(CN) – The owners of a tennis tournament in Germany lost their bid to revive antitrust claims against the Association of Tennis Professionals after it downgraded their tournament when it revamped the ATP Tour. The 3rd Circuit upheld a judge’s dismissal of a lawsuit filed by the German and Qatar Tennis Federations.
The federations had challenged the ATP’s reorganization of the ATP Tour, a worldwide professional tennis circuit, because their tournament had been downgraded from tier one to tier two in the process.
The so-called “Brave New World” restructuring plan, designed to revitalize the tournament’s popularity, channeled more top-tier players to the ATP Tour and reclassified the tier status of certain ATP tournaments, including the tournament in Hamburg, Germany.
The tennis federations sued ATP and its directors, claiming they violated antitrust law and breached their fiduciary duties. They claimed the ATP conspired to monopolize the market for men’s professional tennis players’ services.
A federal judge dismissed the claims against the directors, and a jury ruled for ATP on the antitrust claims against the association.
On appeal, the federations argued that the jury should have been instructed to conduct a “quick look” analysis, without a detailed market analysis, of whether the restructuring harmed competition.
But Judge Anthony Scirica of the Philadelphia-based appeals court said it was impossible to analyze the claims without a more extensive market analysis.
The suggested quick-look analysis “is not appropriate and proof of relevant market is required under full-scale rule of reason,” Scirica wrote.
The court also dismissed the challenge to the jury’s finding that ATP acts as a single entity that cannot enter contracts or conspire with its members.
The three-judge panel acknowledged that “courts have historically subjected sports leagues to antitrust scrutiny,” as evidenced by the Supreme Court’s recent decision that the NFL’s 32 teams are “separate, profit-maximizing entities.” But in this case, Scirica wrote, the federations’ claims “still fail because they did not satisfy their burden of proving a relevant market.”
The court affirmed dismissal of the breach of loyalty claim against ATP director Charles Pasarell, saying he was not “materially self-interested” when he voted to approve the Brave New World plan.
The federations did not appeal the dismissal of similar claims against the other five directors.