists today. These baseball superpowers coming together spelled doom for the other leagues that existed at the time. The Federal League, once the third largest league in the country, was forced to shut down. This was the end of several baseball teams, including the Baltimore Terrapins. In 1922, the Supreme Court heard a suit brought by the former owner of the Terrapins, alleging that Major League Baseball had conspired against the Federal League and was in violation of the Sherman Act. In Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs, it was unanimously ruled that the Sherman Act could not be applied because baseball does not fall under interstate commerce.
In his decision, Judge Oliver Wendell Holmes Jr. wrote that “the business is giving exhibitions of base ball, which are purely state affairs.” While acknowledging the prevalence of travel in the sport, he dismissed this as not being an essential part of the commerce of baseball, and thus “not enough to change the character of the business.”
In 1953, this decision was upheld in Toolson v. New York Yankees, Inc.. This decision disagreed with, yet upheld, Federal Baseball Club. They stated that Congress had had plenty of opportunity to pass legislation to revoke this exemption, but chose not to. It was noted that baseball’s development over the decades since Federal Baseball Club had occurred with the antitrust exemption as a foundation, and that baseball was too important to American culture to disrupt.
Being exempt from the Sherman Act prevents most antitrust suits against Major League Baseball — but not all. The Curt Flood Act, passed in 1998, allows for antitrust suits regarding labor. However, the text of the law specifically states that everything else about how antitrust law applies (or rather, does not apply) to baseball is unchanged. Additionally, this law only applies to major league players.
There have been some attempts to challenge the antitrust exemption in general. The most noteworthy recent attempt was Nostalgic Partners v. Office of the Commissioner of Baseball in 2023. In this case, several minor leagues sued after their MLB affiliation was removed during the league’s restructuring, claiming this behavior as anti-competitive. If this case had made it to the Supreme Court, it may have forced another decision about baseball’s antitrust exemption. However, the case was ultimately settled, so the issue remains unresolved.
If the antitrust exemption was foundational to Major League Baseball at the time of the Toolson case, it certainly is now- several decades later. With there being so much vested interest in keeping baseball the way it is, it is not certain whether this exemption will be overruled any time soon — or even addressed again by the Supreme Court.
If you’d like to learn more, here are just a few of the relevant books we have on display!
The Baseball Trust by
Baseball Meets the Law by
Curt Flood in the Media by
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