Competing for Competitors: An Overview of the Antitrust Lawsuit Filed by Student Athletes Against the Ivy League

by Kathyrn McIlroy, Associate Member, University of Cincinnati Law Review Vol. 91

I. Introduction

Over the past few years, the Sherman Antitrust Act has been the basis of several claims surrounding the National Collegiate Athletic Association (“NCAA”).¹ The Sherman Antitrust Act states, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or within foreign nations, is hereby declared to be illegal.”² A violation of the Sherman Antitrust Act constitutes a felony under federal law.³ The purpose of the Sherman Antitrust Act is to promote and increase competition in the marketplace.⁴ It prohibits any activity that restricts such competition or interstate commerce, including price-fixing agreements.⁵ Price-fixing occurs when competitors agree to raise, lower, maintain, or stabilize prices, and such agreements are typically illegal.⁶

Since 1954, the NCAA Division I Ivy League member schools have not offered merit scholarships of any kind, which includes athletic scholarships.⁷ As a result, the Ivy League is the only Division I NCAA conference that prohibits its members from offering athletic scholarships.⁸ Because the Ivy League member schools receive vast amounts of well-qualified student applications in general, they offer only need-based financial aid.⁹ Representatives of the Ivy League claim that this policy ensures that student athletes are representative of the entire student body, and allows the student athletes to balance both their academic and athletic endeavors.¹⁰

This article explores the antitrust lawsuit that Ivy League student athletes brought against the Ivy League schools. The student athletes are arguing that because they are not offered athletic scholarships, the schools are engaging in price-fixing and anticompetitive restraint of trade. Part II provides background on the plaintiff student athletes’ claim. Part III discusses the various reactions that have arisen as a result of the claim as well as the implications of the claim. Finally, Part IV concludes by arguing that the student athletes present a compelling argument that could add to the recent developments in the legality of the treatment of collegiate athletes and their services.

II. Background

On March 7, 2023, one former and one current student athlete at Brown University filed a lawsuit, seeking class-action status, in the United States District Court for the District of Connecticut against the eight universities¹¹ that compose the Ivy League.¹² In the complaint filed, the plaintiffs state:

This action arises out of Defendants’ ongoing price-fixing agreement (the “Ivy League Agreement”), in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, not to provide athletic scholarships to their Division I athletes (“Ivy League Athletes”) and not to pay Ivy League Athletes any compensation (or reimbursement of education-related expenses) for the athletic services they provide to the University Defendants.¹³

Thus, the plaintiff student athletes are claiming that because the Ivy League does not offer athletic scholarships, they are essentially fixing the “price” of the student athletes at zero and engaging in anticompetitive practices.¹⁴

The student athletes that are bringing this lawsuit emphasize that the Ivy League policy has anticompetitive effects and raises the net price of education that Ivy League student athletes have to pay.¹⁵ For example, the two named plaintiffs that brough the lawsuit, Tamenang Choh and Grace Kirk, who played for Brown University’s men’s and women’s basketball teams respectively, received full cost-of-attendance athletic scholarship offers from at least one other Division I college outside of the Ivy League.¹⁶ As all other Division I colleges do, absent the Ivy League policy prohibiting athletic scholarships, the individual member schools would be able to unilaterally decide how many athletic scholarships to provide and what amounts.¹⁷ With the current policy, the Ivy League members are not in competition with one another in relation to acquiring athletes, and by offering athletic scholarships, competition would exist.¹⁸ The plaintiffs further claim in their complaint that this price-fixing agreement between Ivy League members is analogous to NCAA v. Alston, decided in 2021.¹⁹ There, the Supreme Court of the United States struck down limits on athletic scholarships for Division I football and basketball athletes for education-related benefits, indicating that this violated the Sherman Antitrust Act.²⁰ As a result of Alston, the NCAA acknowledged that collegiate athletes were also free to license their names, images, and likenesses (“NIL”) and receive monetary benefits.²¹ Thus, this lawsuit against the Ivy League provides an opportunity for further legal analysis of the treatment of NCAA student athletes and their services.

III. Discussion

One of the plaintiffs’ main arguments revolves around the concept that the rules applied to the NCAA in Alston should also apply to the Ivy League conference.²² There, it was determined that the Sherman Antitrust Act was violated when limitations were placed on education-related compensation to student athletes.²³ Alston, and subsequently the NCAA’s allowance of student athletes to license their NIL, both dealt with payment to student athletes apart from their athletic participation and payment that occurred after becoming a student athlete.²⁴ If the Ivy League plaintiffs are successful, the Ivy League members would be required to provide athletic scholarship offers to the student athletes they recruit to attend their schools, which would involve increasing competition prior to the students becoming collegiate athletes rather than after.²⁵ However, a court would likely find that the timeline of the student becoming a collegiate athlete has little impact on the application of the Sherman Antitrust Act based on the plain language reading that every contract that restricts trade is illegal, and has no mention of times the contract was entered into.²⁶

In terms of applying the Sherman Antitrust Act to the Ivy League policy against offering athletic scholarships, some commentators indicate that student athletes do not constitute a market for purposes of evaluating antitrust violations.²⁷ For example, student athletes being recruited by an Ivy League school have equal opportunity to pursue both academic and athletic endeavors at other Division I colleges outside of the Ivy League.²⁸ Further, if the plaintiffs are successful in forcing the Ivy League members to offer athletic scholarships, the individual member schools will still be able to decide, on their own, not to offer athletic scholarships.²⁹

