The legal world might be wrapped up in the Elena Kagan confirmation hearings, and the international community might be wrapped up in the World Cup. But there is one thing that is capturing the minds of many “average Americans”: at midnight Eastern time, NBA free agency starts. LeBron, D-Wade, and the face of major professional basketball will begin to change tonight — and I promise you most Americans care more about who is on their basketball team than who is on their Supreme Court.
Is there a legal angle to the free-agent frenzy that’s about to kick off? Not really, but let’s pretend that there is. A month ago, Dwyane Wade said that he and other top free agents would be “having a meeting” to discuss their options — and this made a lot of people wonder if such a meeting (and any decisions coming out of such a meeting) would be tantamount to collusion and a violation of the Sherman Act. From ESPN:
But make no mistake: When Wade talks about sitting down with LeBron James and Joe Johnson (and perhaps Chris Bosh) to discuss free agency and where each of them will wind up playing, he is absolutely suggesting that a tiny handful of elite players could conspire — that’s the familiar use of the word, not the legal — to determine the future direction of the league.
Will Wade and LeBron engage in illegal price-fixing? If they end up in New York together, will I care? Let’s talk free agency and the law….
ATL’s sports columnist, law professor Marc Edelman, has a nice primer on collusion in the Major League Baseball context. When we talk about collusion in the sports context, we’re often talking about owners colluding to artificially suppress prices on players.
But with the potential Wade meeting, the suggestion is that the players would collude against the owners. Instead of competing to get the best contract possible, might they make some kind of deal amongst themselves? For instance, if LeBron doesn’t want to play with Dwyane Wade, might the two of them try to engineer a situation where they end up in separate conferences, so they don’t have to compete against each other until the NBA Finals (err, assuming that Kobe doesn’t keep destroying people)?
Obviously the Sherman Act is designed to catch employers more than employees, but thanks to the wonders of the internet I was able to find a guy that makes an argument that the players could be in trouble. From the Ludwig von Mises Institute:
Scoff if you will, but if four firms in any industry meet to discuss what customers they plan to negotiate with, the Justice Department and the FBI will come barging in with guns blazing. Heck, as former Congressman Tom Campbell once told a House committee, if “three eye doctors in Elgin, Illinois” have lunch to discuss a proposed HMO contract, they’ll get a letter from the Federal Trade Commission advising them that said lunch violated the Sherman Act…
And although price fixing is a per se antitrust violation — meaning it’s unnecessary to show there’s any monopoly or exercise of “market power,” as in a merger case — the antitrust violation is arguably worse in the basketball players’ case… Collusion by three or four NBA All-Stars, however, can fundamentally alter the fortunes of several teams and cities, not to mention the league’s worldwide business.
Gotta love those Austrians.
In any event, if all the players “magically” end up in certain places based on a secret meeting they have amongst themselves, can the DOJ roll in and fine them for not going to the Knicks? (Sorry: I still have hopes and dreams that the 2010 Knicks will not be a rehash of the 2005 Suns.)