Maryland Seeks To Block ACC Withdrawal Fee With Antitrust Suit
The University of Maryland and the Maryland Attorney General have filed an antitrust complaint against the Atlantic Coast Conference (the “ACC”) in an effort to block a $52 million withdrawal fee that the ACC has imposed on the university for deciding to move to the Big Ten Conference.
In November 2012, the University of Maryland made the decision to move its athletic teams from the ACC, the collegiate athletic conference in which the school has competed in since 1953.
The ACC responded by filing a lawsuit in North Carolina state court to enforce a $52 million withdrawal penalty. The ACC approved such withdrawal penalties in September 2012 as a way to cover lost ticket revenue if a school left the conference.
Maryland Attorney General Doug F. Gansler has now taken two legal actions on behalf of the university board. First, the Attorney General filed a complaint in Maryland state court on behalf of the Board of Regents of the University System of Maryland and the University of Maryland, alleging that the withdrawal penalty is an illegal restraint of trade in violation of Maryland antitrust laws. Second, the Attorney General moved to dismiss the ACC’s state court action in North Carolina, arguing that a North Carolina court has no jurisdiction over the state of Maryland and its public universities.
The Maryland Attorney General alleges in Board of Regents of the University System of Maryland et al. v. Atlantic Coast Conference, in the Circuit Court for Prince George’s County that the ACC violated Maryland antitrust laws, breached contractual obligations and tortiously interfered with the prospective economic advantage of the University of Maryland. The action seeks an injunction against enforcement of the withdrawal penalty, a declaratory judgment finding the penalty unlawful and treble damages under the antitrust laws, along with other relief.
The antitrust complaint alleges that the ACC has market power, citing the limited amount of viable intercollegiate athletic conferences in which universities such as Maryland can participate. The Maryland Attorney General argues that with such market power, the ACC can use the withdrawal fee to limit universities from freely competing not only for athletes and coaches, but also for the best students and faculty.
In addition to alleging the university has suffered antitrust injury, the Maryland Attorney General also alleges that consumers would be harmed by payment of the withdrawal penalty as a result of “increases in price or other fees needed to offset the financial penalty imposed by the ACC.”
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