American Needle, Inc. v. National Football League

(Slip Opinion)              OCTOBER TERM, 2009                                       1

                                       Syllabus

         NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
       being done in connection with this case, at the time the opinion is issued.
       The syllabus constitutes no part of the opinion of the Court but has been
       prepared by the Reporter of Decisions for the convenience of the reader.
       See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.


SUPREME COURT OF THE UNITED STATES

                                       Syllabus

 AMERICAN NEEDLE, INC. v. NATIONAL FOOTBALL

              LEAGUE ET AL. 


CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                THE SEVENTH CIRCUIT

     No. 08–661.      Argued January 13, 2010—Decided May 24, 2010
Respondent National Football League (NFL) is an unincorporated asso
  ciation of 32 separately owned professional football teams, also re
  spondents here. The teams, each of which owns its own name, colors,
  logo, trademarks, and related intellectual property, formed respon
  dent National Football League Properties (NFLP) to develop, license,
  and market that property. At first, NFLP granted nonexclusive li
  censes to petitioner and other vendors to manufacture and sell team
  labeled apparel. In December 2000, however, the teams authorized
  NFLP to grant exclusive licenses. NFLP granted an exclusive license
  to respondent Reebok International Ltd. to produce and sell trade
  marked headwear for all 32 teams. When petitioner’s license was not
  renewed, it filed this action alleging that the agreements between re
  spondents violated the Sherman Act, §1 of which makes “[e]very con
  tract, combination . . . or, conspiracy, in restraint of trade” illegal.
  Respondents answered that they were incapable of conspiring within
  §1’s meaning because the NFL and its teams are, in antitrust law
  jargon, a single entity with respect to the conduct challenged. The
  District Court granted respondents summary judgment, and the Sev
  enth Circuit affirmed.
Held: The alleged conduct related to licensing of intellectual property
 constitutes concerted action that is not categorically beyond §1’s cov
 erage. Pp. 4–20.
    (a) The meaning of “contract, combination . . . , or, conspiracy” in §1
 of the Sherman Act is informed by the Act’s “ ‘basic distinction be
 tween concerted and independent action.’ ” Copperweld Corp. v. In
 dependence Tube Corp., 467 U. S. 752, 767. Section 1 “treat[s] con
 certed behavior more strictly than unilateral behavior,” id., at 768,
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                            Syllabus 


    because, unlike independent action, “[c]oncerted activity inherently is
    fraught with anticompetitive risk” insofar as it “deprives the market
    place of independent centers of decisionmaking that competition as
    sumes and demands,” id., at 768–769. And because concerted action
    is discrete and distinct, a limit on such activity leaves untouched a
    vast amount of business conduct. That creates less risk of deterring
    a firm’s necessary conduct and leaves courts to examine only discrete
    agreements. An arrangement must therefore embody concerted ac
    tion in order to be a “contract, combination . . . or, conspiracy” under
    §1. Pp. 4–6.
       (b) In determining whether there is concerted action under §1, the
    Court has eschewed formalistic distinctions, such as whether the al
    leged conspirators are legally distinct entities, in favor of a functional
    consideration of how they actually operate. The Court has repeatedly
    found instances in which members of a legally single entity violated
    §1 when the entity was controlled by a group of competitors and
    served, in essence, as a vehicle for ongoing concerted activity. See,
    e.g., United States v. Sealy, Inc., 388 U. S. 350, 352–356. Conversely,
    the Court has found that although the entities may be “separate” for
    purposes of incorporation or formal title, if they are controlled by a
    single center of decisionmaking and they control a single aggregation
    of economic power, an agreement between them does not constitute a
    “contract, combination . . . or, conspiracy.” Copperweld, 467 U. S., at
    769. Pp. 6–10.
       (c) The relevant inquiry is therefore one of substance, not form,
    which does not turn on whether the alleged parties to contract, com
    bination, or conspiracy are part of a legally single entity or seem like
    one firm or multiple firms in any metaphysical sense. The inquiry is
    whether the agreement in question joins together “separate economic
    actors pursuing separate economic interests,” Copperweld, 467 U. S.,
    at 768, such that it “deprives the marketplace of independent centers
    of decisionmaking,” id., at 769, and therefore of diversity of entrepre
    neurial interests and thus of actual or potential competition. If it
    does, then there is concerted action covered by §1, and the court must
    decide whether the restraint of trade is unreasonable and therefore
    illegal. Pp. 10–11.
       (d) The NFL teams do not possess either the unitary decisionmak
    ing quality or the single aggregation of economic power characteristic
    of independent action. Each of them is a substantial, independently
    owned, independently managed business, whose “general corporate
    actions are guided or determined” by “separate corporate conscious
    nesses,” and whose “objectives are” not “common.” Copperweld, 467
    U. S., at 771. They compete with one another, not only on the play
    ing field, but to attract fans, for gate receipts, and for contracts with
                     Cite as: 560 U. S. ____ (2010)                      3

