Major League Baseball, Fanatics Hit with Antitrust Class Action Over Licensed Apparel Sales

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A proposed class action alleges Major League Baseball, all 30 teams, and Fanatics, Inc. have illegally wiped out competition in the third-party online marketplace for licensed apparel. 

The 69-page antitrust case says that MLB has aided and abetted Fanatics by investing more than $50 million in the sporting goods company to become a minority shareholder. With MLB’s backing, Fanatics has bought up competing product licensees while boxing out others through “group boycotts” and other collusive conduct, according to the suit. 

Per the complaint, MLB has used its considerable interest in Fanatics to help the company “control as much of the online retail space as possible.” This help, the lawsuit relays, includes restricting how smaller retailers are allowed to advertise online, which virtually ensures their websites will “appear far below” those affiliated with Fanatics and the MLB teams. 

“As Fanatics’ value grows, so does the value of the MLB’s equity share in Fanatics,” the filing says. “Thus, it is in MLB’s interest to assist Fanatics in its campaign to control as much of the online retail space as possible.” 

With MLB’s help, Fanatics has come to dominate Amazon, Walmart and other third-party online marketplaces, where the league and the apparel company have wielded various “illegal” licensing agreements to effectively squeeze out smaller would-be competitors, the case alleges.

“Some of these agreements go so far as to mandate that the licensees’ products be sold only to Fanatics, or else the licensees’ licenses would be revoked,” the suit says. 

The plaintiff, a small Omaha, Nebraska apparel and accessories seller, claims to have seen a written agreement that purportedly required competing licensees to “group boycott” others who compete with Fanatics. Smaller sellers such as the plaintiff, the case claims, have been restricted by MLB from selling on Amazon’s third-party marketplace, unless the league has used its discretion to allow otherwise. 

Overall, the lawsuit alleges Fanatics has gained “monopoly power” over licensed MLB apparel, pointing to a 2019 10-year deal between the league and Nike that also granted Fanatics the exclusive right to design, make and distribute all Nike MLB fan gear, with the sneaker giant retaining the exclusive right to supply player uniforms, footwear and other on-field gear. 

Today, Fanatics is in “complete control” of all commerce involving licensed MLB apparel and other goods, not only online but everywhere, the plaintiff alleges. 

The case looks to cover all entities or persons in the U.S. who are prohibited from selling MLB licensed products through third-party online marketplaces, or directly to Amazon for resale, due to the implementation of MLB’s third-party online marketplace policy or similar policies from January 1, 2016 until the “unlawful conduct” ceases.

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