In Agnew et al. v. NCAA, the Seventh Circuit dismissed a proposed price-fixing class action against the NCAA. In October 2010, the name plaintiff, a former Rice University football player, filed a Sherman Act claim, alleging that NCAA member institutions ran a degree price-fixing scheme. For years, the complaint alleges, the schools agreed that they would never offer student-athletes multiyear athletic scholarships or grants. In addition, they were alleged to have placed artificial caps on the number of scholarships and grants the each school could offer to athletes. These arrangements, the class claimed, reduced competition in the market for bachelor’s degrees and student-athlete labor.
In opposing the NCAA’s motion to dismiss, the class argued that the court could use a “quick-look” analysis to analyze the anti-competitive effect on the market. The court disagreed and held that although plaintiffs may sometimes avoid showing that an agreement had anti-competitive effects, they must show that a relevant market existed. And in this case, the court held, plaintiffs failed to do so. The court also noted that a bachelor’s degree market, as asserted by the plaintiffs, would include many more people than scholarship athletes. As a result, the anti-competitive impact of an NCAA bylaw would likely be very minimal. Furthermore, bachelor’s degrees are not automatically received upon the payment of tuition because students pay for the opportunity to earn a bachelor’s degree, not the actual degree. The complaint therefore failed to identify a product market for bachelor’s degrees.
Lastly, the court rejected the class’s attempt to identify a labor market for student-athletes, noting that although such a market might well exist, plaintiffs had not identified it in their amended complaint.