                                Syllabus

  managerial and playing personnel. See, e.g., Brown v. Pro Football,
  Inc., 518 U. S. 231, 249. Directly relevant here, the teams are poten
  tially competing suppliers in the market for intellectual property.
  When teams license such property, they are not pursuing the “com
  mon interests of the whole” league, but, instead, the interests of each
  “corporation itself.” Copperweld, 467 U. S., at 770. It is not disposi
  tive, as respondents argue, that, by forming NFLP, they have formed
  a single entity, akin to a merger, and market their NFL brands
  through a single outlet. Although the NFL respondents may be simi
  lar in some sense to a single enterprise, they are not similar in the
  relevant functional sense. While teams have common interests such
  as promoting the NFL brand, they are still separate, profit
  maximizing entities, and their interests in licensing team trade
  marks are not necessarily aligned. Nor does it matter that the teams
  may find the alleged cooperation necessary to compete against other
  forms of entertainment. Although decisions made by NFLP are not
  as easily classified as concerted activity, the NFLP’s decisions about
  licensing the teams’ separately owned intellectual property are con
  certed activity and thus covered by §1 for the same reason that deci
  sions made directly by the 32 teams are covered by §1. In making the
  relevant licensing decisions, NFLP is “an instrumentality” of the
  teams. Sealy, 388 U. S., at 352–354. Pp. 11–17.
     (e) Football teams that need to cooperate are not trapped by anti
  trust law. The fact that the NFL teams share an interest in making
  the entire league successful and profitable, and that they must coop
  erate to produce games, provides a perfectly sensible justification for
  making a host of collective decisions. Because some of these re
  straints on competition are necessary to produce the NFL’s product,
  the Rule of Reason generally should apply, and teams’ cooperation is
  likely to be permissible. And depending upon the activity in ques
  tion, the Rule of Reason can at times be applied without detailed
  analysis. But the activity at issue in this case is still concerted activ
  ity covered for §1 purposes. Pp. 18–19.
538 F. 3d 736, reversed and remanded.

  STEVENS, J., delivered the opinion for a unanimous Court.
                       Cite as: 560 U. S. ____ (2010)                              1

                            Opinion of the Court

    NOTICE: This opinion is subject to formal revision before publication in the
    preliminary print of the United States Reports. Readers are requested to
    notify the Reporter of Decisions, Supreme Court of the United States, Wash­
    ington, D. C. 20543, of any typographical or other formal errors, in order
    that corrections may be made before the preliminary print goes to press.


SUPREME COURT OF THE UNITED STATES
                                  _________________

                                  No. 08–661
                                  _________________


         AMERICAN NEEDLE, INC., PETITIONER v.

          NATIONAL FOOTBALL LEAGUE ET AL. 

