An Antitrust Analysis of NCAA Amateurism as an Unlawful Tying Restraint: Market Power, Surplus Extraction, and Foreclosure

Abstract

Economists have long recognized the National Collegiate Athletic Association (NCAA) as a monopsonistic cartel that restrains athlete labor compensation below competitive market levels. However, an additional restraint has been heretofore ignored. This article argues that NCAA justifies the restraint on athlete compensation through an anticompetitive tying restraint between two distinct products: intercollegiate athletic participation and post-secondary academic education. Contrary to the unitary “college education” market definition used in the O’Bannon v. NCAA case and to which parties stipulated in subsequent litigation, this article presents evidence of separate relevant markets for these goods. The NCAA Division I cartel leverages its market power in the intercollegiate athletics market, particularly through dominant autonomy “Power-5” conference members, to enhance market power in the tying market, extract consumer surplus from both athletes and the general student body and foreclose competition in the tied market. The existence of separate markets, market power in the tying market, and non-trivial foreclosure sales in the tied education market confirm that NCAA’s model of “amateurism” meets the Supreme Court’s three-pronged per se test for unlawful tying. Further, even in the absence of foreclosure share, the tying arrangement enhances dominant schools’ market power in athletics and achieves surplus extraction by harming competition, which should warrant the imposition of antitrust liability. This article presents an analysis of relevant markets and discusses relevant economic arguments raised by economic experts in the O’Bannon and NCAA Grant-in-Aid litigation, along with a review of the relevant academic literature and legal precedent.