The Supreme Court recently  ruled that the National Football  League’s apparel contract with  Reebok is subject to the Sherman  Antitrust Act. Believe it or not, this ruling may affect your business.

The Plaintiff, an apparel company, sued the NFL alleging that the league’s apparel contract with Reebok violates the Sherman Antitrust  Act. The Act provides that “[e]very  contract… in restraint of trade or commerce… is declared to be illegal.” The antitrust laws are in place  to encourage competition and protect  against the creation of monopolies that harm the consumer.

The Court determined that the  NFL’s teams should be considered  separate entities for antitrust purposes,  such that the apparel company can proceed with its lawsuit. Since each NFL franchise is competing  against the others, not only on the field but in terms of apparel sales, the NFL’s apparel contract with Reebok is subject to the Sherman Antitrust  Act. Note that the Court was only ruling on whether the case  should be allowed to go forward, not  whether the contract actually violates  the Act.

Many of our clients are members of trade associations or other organizations consisting of separate businesses coming together to work towards a common goal. Like the NFL’s apparel contract, contracts entered into by these organizations  can be subject to antitrust laws.

(For example, consider a situation in which a group of suppliers agrees that it will not sell materials to a particular business or group of businesses).  Although the group may be acting in the best interest of their businesses, such an agreement may violate state or federal antitrust laws, and the group could be subject to substantial fines and other penalties.

As a member of a trade association, it is important to understand that these laws exist. If you are concerned  about any of the contracts  entered into by your organization or any contracts currently being considered, it may be a good idea to have  them reviewed by your attorney.