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Jun232011

Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce

The recent purchase of Strikeforce by Zuffa, LLC (the UFC’s parent company) has, in the minds of many fans, created a monopoly in MMA.  Unfortunately, there is a great deal of confusion as to what constitutes a “monopoly” under the antitrust laws, and when such a monopoly is illegal.  Below I’ll provide a very brief introduction into the antitrust offense of illegal monopolization as it applies to the world of MMA in the hopes that this framework will help fans better understand the ongoing debate.

The phrase “antitrust” stems from the late nineteenth century when John D. Rockefeller’s Standard Oil Company used “trusts” to attempt to monopolize the oil industry in the United States.   The US passed the Sherman Act (and later the Clayton Act) in an effort to prevent the monopolistic actions and other anticompetitive behavior of these trusts, hence the term “antitrust.”  For non-US readers, most nations used the term “competition law” to mean the same thing as antitrust.

First, it’s important to understand that simply having a monopoly is not illegal.  Let’s assume for a second that Dana White & Co. do have a monopoly over MMA—that, by itself, is not an antitrust violation.  An antitrust violation only exists when (1) a party possesses monopoly power, AND (2) that party has acquired, enhanced, or maintained that power by the use of exclusionary conduct.  If the UFC/Strikeforce combination has monopoly power as a result of smart business practices and a superior product alone, then that monopoly is perfectly legal.  However, if they are using that monopoly power to exclude competitors then they are likely in violation of antitrust laws.

Second, there is a great deal of confusion about when a monopoly exists.  Contrary to the popular definition that a monopoly exists when there is only one provider in a market, a monopoly for the purposes of US antitrust laws exists whenever one participant in a market has the power to control prices or exclude competition.  A market share of more than 70% is generally enough to prove monopoly power.  Of course, the key in most illegal monopolization cases is this question:  “70% of what market?”  In MMA, for example, the relevant market might consist only of “televised professional MMA.”  Similarly, courts have held that the relevant market in a case involving professional boxing could be limited to only “championship boxing.”  Depending on the specific market definition accepted by the court, the UFC/Strikeforce combination likely possesses monopoly power.

Finally, it’s important to realize that both the Justice Department and private companies can sue to enforce the antitrust laws.  The Justice Department tends to use their limited resources to address mergers between major utilities, huge multinational corporations, and other instances deemed critical to the national economy.  As a result, most antitrust litigation is commenced by private companies—usually when one company feels it has been harmed by the anticompetitive actions of another.

If you have concerns about anticompetitive behavior in any industry sector, contact jvail@vail-law.com for a consultation on legal options including antitrust and other business claims.

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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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    The Law Office of Jeff Vail, LLC - - Denver Business Litigation - Mixed Martial Arts & Antitrust Law - A Primer on Zuffa, LLC's Purchase of Strikeforce
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