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

          APPEALS FOR THE SEVENTH CIRCUIT

                                [May 24, 2010] 


   JUSTICE STEVENS delivered the opinion of the Court.
   “Every contract, combination in the form of a trust or
otherwise, or, conspiracy, in restraint of trade” is made
illegal by §1 of the Sherman Act, ch. 647, 26 Stat. 209, as
amended, 15 U. S. C. §1. The question whether an ar­
rangement is a contract, combination, or conspiracy is
different from and antecedent to the question whether it
unreasonably restrains trade. This case raises that ante­
cedent question about the business of the 32 teams in the
National Football League (NFL) and a corporate entity
that they formed to manage their intellectual property.
We conclude that the NFL’s licensing activities constitute
concerted action that is not categorically beyond the cov­
erage of §1. The legality of that concerted action must be
judged under the Rule of Reason.
                              I
  Originally organized in 1920, the NFL is an unincorpo­
rated association that now includes 32 separately owned
professional football teams.1 Each team has its own name,
——————
 1 The   NFL was founded in Canton, Ohio as the “American Profes­
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                     Opinion of the Court 


colors, and logo, and owns related intellectual property.
Like each of the other teams in the league, the New Or­
leans Saints and the Indianapolis Colts, for example, have
their own distinctive names, colors, and marks that are
well known to millions of sports fans.
   Prior to 1963, the teams made their own arrangements
for licensing their intellectual property and marketing
trademarked items such as caps and jerseys. In 1963, the
teams formed National Football League Properties (NFLP)
to develop, license, and market their intellectual property.
Most, but not all, of the substantial revenues generated by
NFLP have either been given to charity or shared equally
among the teams. However, the teams are able to and
have at times sought to withdraw from this arrangement.
   Between 1963 and 2000, NFLP granted nonexclusive
licenses to a number of vendors, permitting them to manu­
facture and sell apparel bearing team insignias. Peti­
tioner, American Needle, Inc., was one of those licensees.
In December 2000, the teams voted to authorize NFLP to
grant exclusive licenses, and NFLP granted Reebok Inter­
national Ltd. an exclusive 10-year license to manufacture
and sell trademarked headwear for all 32 teams. It there­
after declined to renew American Needle’s nonexclusive
license.
   American Needle filed this action in the Northern Dis­
trict of Illinois, alleging that the agreements between the
NFL, its teams, NFLP, and Reebok violated §§1 and 2 of
the Sherman Act. In their answer to the complaint, the
defendants averred that the teams, NFL, and NFLP were
incapable of conspiring within the meaning of §1 “because
they are a single economic enterprise, at least with respect

——————
sional Football Association.” United States Football League v. National
Football League, 842 F. 2d 1335, 1343 (CA2 1988). It took its current
name in 1922. Ibid. Forty-one franchises failed in the first forty-one
years of the League’s existence. Ibid.
                 Cite as: 560 U. S. ____ (2010)            3

                     Opinion of the Court

to the conduct challenged.” App. 99. After limited discov­
ery, the District Court granted summary judgment on the
question “whether, with regard to the facet of their opera­
tions respecting exploitation of intellectual property
rights, the NFL and its 32 teams are, in the jargon of
antitrust law, acting as a single entity.” American Needle,
Inc. v. New Orleans La. Saints, 496 F. Supp. 2d 941, 943
(2007). The court concluded “that in that facet of their
operations they have so integrated their operations that
they should be deemed a single entity rather than joint
ventures cooperating for a common purpose.” Ibid.
   The Court of Appeals for the Seventh Circuit affirmed.
The panel observed that “in some contexts, a league seems
more aptly described as a single entity immune from
antitrust scrutiny, while in others a league appears to be a
joint venture between independently owned teams that is
subject to review under §1.” 538 F. 3d, 736, 741 (2008).
Relying on Circuit precedent, the court limited its inquiry
to the particular conduct at issue, licensing of teams’
intellectual property. The panel agreed with petitioner
that “when making a single-entity determination, courts
must examine whether the conduct in question deprives
the marketplace of the independent sources of economic
control that competition assumes.” Id., at 742. The court,
however, discounted the significance of potential competi­
tion among the teams regarding the use of their intellec­
tual property because the teams “can function only as one
source of economic power when collectively producing NFL
football.” Id., at 743. The court noted that football itself
can only be carried out jointly. See ibid. (“Asserting that
a single football team could produce a football game . . . is
a Zen riddle: Who wins when a football team plays itself ”).
Moreover, “NFL teams share a vital economic interest in
collectively promoting NFL football . . . [to] compet[e] with
other forms of entertainment.” Ibid. “It thus follows,” the
court found, “that only one source of economic power con­
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                    Opinion of the Court 


