The Antitrust Bulletin

Labor markets in sports have historically been dominated by the monopsony power enjoyed by owners. In the 1970s, Oscar Robertson argued in front of Congress that “…it’s terribly wrong for anyone to limit anyone’s ability to earn more money.” The data make it clear that Robertson’s wages—and the wages of other National Basketball Association (NBA) players—were indeed limited by the NBA’s reserve clause. Robertson, though, didn’t just make speeches. As the head of the NBA’s Player Association, he delayed a merger between the American Basketball Association and NBA and eventually created the NBA’s free agent market. His work dramatically increased the wages paid to NBA players. These victories, though, didn’t last forever. The many limits today on player wages in the NBA’s labor market suggest that Robertson’s fight has largely been forgotten by today’s NBA players.

We usually think of antitrust law as addressing violations of free market norms, not equality norms. The two, however, may be related. Systemic racism (and other systemic “isms”) is about power and its abuse. So is antitrust law. Moreover, antitrust may be able to fill gaps left by antidiscrimination law. In particular, antitrust law can address: entire markets, not just individual firms or discrete actions; power imbalances from differences in capital, not just disparities in compensation; financial allocations between owners and workers, not just between workers; and legal violations that shrink total worker pay and do not just distort its allocation. Antitrust law also relies on centrist free market principles. Those may be less controversial than tackling issues of race directly. To be sure, in part for that reason, antitrust laws are limited. They can at best remedy a small portion of the potential wrongs caused by systemic racism. But antitrust may nevertheless contribute valuably to systemic racial equality. It also may provide a model for how antidiscrimination law might be reframed to make it more effective in that regard.

If the tumultuous 2010s yielded one consistent theme, it is frustration with inequality coalescing into collective action. In response, progressive enforcers and commentators have begun to explore whether the antitrust laws—enacted in an attempt to counter concentrated power during a previous Gilded Age—might play a role in addressing systemic racialized inequality. This essay contributes to that ongoing conversation by historicizing a pair of antitrust cases: Knights of the Ku Klux Klan and Superior Court Trial Lawyers Association. The first is an admirable example of antiracist antitrust. The second is its opposite. Together, these two decisions represent divergent paths. Which has the contemporary antitrust enterprise followed? The Supreme Court’s most recent substantive decision in the area, Ohio v. American Express, suggests both room for hope and reason for concern. The essay concludes by offering four recommendations for how antitrust can retake the high road. Antitrust can and should help to address—rather than exacerbate—structural inequality.

Under an illusory nexus to education, intercollegiate athletics in the United States represents a multibillion-dollar enterprise that extracts economic rents from the majority Black athlete labor to the benefit of overwhelmingly White constituencies. Under the aegis of “amateurism,” member universities of the National College Athletic Association (NCAA) collude to fix maximum athlete compensation at cost-of-attendance and strip athletes of the economic rights over their own name, image, or likeness. While this anticompetitive restraint encumbers all athletes competing under the NCAA umbrella, it imposes a disparate impact on Black and other minority athletes who represent a majority of the labor in the largest revenue sports: football and basketball. Although White coaches are the most visible beneficiaries of this anticompetitive restraint, the scope of amateurism’s interracial distributional effects has largely remained uncovered. This article seeks to fill this gap in the literature. Leveraging data from multiple sources, including institutional financial reports and the NCAA Demographics Database from 2007–2020, this article quantifies the NCAA’s wealth transfer away from primarily Black athlete labor to institutions and overwhelmingly White constituencies. Under the NCAA’ restraint, we estimate that Black football and men’s and women’s basketball athletes at the Division I Power 5 Conference level have lost approximately $17 billion to $21 billion in compensation from 2005 to 2019 or roughly $1.2–$1.4 billion per year. The antitrust status quo’s failure to enjoin the NCAA’s collusive wage-fixing restraint, which causes such obvious antitrust injury and harm to athlete labor, underscores the fundamental shortcomings of using the consumer-welfare standard as the exclusive lodestar to investigate and enjoin anticompetitive conduct; it also exposes the divergence between “amateurism” as described in Board of Regents and the modern-day realities of college athletics.

Debates on whether structural antitrust remedies or behavioral regulatory remedies should be used to implement institutional mandates are long-standing. Historical data for an entire population of firms for a fourteen-year period have been used, in a natural experiment format, to evaluate the impacts of both (a) structural antitrust policy (stick) and (b) behavioral regulation (carrot), for (i) exactly the same efficiency outcome, (ii) for the same firms, and (iii) at the same time. The results indicate that the stick has been less effective than the carrot. Implementation of regulations has had a significantly larger economic impact relative to implementing structural antitrust remedies on firm efficiency. Fiscally, annual incremental gains generated by the regulatory approach versus the antitrust approach have been over US$2 billion. Behavioral institutional design, implementation, and outcome assessments could be based on dynamic evolutionary process ideas situated within a managed incentive regulation framework. Given recent clamor for actions against technology companies, the facts suggest that behavioral regulations could constrain unacceptable firm behaviors and the results question contemporary antitrust remedies’ relative efficacy.