Comments on: Why are TV studios and sports teams allowed to colluded in labor negotiations?

Question: Why are TV studios and sports teams allowed to colluded in labor negotiations?

mullacc — Fri, 28 Dec 2007 11:20:55 -0800

Question about the Writer's Guild strike and comparable situations in other industries: why are the studios allowed to negotiate as a single entity, the AMPTP? How does this situation compare to the various US sports leagues and the auto and airline industries? I'm having trouble connecting the dots across the various things I've read.

Here's what I think I know:
1. The AMPTP represents the studios in their negotiations with the WGA. This will likely result in a CBA that determines royalty rates for the entire industry.
2. The various sports leagues have similar arrangements, e.g., the MLBPA negotiates with the MLB, a collective representing all the teams. The MLB has an anti-trust exemption, but that just allows it to fight off competitive leagues. Other US sports leagues have no such exemptions. But all the sports leagues allow things like player trades, which I can't imagine going over too well in other industries.
3. In the auto and airline industries, each individual company negotiates directly with the various unions.

Situations 1 & 2 seem like collusion to me. Just as obvious as if Pepsi and Coke formed a collective entity to negotiate aluminum prices. So why are the studio/sports collectives allowed to negotiate against the unions? Is there a legal principle that makes my analogy inappropriate? Of course, I'm glossing over the fact that unions are themselves a form of collusion among workers, but that's a collusion blessed by law.

And, finally, is there reason that the airline and auto industries couldn't adopt the same strategy as the studio/sports collectives?

By: bove

bove — Fri, 28 Dec 2007 11:34:44 -0800

Looking around, I found this Q&A about the baseball antitrust exemption. What it suggests to me is that the MLBPA or the WGA could sue, but they don't because the ability to negotiate with all of the teams/producers at once is beneficial.

You also might try contacting the author of that article whose specialty seems to be sports law.

Here is another article on this issue. It also suggests that leagues can be sued, it is just that the benefits of a single negotiator usually outweigh the potential harm.

By: bove

bove — Fri, 28 Dec 2007 11:37:11 -0800

Finally, here is the full text of a book on Questia about Professional sports and antitrust issues.

By: smackfu

smackfu — Fri, 28 Dec 2007 11:37:13 -0800

Up until the 17th, the WGA didn't choose to negotiate separately with individual studios. Here 's the relevant bit from their note to the union members:

We have therefore decided to reach out to major AMPTP companies and begin to negotiate with them individually. As you may know, bargaining on a multi-employer basis through the AMPTP is an option for the WGA, not a legal requirement. Each signatory employer is required to bargain with us individually if we make a legal demand that it do so.

We will make this demand on Monday December 17th and hope that each company responds promptly, in accordance with the law.

I haven't been able to find any news stories that indicate whether they actually did make the demand, or the studio response.

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Fri, 28 Dec 2007 12:04:49 -0800

Section 6 of the Clayton Act of 1914 (codified in 18 U.S.C. section 17) exempts labor organizations from the general scheme of U.S. antitrust law.

I think that's a large part of the answer. Since labor unions aren't subject to the same restraints on anti-competitive behavior, they can choose to negotiate with an entire industry. Such negotiations aren't collusive in the normal sense, anyway, since both sides are at the table. Normal collusion occurs when only one side is at the table (e.g. just the producers, but not the consumers, or just the employers, but not the employees).

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Fri, 28 Dec 2007 12:06:17 -0800

Um, 15 U.S.C. section 17. 18 U.S.C. section 17 is the insanity defense, which is precisely how I'm going to explain my screw-up.

By: mullacc

mullacc — Fri, 28 Dec 2007 12:24:58 -0800

Thanks for the links and information so far.

Since labor unions aren't subject to the same restraints on anti-competitive behavior, they can choose to negotiate with an entire industry.

If a union chooses not to negotiate with an industry collective, does it have cause to mount a legal attack on anti-competitive grounds?

I'm sure the costs of such a legal case would be sufficiently prohibitive, but I wonder if it's an option. The other option, I suppose, would be to wait for a member of the collective to give in and abandon the group, which would likely cause a domino effect.

Have the auto companies ever attempted to form a similar collective?

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Fri, 28 Dec 2007 12:33:53 -0800

If a union chooses not to negotiate with an industry collective, does it have cause to mount a legal attack on anti-competitive grounds?

My understanding is that if the labor organization wishes to negotiate with each employer individually, the employers may not separately agree among themselves to insist on the same terms in their individual negotiations.

That is certainly anti-competitive behavior, and since it does not fall within the exemption for labor organizations, it appears to be a violation of the law.

By: MattD

MattD — Fri, 28 Dec 2007 14:29:13 -0800

Smackfu's quote has it right: the unions basically control the scope of multi-employer negotiations.

The unions which elect industry-wide negotiation tend to have in common that their members are inherently mobile among employers. Writers, actors and directors are obviously one category, but the building trades are another -- and, indeed, in the building trades multi-employer negotiations are common.

By: cklennon

cklennon — Fri, 28 Dec 2007 14:42:24 -0800

You answered your own question re: baseball. They have an antitrust exemption, but it's not to fend off rival leagues. See the American League, Continental League. The antitrust exemption for MLB is to prevent clubs from moving locales without the blessing of the other teams in the league (as represented by MLB).

It is collusion. Plain and simple. And every time the exemption has been challenged in court since its inception, the exemption has been curtailed. See Toolson, see Flood. (I am of course glossing over the fact that in the Flood case the court actually didn't rule against the exemption because they considered the original decision to be fundamentally flawed and prompted Congress to act).