Ultimate Fighting Championship (UFC) is going to be hearing from some familiar faces over the next few months, as mixed martial arts (MMA) fighters and former UFC headliners Jon Fitch, Cung Le, and Nate Quarry have been named as "identity class plaintiffs" in the upcoming class-action lawsuit against the promotion.
The lawsuit, which was announced earlier today at a special press conference in San Jose, California, accuses UFC of violating the Sherman Antitrust Act, after illegally maintaining monopoly and monoposony power by "systematically eliminating competition from rival promoters, artificially suppressing fighters' earnings from bouts and merchandising and marketing activities through restrictive contracting and other exclusionary practices."
The aforementioned fighters will be represented by Joseph Saveri Law Firm, Inc., Cohen Milstein Sellers & Toll, PLLC, Berger & Montague, P.C., among others. Each firm has a history battling major companies like Apple and Dow Chemical, among others, according to Bloody Elbow.
The Sherman Act outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize." Long ago, the Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. For instance, in some sense, an agreement between two individuals to form a partnership restrains trade, but may not do so unreasonably, and thus may be lawful under the antitrust laws. On the other hand, certain acts are considered so harmful to competition that they are almost always illegal. These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are "per se" violations of the Sherman Act; in other words, no defense or justification is allowed.
Penalties can swing upward of $100 million.
UFC -- recently valued at $1.65 billion -- has been accused of operating as a "monopoly" in the past, but mostly from MMA haters and local unions with an ax to grind. It is also not uncommon to hear past and present fighters (like this one) openly complain about the UFC pay structure, but a 2012 inquiry by the Federal Trade Commission (FTC) returned no action.
A lot has changed in two years.
That includes a recent sponsorship with Reebok, one that will eliminate outside companies from any form of fighter advertising during fight week (more on that here). While it is not expected to negatively impact the sports' highest paid fighters, the bottom tier may already be feeling the pinch.
Also of important note in regards to Single Firm Conduct:
Some companies succeed in the marketplace to the point where their behavior may not be subject to common competitive pressures. This is not a concern for most businesses, as most markets in the U.S. support many competing firms, and the competitive give-and-take prevents any single firm from having undue influence on the workings of the market.
Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not illegal for a company to have a monopoly, to charge "high prices," or to try to achieve a monopoly position by what might be viewed by some as particularly aggressive methods. The law is violated only if the company tries to maintain or acquire a monopoly through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification.
Definitely a lot to unpack here, fight fans.
But you can expect to hear recurring themes throughout this ordeal, which may not sound unfamiliar to longtime fans of the sport. UFC has often used its considerable clout to pick and choose which sponsors it allowed inside the cage, therefore limiting or perhaps even eliminating the athlete's right to earn money.