Fanatics, Italian Rival Test Antitrust Law in Market Share Fight

Two top sports trading card companies are battling each other in US courts for market share over lucrative collectibles that can sell for more than $1 million dollars apiece.

Panini SpA, an Italian company, has turned to antitrust law as its favored weapon against US-based newcomer Fanatics Inc., mirroring sports card industry lawsuits going back decades. At stake is a competitive retail industry worth billions of dollars, featuring collectibles like a premium Panini card featuring NBA star LeBron James that sold at auction last year for $2.4 million.

The outcome of the dispute between Panini and Fanatics will also provide insights into the legality of exclusive arrangements, outside observers say. The evidence so far suggests Panini, which entered the US market in 2009, will have a high bar to meet to advance its lawsuit against Fanatics’ use of such deals.

Panini in August alleged Fanatics violated antitrust law by securing long-term exclusive deals for licenses with the National Football League, the National Basketball Association, and Major League Baseball to produce branded trading cards, shutting Panini out of the market for those products.

Fanatics’ 20-year contracts with the NFL and MLB are “unprecedented” in the industry, said David Boies, a lead attorney for Panini.

“If you can enter dealing arrangements of this scope and scale, normal rules of exclusive dealings just don’t apply,” said Boies, who recently announced plans to step down as chairman of law firm Boies Schiller Flexner.

Fanatics shot back with its own complaint against Panini, saying the Italian company’s suit was “baseless” and accusing it of failing to invest in innovation while actively trying to sell off its business for roughly a decade. Panini didn’t respond to requests for comment about attempts to sell off its business.

See also: Star Litigator David Boies Will Step Down From Helm of Firm (1)

‘Competition Through Litigation’

The back-to-back lawsuits are indicative of a long-standing tradition of litigation between sports card companies. The disputes are often over card rights and licenses from leagues and players associations’ for use of logos, color combinations, and players’ names, images, and likeness on cards.

Card companies including Topps Co., Upper Deck Co., and the former Fleer business have sued or been sued in cases dating back to the 1980s, said Kenneth Jacobsen, practice professor of law at Temple University’s Beasley School of Law.

“It’s called competition through litigation,” Jacobsen said. “As Yogi Berra said, ‘It’s deja vu all over again.’”

Panini’s complaint against its rival centers on Fanatics’ 20-year agreements with the NFL and MLB and their players’ associations, and 10-year contracts with the NBA and its players association. The deals have “locked up all three major sports for the next decade and two of them for the next two decades,” according to Panini’s amended complaint filed in October. “Fanatics accomplished this without open bidding.”

NFL, MLB, and NBA cards “easily represent” over 75% of the sports card business, said Ken Goldin, founder of Goldin Auctions that sold the $2.4 million LeBron James card.

But Fanatics, in its complaint from August, says Panini shouldn’t point fingers. Panini’s own overlapping exclusive contracts with sports leagues and players association “give the lie to any allegation that it is now an antitrust victim,” Fanatics said.

Panini has an exclusive license deal with the NBA through September 2025 as well as exclusive licenses with the NFL and its players association through March and February 2026.

“It is hypocritical for Panini now to suggest that Fanatics Collectibles violated the antitrust laws simply because the players’ associations and leagues chose to license their intellectual property to Fanatics Collectibles as opposed to Panini,” Fanatics said in its complaint.

A spokesperson says the company intends to seek dismissal of Panini’s suit.

‘Booming’ Industry

The companies are battling for a market growing due to a combination of consumers seeking to recreate their childhood collections, kids ages nine to 17 who want to become dealer entrepreneurs, and investors with high net worth who treat the cards as alternative investments, Goldin said. Goldin also stars in the Netflix show “King of Collectibles: The Goldin Touch.”

Investors are “not in it for the love of the cards,” Goldin said. “They treat it like a stock, an ounce of gold, or a barrel of oil.”

The global sports card trading market is expected to reach more than $20 billion by 2030, up from $9.69 billion in 2022, according to market research and consulting firm Kings Research.

Meanwhile, casual collectors now have a bevy of retail outlets to buy the cards including Target, Walmart, and convenience stores, Goldin said—in contrast to the need to go to more specialty stores in the past. “It is a booming retail business,” he said.

Panini has grown the industry significantly since it entered the market, introducing digital trading card apps in 2015.

Fanatics, a sports memorabilia company, entered the market in 2021 when it announced its exclusive licensing deals.

In 2022, the company purchased the Topps trading card business and acquired control over GCP, a card manufacturer that produces Panini cards. Panini says the GCP purchase violates Section 7 of the Clayton Act, which prohibits acquisitions that inhibit competition.

Market Power

Antitrust law doesn’t typically disfavor exclusive dealing contracts. They can be considered lawful, or anticompetitive, depending on factors including the length and scope of a contract and how much power a company has in a specific market.

“These are the matters that give larger companies in particular insights about what they can and can’t do” when it comes to exclusive contracts, said William Kovacic, former chair of the Federal Trade Commission and now law professor at George Washington University. “Each case is another opportunity for a case to lay out boundaries. Smaller cases can make big law.”

The FTC doesn’t have a specific rule determining what length of a contract should be considered anticompetitive, but it has become far “more skeptical” of exclusive dealings, particularly when the firm imposing them is a significant player in the market, Kovacic added.

“The larger your share of the market, the more critical the questioning will be about the scope of the restriction and its duration,” he said.

Monopolization Claims

A key battleground in the case is whether Panini can prove that Fanatics violated Section 2 of the Sherman Act, which prohibits attempts at monopolization in a specific market.

Angela C. de Cespedes, an attorney for Saul Ewing LLP, said Panini is going to have an “extremely difficult” time surviving the motion to dismiss stage with its monopolization claims, largely because Fanatics only entered the trading card market two years ago.

“Competition is healthy—that is the basic premise of the US economy,” said de Cespedes, a leader in the firm’s sports and entertainment law practice. “The leagues and players associations have a right, quite frankly, to license the ability to use their logos and their image and the players’ names to whoever they want to, based on who’s offered them the best deal.”

Panini could face difficulty proving there is relevant product market limited to trading cards that cover “major US Professional Sports Leagues,” as opposed to a wider trading card market that might include other sports, such as soccer, hockey, and golf, or cards unrelated to sports, such as Pokemon cards, said Patrick McGahan, partner at Scott+Scott who specializes in private litigation.

“Unless Panini can prove that the relevant market is limited to NFL, NBA, and MLB trading cards, it will struggle to show evidence of substantial foreclosure,” he said.

Fanatics is likely to advance arguments that Panini has “simply invented this product market” for the purpose of litigation, and that its NFL, NBA, and MLB trading cards will face competition from a wide range of collectibles, McGahan said.

Gordon Lang, a former Department of Justice lawyer who leads Nixon Peabody’s antitrust practice, also questioned whether Fanatics’ exclusive agreements were any worse than leagues and players associations producing cards in-house.

“The sports leagues and players associations were under no obligation to license their intellectual property to anyone,” Lang said. “They could have said, ‘We are going to form our own company to do this.’”

Panini is represented by Boies Schiller Flexner and Carlton Fields PA. Fanatics is represented by Latham & Watkins LLP, Quinn Emanuel Urquhart & Sullivan LLP, and Gunster Yoakley & Stewart PA.

The cases are Panini America Inc. v. Fanatics Inc., S.D.N.Y., No. 1:23-cv-09714 and Fanatics Collectibles Topco Inc. v. Panini S.P.A, S.D.N.Y., No. 23-cv-06895.