However, this argument seems to go directly to what the Sherman Antitrust Act promotes: the discouragement of multiple entities agreeing to set a fixed price and the encouragement of competition through non-fixed prices.³⁰ The Federal Trade Commission defines a market for purposes of antitrust evaluations as “consist[ing] of all goods or services that buyers view as close substitutes.”³¹ When thinking about student athletes and their services in the United States, the only potential “buyer” is the NCAA.³² In Alston, the Supreme Court did not dispute the lower court’s finding that this made the NCAA a monopsony, which is a monopoly on the buying side rather than selling side.³³ The only place for student athletes to “sell” their services is the NCAA.³⁴ Thus, in this regard, the plaintiffs seem to have a valid argument regarding whether they constitute a market. The Ivy League, composed of eight schools, agreed as a whole not to offer athletic scholarships, which on its face does appear to be an agreement fixing the price of the student athletes’ services at zero and discouraging competition among the eight schools.³⁵

IV. Conclusion

This antitrust lawsuit filed by student athletes against the Ivy League for not offering athletic scholarships is representative of the larger discussion surrounding the legal implications of the treatment of student athletes and their services.³⁶ Decisions such as that in NCAA v. Alston have sparked a phenomenon that has led to student athletes advocating for themselves and the services they provide to their college or university.³⁷ The Ivy League student athletes do have valid arguments regarding the anticompetitive nature of not offering athletic scholarships on a conference wide basis, and if such policy by the Ivy League were deemed in violation of the Sherman Antitrust Act, competition between those eight schools would likely increase.³⁸ The biggest consideration for courts deciding such cases will be determining whether the athletes qualify as a market prior to the start of their collegiate athletic and academic careers.³⁹

Cover Photo by Florian Schmetz on Unsplash

Katie McIlroy

During her undergraduate studies, Katie McIlroy received a degree in Economics and Political Science from Marietta College with a minor in Leadership Studies. Katie is currently interested in pursuing a career in civil litigation following law school. Katie enjoyed working as an Associate Member of the Law Review during her second year and is excited to work as a Citations Editor in her final year of law school.

References

1
See discussion infra Part II.
2
15 U.S.C. § 1.
3
Id.
4
The Antitrust Laws, Fed. Trade Comm’n, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws [https://perma.cc/XMN3-YCJM].
5
Sherman Antitrust Act, Cornell L. Sch. Legal Info. Inst., https://www.law.cornell.edu/wex/sherman_antitrust_act [https://perma.cc/DH28-S6KS].
6
Price Fixing, Fed. Trade Comm’n, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing [https://perma.cc/VSV3-UQ58].
7
Pat Eaton-Robb, Athletes Sue Ivy League Over Its No-Scholarship Policy, AP News (Mar. 8, 2023), https://apnews.com/article/ivy-league-lawsuit-athletes-brown-scholarship-771b34fa36ea06f6109435102d939299 [https://perma.cc/7JNE-8RS6].
8
Id.
9
Melissa Korn, Ivy League’s Agreement to Ban Athletic Scholarship is Illegal, Lawsuit Says, Wall St. J. (Mar. 7, 2023), https://www.wsj.com/articles/ivy-leagues-agreement-to-ban-athletic-scholarships-is-illegal-lawsuit-says-e1e7c29c [https://perma.cc/L6ZM-63PT].
10
Eaton-Robb, supra note 7.
11
Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, the University of Pennsylvania, Princeton University, and Yale University.
12
Eaton-Robb, supra note 7.
13
Complaint ¶ 1, Choh v. Brown University, No. 3:23-cv-00305-AWT (D. Conn. filed Mar. 7, 2023), https://www.courthousenews.com/wp-content/uploads/2023/03/choh-brown-university-complaint-usdc-ct.pdf.
14
Eaton-Robb, supra note 7.
15
Complaint ¶ 4, Choh v. Brown University, No. 3:23-cv-00305-AWT (D. Conn. filed Mar. 7, 2023).
16
Id. ¶ 3.
17
Id. ¶4.
18
Id.
19
Id. ¶ 12.
20
Id.
21
Id. ¶ 15.
22
Korn, supra note 9.
23
NCAA v. Alston, 141 S. Ct. 2141 (2021). Examples of limiting such education-related benefits included “rules limiting scholarships for graduate or vocational school, payments for academic tutoring, or paid post-eligibility internships.” Id.
24
See discussion supra Part II.
25
Id.
26
See discussion supra Part I.
27
Julia Vaz, Brown Students Sue Ivy League Over Athletic Scholarship Policy, Brown Daily Herald (Mar. 9, 2023), https://www.browndailyherald.com/article/2023/03/brown-students-sue-ivy-league-over-athletic-scholarship-policy [https://perma.cc/KCY5-NMDT].
28
Id.
29
Id.
30
See discussion supra Part I.
31
Markets, Fed. Trade Comm’n, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/mergers/markets [https://perma.cc/L4P7-325F].
32
Bruno Renzetti, What Does NCAA v. Alston Tell Us About Antitrust and Labor Markets?, ProMarket (July 9, 2021), https://www.promarket.org/2021/07/09/ncaa-alston-scotus-antitrust-labor-monopsony/ [https://perma.cc/R555-X7Y6].
33
Id.
34
Id. The Supreme Court in NCAA v. Alston emphasized the idea that student athletes have nowhere else to sell their labor, but it is important to note that there is another governing body of college athletics, the National Association of Intercollegiate Athletics (“NAIA”), that is a smaller association than the NCAA. NAIA v. NCAA, NAIA, https://www.naia.org/why-naia/naia-vs-ncaa/index [https://perma.cc/ABN6-R25D].
35
See discussion supra Part II.
36
See Korn, supra note 9.
37
Id.
38
See Eaton-Robb, supra note 7.
39
See Vaz, supra note 27.

I. Introduction

II. Background

III. Discussion

IV. Conclusion

Author

References