Do UCI Rules Prohibiting Riders from Competing in Unsanctioned Events Violate US Anti-Trust Laws?

Last week USA Cycling, the National Governing Body (NGB) for the sport of cycling in the United States, stirred up significant controversy when it clarified UCI Rule 1.2.019. UCI Rule 1.2.019 prohibits any UCI license holder from participating in any “event” that has not been included on a national, continental or world calendar or that has not been recognized by the UCI, a national federation, or a continental confederation. NGBs may grant special exceptions for races or particular events held in their own countries. The term “event” is not defined in the UCI rules. The UCI’s clarification describes exempted events as those organized by groups not associated with NGBs, such as firefighters, students, etc. The rule is not new, but USA Cycling only started enforcing it about three years ago. It has since caused significant controversy among licensed riders, because many, especially cyclocross and mountain bike riders, rely on “prohibited” races to supplement their income. Furthermore, riders participating in unsanctioned races could face fines and suspensions. As an attorney, it is hard to look at Rule 1.2.019 without thinking that it violates some law, most significantly the Sherman Antitrust Act (15 U.S.C. Sections 1-7).

Sherman Antitrust Act Sign

Sherman Act anti-competition violations can occur in two ways. A Section 1 violation requires an agreement between two or more separate entities that adversely affects a relevant market and has anticompetitive effects that outweigh procompetitive effects. A Section 2 violation occurs if a person monopolizes market power and uses unacceptable means to acquire, entrench, or maintain market power. The Ted Stevens Act, as did the Amateur Sporting Act before it, does not expressly exempt activities of NGBs from federal antitrust laws. (Behagen v. Amateur Basketball Ass’n, 884 F.2d 524, 529 (10th Cir. 1989).) Implied Sherman Act exemptions are not favored and only found when necessary for the operation of a statutory scheme. Despite such strong language, courts have consistently exempted NGBs from anti-trust laws, describing the Ted Stevens Act as granting NGBs “monolithic” control of each sport. (Behagen, 884 F.2d 524, 529-30; Eleven Line v. N. Texas State Soccer Ass’n, 213 F.3d 203-04 (5th Cir. 2000); JES Properties, Inc. v. USA Equestrian, Inc., 458 F.3d 1224, 1230-31 (11th Cir. 2006).) In 1989, the 10th Circuit upheld a ruling recognizing the authority of the Amateur Basketball Association to refuse to reinstate a professional basketball player’s amateur status after the player played for the NBA. (Behagen, supra 884 F.2d at 530.) The 11th Circuit later ruled that USA Equestrian Federation had the authority to enforce the “Mileage Rule,” which prohibited two equestrian competitions from occurring within a certain proximity on the same date. (JES Properties, supra 458 F.3d 1224.) Finally, a US District Court held that the US Soccer Federation had the authority to sanction international soccer matches and to charge sanctioning fees. Notably, however, the District Court denied an earlier motion by the USSF for a judgment on the pleadings on the basis that, even though professional athletes may play in the Olympics under the authority of FIFA, it does not necessarily follow that FIFA (and the USSF) have authority over all professional soccer players. (Championswold LLC v. U.S. Soccer Fed’n, Inc., et. al., 726 F.Supp.2d 961 (N.D. Ill. 2010).) The District Court analogized the argument to the International Basketball Federation and Amateur Basketball Association having authority over the National Basketball Association, which they obviously do not. Consequently, although there are limits to the authority that NGBs have over their respective sports, those limits have not yet been reached in US courts.

Does UCI Rule 1.2.019 exceed the limit?  That limit has been found in the European Union. In Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman, where the European Court of Justice (ECJ), the highest court for disputes under European Union law, ruled that FIFA’s transfer fees for soccer players changing teams at the expiration of their contracts and transfer limits based on nationality violated worker rights to freedom of movement. In addition to becoming one of the most significant legal decisions in international sports law, the Bosman Ruling opened the door to free agency for European soccer players and, with it, significant financial gains. While the Bosman Ruling has its critics, most agree that it has had a positive impact on soccer.

Will the Bosman Ruling overrule UCI Rule 1.2.019?

Given that UCI Rule is punitive and prohibits licensed riders from competing in unsanctioned events, it could arguably restrain the movement of workers in a manner similar to transfer fees. Although US courts are not bound by rulings of the ECJ, UCI Rule 1.2.019 also applies in EU countries, where professional cycling is a much larger and more prevalent sport, especially at the professional level. Consequently, even if a US court is unwilling to overrule UCI Rule 1.2.019, a court in the EU, following Bosman, would. The US First Circuit upheld transfer fees imposed by Major League Soccer (MLS) in Fraser v. MLS, 97 F.Supp.2d 130 (D.Mass. 2000), Aff’d by 284 F.3d 47 (1st Cir. 2002). However, Fraser has been widely criticized and, much like the Behagen line of cases, was dictated much by its facts, the organizational characteristics of MLS, and the market for soccer in the US. Much as US soccer would likely benefit from the elimination of transfer fees and other restrictions on free agency, cycling would likely also benefit from allowing riders to compete in more evens, even if they are unsanctioned.

For now, the UCI has backed off of enforcing Rule 1.2.019. Nonetheless, as the Olympics become more commercialized such disputes will only become more frequent.

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