For most of the past century, Congress has failed to adequately regulate professional sports. For example, when Major League Baseball (“MLB”) actively monopolized, Congress did nothing (1914-1998). When the National Football League (“NFL”) sought to merge with its main competitor (the American Football League), Congress granted the NFL a special antitrust exemption to do so (1966). And, when sports teams began to use their market power to pressure cities to build new stadiums, Congress even voted down legislation that would have protected the interests of the American taxpayer (1996 & 1999).
This week, however, Congress has shifted from a policy of under-regulating professional sports to a policy of potentially over-regulating them. In the coming week, Capitol Hill will be abuzz with three sports-related investigations: Spygate, Churchgate, and, of course, the MLB Steroids Investigation.
MLB Steroids Investigation:
The main event on Capitol Hill this week involves the ongoing investigation into MLB’s use of performance-enhancing drugs — an issue that Henry Waxman (D-California) and Tom Davis (R-Virginia) first began investigating back in March 2005. This morning, Roger Clemens — the most dominant starting pitcher of his era — will defend himself against accusations made by his former trainer Brian McNamee that he injected Clemens with illegal performance-enhancing drugs during the 1998, 2000 and 2001 seasons.
Earlier this month, New York Yankees pitcher Andy Pettitte and former Yankees second baseman/outfielder Chuck Knoblauch were deposed by the House Committee on Government Reform about this same topic. Both Pettitte and Knoblauch’s statements — neither of which have been made public — might be used by the House Committee in today’s questioning of both Clemens and McNamee.
Discussion continues, after the jump.

Continue reading “Sports and the Law: Steroids, and Spygate, and Churchgate, Oh My!”

Reading documents as part of the Hart-Scott-Rodino Second Request Process is often as boring as watching paint dry while listening to the soundtrack from Waterworld: the Musical. However, for junior associates tasked with reviewing HSR documents, there may finally be a Second Request worthy of a second chance—one involving fantasy sports.
On Friday, February 1, Microsoft Corporation made a $44.6 billion hostile takeover offer to Yahoo Inc., which according to the American Antitrust Institute (“AAI”), “would effectively reduce the number of significant competitors from three to two in the paid search advertising market.” As a result, the proposed merger would likely lead to careful antitrust review.
If Microsoft’s proposed takeover bid fails, according to a February 4 article in the New York Times, Yahoo Inc. might then consider selling its company in piecemeal, with Yahoo Sports “sold to a company like ESPN.” This possibility would produce far less antitrust concern in advertising markets. However, it might still lead to competitive problems in the rapidly expanding markets for fantasy gaming.
Based on a down-and-dirty review of the fantasy sports marketplace, if either ESPN or CBS Sports were to attempt to purchase Yahoo Sports, the number of traditional websites that host fantasy sports games would fall from three to two—a general red flag in terms of competition law. In addition, if the market’s low price provider, Yahoo, were gobbled up by a website more likely to charge customer fees, another red flag would be triggered.
Read more, after the jump.

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