Supreme Court Decides National Collegiate Athletic Association v. Alston

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

On June 21, 2021, the U.S. Supreme Court decided National Collegiate Athletic Association v. Alston, unanimously holding that the NCAA’s restrictions on education-related benefits for college athletes violates federal antitrust law.

The plaintiffs are a group of current and former college athletes who alleged that the NCAA’s restrictions on undergraduate athletic scholarships, compensation related to athletic performance, and education-related benefits that member institutions may make available to student athletes violate section 1 of the Sherman Act, which prohibits “contract[s], combination[s], or conspirac[ies] in restraint of trade or commerce.” The Supreme Court has long held, however, that the Sherman Act prohibits only “undue” restraint of trade, and courts generally apply a “rule of reason analysis” to challenged trade practices, conducting “‘a fact-specific assessment of market power and market structure’ to assess a challenged restraint’s ‘actual effect on competition.’”

Applying a rule of reason analysis, the district court held that the NCAA’s rules limiting “athletic scholarships to the full cost of attendance” and restricting “compensation and benefits unrelated to education” were justified under federal antitrust law, noting that “professional-level cash payments … could blur the distinction between college sports and professional sports and thereby negatively affect consumer demand.” At the same time, however, the district court enjoined the NCAA from enforcing its restrictions on “education-related benefits,” such as “scholarships for graduate or vocational school, payments for academic tutoring, or paid posteligibility internships,” holding that such benefits cannot be “confused with a professional athlete’s salary” and are not justified by “consumer demand for college sports.” The Ninth Circuit affirmed, and the NCAA sought certiorari, arguing that its compensation restrictions were subject to an “abbreviated deferential review” — also referred to as a “quick look” review — rather than a full rule of reason analysis.

The Supreme Court affirmed, holding that the district court and Ninth Circuit properly subjected the NCAA’s compensation restrictions to a rule of reason analysis and that the compensation restrictions do not pass muster under that standard in light of the district court’s factual findings.

The Court rejected the NCAA’s argument that “it is a joint venture and that collaboration among its members is necessary if they are to offer consumers the benefit of intercollegiate athletic competition,” noting that although joint-venture status may be relevant for some forms of restraints (such as rules for game play), it does not automatically excuse the “NCAA’s rules for fixing wages.” The Court also rejected the NCAA’s reliance on the Court’s decision in National College Athletic Association v. Board of Regents of University of Oklahoma, 468 U.S. 85 (1984), noting that the Court in Board of Regents “did not have occasion to declare — nor did it declare — the NCAA’s compensation restrictions procompetitive both in 1984 and forevermore.” Finally, the Court rejected the NCAA’s argument that it and its member institutions are entitled to deferential review because they are not commercial enterprises, noting that the Court has consistently refused to exempt organizations from Sherman Act regulation merely because their restraints of trade “serve uniquely important social objectives.”

Applying the rule of reason analysis, the Court affirmed the lower courts’ holding that the NCAA could achieve any procompetitive benefits intended by its compensation restrictions with significantly less restrictive alternative rules.

Justice Gorsuch authored the opinion for a unanimous court. Justice Kavanaugh authored a concurring opinion.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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