NFL, Teams, Fanatics Conspired to Dominate Online Market for League-Licensed Merchandise, New Class Action Claims

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A proposed class action alleges National Football League Properties, Inc., the NFL subsidiary responsible for collectively licensing all 32 teams’ and the league’s intellectual property, exists solely as a mechanism to keep each team from competing against one another in the licensing of their trademarks to manufacturers and retailers, causing prices for official merchandise to skyrocket for consumers. 

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The 92-page antitrust complaint summarizes that the NFL and its 32 teams, rather than compete individually, use National Football League Properties to set one price for licenses, choose who will be a licensee, and decide minimum guarantees and licensing terms. In a competitive market, the filing says, each team “would make each of these decisions for itself.” Overall, the 32 teams have jointly formed “a cartel” to organize the licensing of their logos, names, trademarks and other intellectual property, utilizing “collusive marketing agreements [to] disincentivize competition among themselves,” the case alleges. 

Whereas each team historically competed with one another and other retailers in the online market for NFL licensed products, the defendants—the NFL, its 32 teams and apparel maker Fanatics, of which the league owns a three percent stake—have conspired to rule the online retail market for official NFL products, the suit alleges. 

According to the complaint, the defendants’ conspiracy contains at least four related parts. First, the suit says, the parties “colluded” to boycott retailers that sold NFL-licensed products through third-party marketplaces, such as the Amazon Marketplace. This prevented competitors from charging lower prices for official NFL items sold online, which, in a competitive market, would have forced the defendants to lower their own prices, the lawsuit claims.

Second, Fanatics entered into exclusive dealing arrangements with its suppliers that prohibited them from selling to any competitors that primarily sell online, the complaint alleges. 

“The effect of these coerced agreements is not only to deny Defendants’ competitors access to inventory, thereby driving traffic to Fanatics-controlled online outlets, but also to restrict the number of customers for licensees’ products, thereby rendering the licensees ever more dependent on Fanatics’ business,” the case alleges. 

From there, the NFL defendants entered into anticompetitive domain name licensing agreements with Fanatics to consolidate their operations and “end competition amongst themselves,” the suit charges. Per the case, instead of competing for sales, the NFL defendants have “simply handed Fanatics the proverbial keys to their stores” and allowed the retailer to operate their online storefronts as a monopolist. The complaint says Fanatics now operates, in addition to its own retail websites, the e-commerce websites of the NFL (NFLshop.com) and 27 NFL teams. In exchange, Fanatics shares its monopoly profits with the teams, the suit claims. 

Lastly, the case alleges the defendants endeavored to further undermine other retailers’ ability to compete online by “forbidding those retailers from using NFL-related keywords to advertise or even describe their product offerings.” The effect of this, according to the lawsuit, is to push consumer traffic to the NFL and its teams’ retail sites and away from those of competing sellers. 

“The conspiracy as a whole, and each individual part, have allowed Defendants to charge supracompetitive prices for NFL Licensed Products and share the monopoly profits among themselves,” the case summarizes, alleging the apparent conspiracy has caused consumers to pay more than they otherwise would have for NFL merchandise. 

The lawsuit looks to cover all persons or entities in the United States who bought NFL licensed products online from Fanatics, any NFL defendant or team, or any current or former subsidiary of the defendants, at any time from January 1, 2016 through “such time as the effects of the unlawful conduct ceased.” 

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