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MLB, Teams, Fanatics Inc. Accused of Online Merchandise Monopoly

June 10, 2022, 2:55 PM

Major League Baseball is facing federal antitrust litigation in Manhattan over claims that the organization and its teams have conspired with Fanatics Inc. to corner the market for MLB products purchased through online platforms like Amazon.com Inc.'s marketplace for third-party sellers.

The lawsuit, filed Thursday by a sports merchandise business, also targets Fanatics and the league’s 30 teams. It accuses MLB of tilting the scales in favor of Fanatics, which it partly owns, through restrictions on distribution of licensed products to other wholesalers and retailers.

Fanatics now “dominates” online MLB merchandise sales thanks to the restrictions, which require distributors and retailers to get league permission for any resales, according to the proposed class action filed in the U.S. District Court for the Southern District of New York.

The deals allowing “MLB and Fanatics to reach downwards to attempt to restrict the conduct of retailers that horizontally compete with them” have left Fanatics “in complete control of the commerce involving MLB licensed apparel” and products, “not only on Amazon but everywhere,” the suit says.

MLB and Fanatics didn’t immediately respond to requests for comment Friday.

The suit was filed by Casey’s Distributing Inc., which is leading similar litigation against the National Football League, another Fanatics part-owner.

According to the new complaint, the agreements giving Fanatics increasing control over official MLB merchandise sales culminated in January with the league’s decision to designate the company its “exclusive master licensee” for “hardgoods” like bats and helmets, with limited exceptions.

“That is, Fanatics has the exclusive right to determine who its competitors are,” the suit says.

Fanatics is now the only feasible destination for downstream retailers that “often require that the seller offer products from the four major sports leagues and the NCAA,” which is a main reason the company’s value has tripled in recent years to $27 billion, according to the complaint.

Cause of Action: Sections 1 and 2 of the Sherman Act.

Relief: An injunction against the licensing and resale restrictions; costs and fees.

Potential Class Size: Any person or company “prohibited from selling MLB licensed products” by the policies in question since January 2016.

Attorneys: Casey’s is represented by Nematzadeh PLLC, Cera LLP, and Kohn Swift & Graf PC.

The case is Casey’s Distrib. Inc. v. Office of the Comm’r of Baseball, S.D.N.Y., No. 22-cv-4832, complaint filed 6/9/22.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com