Appeals Court Deflects MSG

[WSJ_law_blog]

Back in the fall, we posted on the antitrust suit that MSG, owner of the New York Rangers, filed in New York federal court against the NHL. According to reports, MSG filed the suit in the face of the NHL’s promise to begin fining MSG $100,000 per day if it didn’t give the league complete control over the Rangers’ web site. Reportedly, the league wants to convert the site into one of 30 “cookie-cutter” club web sites at NHL.com - The National Hockey League Web Site. (Here’s commentary on the complaint from the Sports Law blog, and here’s more from the Sports Economist blog.)

“By seeking to control the competitive activities of independent businesses in ways that are not necessary to the functioning of that legitimate joint venture, the NHL has become an illegal cartel,” the suit said (the complaint was not available). “The NHL has no competitive justification for seizing the Rangers Web site, which MSG today uses as a competitive tool to generate and maintain fan interest in the Rangers in competition with other NHL teams.”

In November, the district court ruled against MSG’s request for a preliminary injunction. Today, more bad news for MSG. The Second Circuit Court of Appeals released a summary order (not available) finding MSG’s PI argument “without merit,” and sending the suit back to the trial court for a trial on the merits of the case — a process that could reportedly take more than a year if MSG pursues it.

The court of appeals wrote that MSG “did not show that the NHL’s website ban has had an actual adverse effect on competition in the relevant market. Nor did MSG demonstrate that the many procompetitive benefits of the NHL’s restrictions could be achieved through an alternative means that is less restrictive of competition.”