NFL, Fanatics Monopolized Online Merchandise Market, Class Action Alleges [UPDATE]

If you’ve recently purchased NFL team merchandise online from Fanatics or directly from the league, a new lawsuit says you may have paid too much for it.

According to a proposed class action filed this week, the National Football league, its 32 teams and online retailer Fanatics have conspired to effectively wipe out any competition in the market for official licensed merchandise, including NFL-licensed t-shirts, hats, jerseys, drinkware, and other items stamped with team logos or the league’s shield.

As a result, the NFL and Fanatics, with no competing sellers in sight and the final say over who can use the league’s logos and sell each team’s gear, have worked together to dominate online sales and charge “supracompetitive monopoly prices” for licensed team merchandise, sharing the profits among themselves, the 71-page lawsuit says.

“With far fewer competitors, and without competition among themselves, Defendants no longer face meaningful competition in the online retail market,” the case summarizes.

The alleged boycott

With the NFL’s purchase of an equity stake in Fanatics, the league created for itself a financial interest to assist the company in its “campaign to usurp as much of the online retail space as possible,” the lawsuit alleges. Whereas teams, as independent licensors, might want to make their gear available to as many fans as possible, the NFL’s relationship with Fanatics has instead birthed a “more lucrative retail monopoly” whereby smaller, competing online retailers have been excluded from the market, the complaint claims.

As traditional brick-and-mortar sales have given way to e-commerce, third-party online marketplaces have become “a farmers’ market or antiques mall” wherein multiple independent sellers compete for consumers’ money, the suit relays. A benefit of these online marketplaces is that buyers can compare retailers’ prices and, from a retailer’s standpoint, winning sales in an online marketplace is effectively a “race to the bottom” by offering the lowest prices, the lawsuit says.

To carry out their conspiracy, the defendants, the case alleges, worked together to boycott retailers who sold licensed NFL gear through third-party online marketplaces, such as the one run by Amazon.

Defendants agreed that the Teams and Fanatics—all competing online retailers of NFL Licensed Products—would impose new conditions on licensees, in particular, a prohibition on selling any NFL Licensed Products to online retailers who sold the products on [third-party online marketplaces.]”

This effectively eliminated competitors who could have charged lower prices to consumers for licensed merchandise sold online, the complaint claims.

“Defendants’ motivation is readily apparent,” the case says. “As Fanatics’s chairman Michael Rubin puts [it], if NFL Licensed products were commonly available on Amazon, ‘there’d be no reason for [Fanatics] to be.’”

Which teams’ NFL licensed merchandise is mentioned in the lawsuit?

The proposed class action claims that prices for the merchandise of all 32 NFL teams has been affected by the alleged competition-killing conduct of the league and Fanatics:

Instead of competing independently, each of the league’s 32 teams have formed a “cartel” that licenses their property as a group through defendant National Football League Properties, Inc., the case says.

“Unlike real competitors in an open and competitive marketplace, the Teams’ collusive marketing agreements disincentivize competition among themselves,” the complaint reads.

Who does the lawsuit look to cover?

The proposed class action looks to represent all persons or entities in the United States, including its territories and the District of Columbia, who bought NFL Licensed Products directly from Fanatics, any NFL defendant or team, or any current or former subsidiary or affiliate of the defendants at any time from January 1, 2016 until the unlawful conduct alleged in the lawsuit has ceased.

I’ve bought some NFL merch. How do I get involved?

Since the case was just filed, there’s generally nothing NFL fans need to do at this time to join or make sure they’re included in the class action. It will be only if and when the lawsuit settles that those who are covered by the case, also known as “class members,” would need to act, which typically involves filing a claim form online or by mail.

If a settlement were to eventually be reached, eligible NFL merchandise buyers would likely receive a notice, by mail and/or email, with instructions on how to file a claim and other information on their legal rights.

Keep in mind that class action lawsuits generally take time to work their way through the legal process. Consumers who have bought licensed NFL merchandise should sign up for ClassAction.org’s free weekly newsletter and make sure to hang on to their receipts!

The complaint can be found below.