trols the promotion of NFL football,” and “it makes little
sense to assert that each individual team has the author­
ity, if not the responsibility, to promote the jointly pro­
duced NFL football.” Ibid. Recognizing that NFL teams
have “license[d] their intellectual property collectively”
since 1963, the court held that §1 did not apply. Id., at
744.
   We granted certiorari. 557 U. S. __ (2009).
                              II
   As the case comes to us, we have only a narrow issue to
decide: whether the NFL respondents are capable of en­
gaging in a “contract, combination . . . , or conspiracy” as
defined by §1 of the Sherman Act, 15 U. S. C. §1, or, as we
have sometimes phrased it, whether the alleged activity
by the NFL respondents “must be viewed as that of a
single enterprise for purposes of §1.” Copperweld Corp. v.
Independence Tube Corp., 467 U. S. 752, 771 (1984).
   Taken literally, the applicability of §1 to “every contract,
combination . . . or conspiracy” could be understood to
cover every conceivable agreement, whether it be a group
of competing firms fixing prices or a single firm’s chief
executive telling her subordinate how to price their com­
pany’s product. But even though, “read literally,” §1
would address “the entire body of private contract,” that is
not what the statute means. National Soc. of Professional
Engineers v. United States, 435 U. S. 679, 688 (1978); see
also Texaco Inc. v. Dagher, 547 U. S. 1, 5 (2006) (“This
Court has not taken a literal approach to this language”);
cf. Board of Trade of Chicago v. United States, 246 U. S.
231, 238 (1918) (reasoning that the term “restraint of
trade” in §1 cannot possibly refer to any restraint on com­
petition because “[e]very agreement concerning trade,
every regulation of trade, restrains. To bind, to restrain,
is of their very essence”). Not every instance of co-
operation between two people is a potential “contract,
                     Cite as: 560 U. S. ____ (2010)               5

                         Opinion of the Court

combination . . . , or conspiracy, in restraint of trade.” 15
U. S. C. §1.
   The meaning of the term “contract, combination . . . or
conspiracy” is informed by the “ ‘basic distinction’ ” in the
Sherman Act “ ‘between concerted and independent ac­
tion’ ” that distinguishes §1 of the Sherman Act from §2.
Copperweld, 467 U. S., at 767 (quoting Monsanto Co. v.
Spray-Rite Service Corp., 465 U. S. 752, 761 (1984)).
Section 1 applies only to concerted action that restrains
trade. Section 2, by contrast, covers both concerted and
independent action, but only if that action “monopolize[s],”
15 U. S. C. §2, or “threatens actual monopolization,” Cop
perweld, 467 U. S., at 767, a category that is narrower
than restraint of trade. Monopoly power may be equally
harmful whether it is the product of joint action or indi­
vidual action.
   Congress used this distinction between concerted and
independent action to deter anticompetitive conduct and
compensate its victims, without chilling vigorous competi­
tion through ordinary business operations. The distinc­
tion also avoids judicial scrutiny of routine, internal busi­
ness decisions.
   Thus, in §1 Congress “treated concerted behavior more
strictly than unilateral behavior.” Id., at 768. This is so
because unlike independent action, “[c]oncerted activity
inherently is fraught with anticompetitive risk” insofar as
it “deprives the marketplace of independent centers of
decisionmaking that competition assumes and demands.”
Id., at 768–769. And because concerted action is discrete
and distinct, a limit on such activity leaves untouched a
vast amount of business conduct. As a result, there is less
risk of deterring a firm’s necessary conduct; courts need
only examine discrete agreements; and such conduct may
be remedied simply through prohibition.2 See Areeda &
——————
 2 If   Congress prohibited independent action that merely restrains
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                     Opinion of the Court 


