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MLB Reaches Settlement with Minor League Teams, Avoids Antitrust Challenge at Supreme Court

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MLB Settles Lawsuits from Minor League Teams, Avoids Supreme Court Antitrust Challenge

Major League Baseball (MLB) has reached a settlement in federal and state court lawsuits filed by minor league teams that lost their affiliations with the big leagues, thereby avoiding a potential challenge to its antitrust exemption at the U.S. Supreme Court.

Confidential Settlement

James W. Quinn, the lawyer representing the suing teams, announced that a settlement had been reached in all three cases, but the terms of the settlement remain confidential. MLB declined to comment on the matter.

Changes in Minor League Affiliation

In September 2020, MLB reduced the minimum guaranteed minor league affiliation agreements from 160 to 120 and took over the management of the minors from the National Association of Professional Baseball Leagues. This move led to legal action from several minor league teams. The parent companies of the Staten Island Yankees, Tri-City ValleyCats, Salem-Keizer Volcanoes, and Norwich Sea Unicorns filed lawsuits in December 2021, alleging a violation of the Sherman Antitrust Act. They claimed that MLB's actions artificially reduced and capped output in the market for Minor League Baseball (MiLB) teams affiliated with MLB clubs. The federal lawsuit was dismissed due to MLB's antitrust exemption, and the decision was upheld by the 2nd U.S. Circuit Court of Appeals. The minor league teams then sought a review from the U.S. Supreme Court to challenge baseball's antitrust exemption, but the Supreme Court had not yet decided whether to accept the case. The Supreme Court granted MLB an antitrust exemption in a 1922 ruling, considering baseball as exhibitions exempt from antitrust laws. Subsequent cases reaffirmed this exemption, emphasizing that any changes should come from Congress. This settlement allows MLB to avoid a potential Supreme Court challenge and resolves the legal disputes with the minor league teams.

Hot Take: The Impact of MLB's Settlement on New Businesses

The recent settlement reached by Major League Baseball (MLB) with minor league teams, avoiding a potential Supreme Court antitrust challenge, could have significant implications for new businesses, particularly in the sports industry.

Understanding Antitrust Laws

This case underscores the importance of understanding and adhering to antitrust laws. New businesses must be aware of these laws to prevent monopolistic practices and promote fair competition. The MLB's antitrust exemption, granted by the Supreme Court in 1922, is a unique case and not applicable to most industries.

Managing Affiliations and Partnerships

The dispute arose from MLB's decision to reduce its minor league affiliations and take over the management of minor leagues. This highlights the need for businesses to manage their affiliations and partnerships carefully, considering the potential legal implications of their decisions.
Resolving Legal Disputes
The confidential settlement reached in this case demonstrates the value of resolving legal disputes amicably, especially when the potential consequences could be far-reaching. For new businesses, it's a reminder of the importance of having robust legal strategies in place to handle potential disputes and challenges. In conclusion, while the MLB's case is specific to the sports industry, the lessons drawn from it are universally applicable to new businesses across all sectors.
Story First Published at: https://financialpost.com/pmn/business-pmn/mlb-settles-lawsuits-from-minor-league-teams-avoids-possible-antitrust-challenge-at-supreme-court
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