Federal Court Rules Soccer Promoter’s Antitrust Claims Out of Bounds
A soccer promotion company has lost its bid to expand the universe of so-called “official” soccer games played in the United States following the rules of FIFA, the international federation that is the world governing body of soccer.
In Relevent Sports, LLC v. Federation Internationale de Football Association and United States Soccer Federation, Inc., Judge Valerie Caproni of the U. S. District Court for the Southern District of New York rejected the argument of soccer promoter Relevent Sports that the United States Soccer Federation’s (“USSF”) compliance with a FIFA rule restricting output of soccer games in the U.S. amounted to an agreement between USSF and FIFA to restrict output of soccer games in the U.S. On July 20, 2021, the court dismissed plaintiff Relevent Sports’ antitrust claims against defendants USSF and FIFA on the grounds that Relevent Sports failed to plausibly allege a vertical agreement between the defendants. The court also held that Relevent Sports failed to plausibly allege a horizontal agreement among FIFA’s top-tier men’s professional soccer leagues and teams, as well as their respective FIFA-affiliated National Associations, of which USSF is one.
The dispute in Relevent Sports centered on a FIFA policy that prohibits staging “official” soccer games outside of the participants’ home territory. An “official” soccer game is one that counts toward the clubs’ official league or tournament records, as opposed to a “friendly” soccer game, which does not. Official games must be sanctioned by FIFA, which governs soccer around the world, as well as the participating clubs’ and host country’s national associations. FIFA has authorized 211 national associations to act as its representatives in their respective countries.
In August 2018 Relevent Sports, a third-party promoter of soccer matches, announced plans to host an “official” game in Miami between two Spanish clubs, FC Barcelona and Girona FC. However, after FIFA enacted its policy against extraterritorial games in October 2018, FC Barcelona withdrew its commitment to participate in the match. In March 2019, Relevent Sports announced that it intended to host an official game in Miami between two Ecuadorian clubs. USSF refused to sanction the match, citing FIFA’s policy.
Relevent Sports filed suit under Section 1 of the Sherman Act, alleging that FIFA and USSF entered into an unlawful vertical market allocation agreement to limit the output of official games in the United States. Relevent Sports also alleged that Major League Soccer—the top-tier U.S. professional soccer league—and all other top-tier men’s professional soccer leagues and teams, as well as their respective national associations, entered into an unlawful horizontal agreement to adhere to the FIFA policy and to boycott leagues, clubs, and players that participate in unsanctioned games in the United States. FIFA and USSF moved to dismiss Relevent Sports’ complaint on several grounds, including the failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.
The court granted defendants’ motion. The court did not address whether Relevent Sports adequately pleaded that FIFA’s policy restricted the output of official soccer games in the U.S. Rather, the court held that Relevent Sports had failed to plausibly allege that defendants had entered into an agreement—a requirement for any Section 1 case. The court distinguished between, on the one hand, USSF complying with FIFA’s policy prohibiting staging official games outside of the teams’ home territory and, on the other hand, USSF agreeing with FIFA to prohibit staging official games outside of the teams’ home territory. The court held that “although USSF’s adherence to the FIFA Policy may be consistent with a vertical agreement, Plaintiff must plead facts to suggest that an agreement was made.” The court also held that Relevent Sports failed to allege a horizontal agreement for similar reasons, finding that Relevent Sports’ allegations that all FIFA leagues, teams, and national associations adhered to FIFA’s policy does not alone amount to evidence of a horizontal agreement.
The court’s holding that USSF’s compliance with FIFA’s policy does not amount to an agreement between USSF and FIFA may strike some as a head-scratcher. USSF is FIFA’s authorized representative in the United States. Clearly, USSF does not have the discretion to pick and choose which FIFA policies it will follow. The court held that “there are obvious rational reasons why USSF would comply with the FIFA Policy without being part of an unlawful agreement to do so, such as its desire not to take action that could result in all U.S. men’s soccer players and teams being deemed ineligible for World Cup play.” But, contrary to the court’s decision, the fact that FIFA can impose its rules on USSF and enforce compliance with those rules supports an inference of an agreement. It would also seem reasonable to infer that USSF agreed to comply with FIFA’s policies as a condition of USSF’s FIFA affiliation and authority. At the pleading stage, such inferences should be drawn in favor of the plaintiff.
Defendants in future sports antitrust cases may try to rely on Relevent Sports, but it is likely to be inapposite in most cases against sports leagues. Unlike Relevent Sports, those cases typically involve agreements among teams that compete against each other in a relevant geographic market.
For example, it is hard to imagine a court accepting an argument that the 30 NBA teams have not agreed with each other to follow league rules and policies. Indeed, Relevent Sports distinguished several such cases, including the recent Supreme Court decision in NCAA v. Alston, noting that in those cases the defendants were undisputedly horizontal competitors that had formed an agreement. By contrast, the parties to the alleged horizontal agreement in Relevent Sports were purportedly every top-tier team, league, and national association in the entire world affiliated with FIFA. That mix of alleged conspirators is far broader (both in horizontal and vertical dimensions) than a group of direct competitors that have associated under the banner of a single league.
Edited by Gary J. Malone
Tagged in: Antitrust Litigation,