Hovenkamp ¶1464c, at 206. Concerted activity is thus
“judged more sternly than unilateral activity under §2,”
Copperweld, 467 U. S., at 768. For these reasons, §1
prohibits any concerted action “in restraint of trade or
commerce,” even if the action does not “threate[n] monopo­
lization,” Ibid. And therefore, an arrangement must
embody concerted action in order to be a “contract, combi­
nation . . . or conspiracy” under §1.
                             III
   We have long held that concerted action under §1 does
not turn simply on whether the parties involved are le­
gally distinct entities. Instead, we have eschewed such
formalistic distinctions in favor of a functional considera­
tion of how the parties involved in the alleged anticom­
petitive conduct actually operate.
   As a result, we have repeatedly found instances in
which members of a legally single entity violated §1 when
the entity was controlled by a group of competitors and
served, in essence, as a vehicle for ongoing concerted
activity. In United States v. Sealy, Inc., 388 U. S. 350
(1967), for example, a group of mattress manufacturers
operated and controlled Sealy, Inc., a company that li­
censed the Sealy trademark to the manufacturers, and
——————
trade (even if it does not threaten monopolization), that prohibition
could deter perfectly competitive conduct by firms that are fearful of
litigation costs and judicial error. See Copperweld, 467 U. S., at 768
(“Judging unilateral conduct in this manner reduces the risk that the
antitrust laws will dampen the competitive zeal of a single aggressive
competitor”); cf. United States v. United States Gypsum Co., 438 U. S.
422, 441 (1978) (“[S]alutary and procompetitive conduct . . . might be
shunned by businessmen who chose to be excessively cautious in the
face of uncertainty”). Moreover, if every unilateral action that re­
strained trade were subject to antitrust scrutiny, then courts would be
forced to judge almost every internal business decision. See 7 P.
Areeda & H. Hovenkamp, Antitrust Law ¶1464c, at 206 (2d ed. 2003)
(hereinafter Areeda & Hovenkamp) (unilateral behavior is “often
difficult to evaluate or remedy”).
                    Cite as: 560 U. S. ____ (2010)                   7

                         Opinion of the Court

dictated that each operate within a specific geographic
area. Id., at 352–353. The Government alleged that the
licensees and Sealy were conspiring in violation of §1, and
we agreed. Id., at 352–354. We explained that “[w]e seek
the central substance of the situation” and therefore “we
are moved by the identity of the persons who act, rather
than the label of their hats.” Id., at 353. We thus held
that Sealy was not a “separate entity, but . . . an instru­
mentality of the individual manufacturers.” Id., at 356.
In similar circumstances, we have found other formally
distinct business organizations covered by §1. See, e.g.,
Northwest Wholesale Stationers, Inc. v. Pacific Stationery
& Printing Co., 472 U. S. 284 (1985); National Collegiate
Athletic Assn. v. Board of Regents of Univ. of Okla., 468
U. S. 85 (1984) (NCAA); United States v. Topco Associates,
Inc., 405 U. S. 596, 609 (1972); Associated Press v. United
States, 326 U. S. 1 (1945); id., at 26 (Frankfurter, J., con­
curring); United States v. Terminal Railroad Assn. of St.
Louis, 224 U. S. 383 (1912); see also Rock, Corporate Law
Through an Antitrust Lens, 92 Colum. L. Rev. 497, 506–
510 (1992) (discussing cases). We have similarly looked
past the form of a legally “single entity” when competitors
were part of professional organizations3 or trade groups.4
   Conversely, there is not necessarily concerted action
simply because more than one legally distinct entity is
involved. Although, under a now-defunct doctrine known
as the “intraenterprise conspiracy doctrine,” we once
treated cooperation between legally separate entities as
——————
  3 See, e.g., FTC v. Indiana Federation of Dentists, 476 U. S. 447
(1986); Arizona v. Maricopa County Medical Soc., 457 U. S. 332 (1982);
National Soc. of Professional Engineers v. United States, 435 U. S. 679
(1978); Goldfarb v. Virginia State Bar, 421 U. S. 773 (1975).
  4 See, e.g., Allied Tube & Conduit Corp. v. Indian Head, Inc., 486

U. S. 492 (1988); Radiant Burners, Inc. v. Peoples Gas Light & Coke
Co., 364 U. S. 656 (1961) (per curiam); Fashion Originators’ Guild of
America, Inc. v. FTC, 312 U. S. 457 (1941).
8          AMERICAN NEEDLE, INC. v. NATIONAL 

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                   Opinion of the Court 


necessarily covered by §1, we now embark on a more
functional analysis.
    The roots of this functional analysis can be found in the
very decision that established the intraenterprise conspir­
acy doctrine. In United States v. Yellow Cab Co., 332 U. S.
218 (1947), we observed that “corporate interrelationships
. . . are not determinitive of the applicability of the
Sherman Act” because the Act “is aimed at substance
rather than form.” Id., at 227. We nonetheless held that
cooperation between legally separate entities was neces­
sarily covered by §1 because an unreasonable restraint of
trade “may result as readily from a conspiracy among
those who are affiliated or integrated under common
ownership as from a conspiracy among those who are
otherwise independent.” Ibid.; see also Kiefer-Stewart Co.
v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211, 215
(1951).
    The decline of the intraenterprise conspiracy doctrine
began in Sunkist Growers, Inc. v. Winckler & Smith Citrus
Products Co., 370 U. S. 19 (1962). In that case, several
agricultural cooperatives that were owned by the same
farmers were sued for violations of §1 of the Sherman Act.
Id., at 24–25. Applying a specific immunity provision for
agricultural cooperatives, we held that the three coopera­
tives were “in practical effect” one “organization,” even
though the controlling farmers “have formally organized
themselves into three separate legal entities.” Id., at 29.
“To hold otherwise,” we explained, “would be to impose
grave legal consequences upon organizational distinctions
that are of de minimis meaning and effect” insofar as “use
of separate corporations had [no] economic significance.”
Ibid.
    Next, in United States v. Citizens & Southern Nat.
Bank, 422 U. S. 86 (1975), a large bank, Citizens and
Southern (C&S), formed a holding company that operated
de facto suburban branch banks in the Atlanta area
                 Cite as: 560 U. S. ____ (2010)            9

                     Opinion of the Court

through ownership of the maximum amount of stock in
each local branch that was allowed by law, “ownership of
much of the remaining stock by parties friendly to C&S,
use by the suburban banks of the C&S logogram and all of
C&S’s banking services, and close C&S oversight of the
operation and governance of the suburban banks.” Id., at
89 (footnote omitted). The Government challenged the
cooperation between the banks. In our analysis, we ob­
served that “ ‘corporate interrelationships . . . are not
determinative,’ ” id., at 116, “looked to economic sub­
stance,” and observed that “because the sponsored banks
were not set up to be competitors, §1 did not compel them
to compete.” Areeda & Hovenkamp ¶1463, at 200–201;
see also Citizens & Southern, 422 U. S., at 119–120;
Areeda, Intraenterprise Conspiracy in Decline, 97 Harv.
L. Rev. 451, 461 (1983).
  We finally reexamined the intraenterprise conspiracy
doctrine in Copperweld Corp. v. Independence Tube Corp.,
467 U. S. 752 (1984), and concluded that it was inconsis­
tent with the “ ‘basic distinction between concerted and
independent action.’ ” Id., at 767. Considering it “per­
fectly plain that an internal agreement to implement a
single, unitary firm’s policies does not raise the antitrust
dangers that §1 was designed to police,” id., at 769, we
held that a parent corporation and its wholly owned sub­
sidiary “are incapable of conspiring with each other for
purposes of §1 of the Sherman Act,” id., at 777. We ex­
plained that although a parent corporation and its wholly
owned subsidiary are “separate” for the purposes of incor­
poration or formal title, they are controlled by a single
center of decisionmaking and they control a single aggre­
gation of economic power. Joint conduct by two such
entities does not “depriv[e] the marketplace of independ­
ent centers of decisionmaking,” id., at 769, and as a re­
sult, an agreement between them does not constitute a
“contract, combination . . . or conspiracy” for the purposes
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                      Opinion of the Court 


of §1.5
                              IV
   As Copperweld exemplifies, “substance, not form, should
determine whether a[n] . . . entity is capable of conspiring
under §1.” 467 U. S., at 773, n. 21. This inquiry is some­
times described as asking whether the alleged conspira­
tors are a single entity. That is perhaps a misdescription,
however, because the question is not whether the defen­
dant is a legally single entity or has a single name; nor is
the question whether the parties involved “seem” like one
firm or multiple firms in any metaphysical sense. The key
is whether the alleged “contract, combination . . . , or
conspiracy” is concerted action—that is, whether it joins
together separate decisionmakers. The relevant inquiry,
therefore, is whether there is a “contract, combination . . .
or conspiracy” amongst “separate economic actors pursu­
ing separate economic interests,” id., at 769, such that the
agreement “deprives the marketplace of independent
centers of decisionmaking,” ibid., and therefore of “diver­
sity of entrepreneurial interests,” Fraser v. Major League
Soccer, L. L. C., 284 F. 3d 47, 57 (CA1 2002) (Boudin,
C. J.), and thus of actual or potential competition, see
Freeman v. San Diego Assn. of Realtors, 322 F. 3d 1133,
1148–1149 (CA9 2003) (Kozinski, J.); Rothery Storage &
Van Co. v. Atlas Van Line, Inc., 792 F. 2d 210, 214–215
(CADC 1986) (Bork, J.); see also Areeda & Hovenkamp
¶1462b, at 193–194 (noting that the “central evil ad­
——————
  5 This focus on “substance, not, form,” Copperweld, 467 U. S., at 773,

n. 21, can also be seen in our cases about whether a company and its
agent are capable of conspiring under §1. See, e.g., Simpson v. Union
Oil Co. of Cal., 377 U. S. 13, 20–21 (1964); see also E. Elhauge & D.
Geradin, Global Antitrust Law and Economics 787–788, and n. 7 (2007)
(hereinafter Elhauge & Geradin) (explaining the functional difference
between Simpson and United States v. General Elec. Co., 272 U. S. 476
(1926), in which we treated a similar agreement as beyond the reach of
§1).
                 Cite as: 560 U. S. ____ (2010)          11

                     Opinion of the Court

dressed by Sherman Act §1” is the “elimin[ation of] compe­
tition that would otherwise exist”).
   Thus, while the president and a vice president of a firm
could (and regularly do) act in combination, their joint
action generally is not the sort of “combination” that §1 is
intended to cover. Such agreements might be described as
“really unilateral behavior flowing from decisions of a
single enterprise.” Copperweld, 467 U. S., at 767. Nor, for
this reason, does §1 cover “internally coordinated conduct
of a corporation and one of its unincorporated divisions,”
id., at 770, because “[a] division within a corporate struc­
ture pursues the common interests of the whole,” ibid.,
and therefore “coordination between a corporation and its
division does not represent a sudden joining of two inde­
pendent sources of economic power previously pursuing
separate interests,” id., at 770–771. Nor, for the same
reasons, is “the coordinated activity of a parent and its
wholly owned subsidiary” covered. See id., at 771. They
“have a complete unity of interest” and thus “[w]ith or
without a formal ‘agreement,’ the subsidiary acts for the
benefit of the parent, its sole shareholder.” Ibid.
   Because the inquiry is one of competitive reality, it is
not determinative that two parties to an alleged §1 viola­
tion are legally distinct entities. Nor, however, is it de­
terminative that two legally distinct entities have organ­
ized themselves under a single umbrella or into a
structured joint venture. The question is whether the
agreement joins together “independent centers of deci­
sionmaking.” Id., at 769. If it does, the entities are capa­
ble of conspiring under §1, and the court must decide
whether the restraint of trade is an unreasonable and
therefore illegal one.
                           V
  The NFL teams do not possess either the unitary deci­
sionmaking quality or the single aggregation of economic
12          AMERICAN NEEDLE, INC. v. NATIONAL 

                   FOOTBALL LEAGUE                           

                    Opinion of the Court 


power characteristic of independent action. Each of the
teams is a substantial, independently owned, and inde­
pendently managed business. “[T]heir general corporate
actions are guided or determined” by “separate corporate
consciousnesses,” and “[t]heir objectives are” not “com­
mon.” Copperweld, 467 U. S., at 771; see also North
American Soccer League v. NFL, 670 F. 2d 1249, 1252
(CA2 1982) (discussing ways that “the financial perform­
ance of each team, while related to that of the others, does
not . . . necessarily rise and fall with that of the others”).
The teams compete with one another, not only on the
playing field, but to attract fans, for gate receipts and for
contracts with managerial and playing personnel. See
Brown v. Pro Football, Inc., 518 U. S. 231, 249 (1996);
Sullivan v. NFL, 34 F. 3d 1091, 1098 (CA1 1994); Mid-
South Grizzlies v. NFL, 720 F. 2d 772, 787 (CA3 1983); cf.
NCAA, 468 U. S., at 99.
   Directly relevant to this case, the teams compete in the
market for intellectual property. To a firm making hats,
the Saints and the Colts are two potentially competing
suppliers of valuable trademarks. When each NFL team
licenses its intellectual property, it is not pursuing the
“common interests of the whole” league but is instead
pursuing interests of each “corporation itself,” Copperweld,
467 U. S., at 770; teams are acting as “separate economic
actors pursuing separate economic interests,” and each
team therefore is a potential “independent cente[r] of
decisionmaking,” id., at 769. Decisions by NFL teams to
license their separately owned trademarks collectively and
to only one vendor are decisions that “depriv[e] the mar­
ketplace of independent centers of decisionmaking,” ibid.,
and therefore of actual or potential competition. See
NCAA, 468 U. S., at 109, n. 39 (observing a possible §1
violation if two separately owned companies sold their
separate products through a “single selling agent”); cf.
Areeda & Hovenkamp ¶1478a, at 318 (“Obviously, the
                 Cite as: 560 U. S. ____ (2010)           13

                     Opinion of the Court

most significant competitive threats arise when joint
venture participants are actual or potential competitors”).
   In defense, respondents argue that by forming NFLP,
they have formed a single entity, akin to a merger, and
market their NFL brands through a single outlet. But it is
not dispositive that the teams have organized and own a
legally separate entity that centralizes the management of
their intellectual property. An ongoing §1 violation cannot
evade §1 scrutiny simply by giving the ongoing violation a
name and label. “Perhaps every agreement and combina­
tion in restraint of trade could be so labeled.” Timken
Roller Bearing Co. v. United States, 341 U. S. 593, 598
(1951).
   The NFL respondents may be similar in some sense to a
single enterprise that owns several pieces of intellectual
property and licenses them jointly, but they are not simi­
lar in the relevant functional sense. Although NFL teams
have common interests such as promoting the NFL brand,
they are still separate, profit-maximizing entities, and
their interests in licensing team trademarks are not nec­
essarily aligned. See generally Hovenkamp, Exclusive
Joint Ventures and Antitrust Policy, 1995 Colum. Bus.
L. Rev. 1, 52–61 (1995); Shishido, Conflicts of Interest and
Fiduciary Duties in the Operation of a Joint Venture, 39
Hastings L. J. 63, 69–81 (1987). Common interests in the
NFL brand “partially unit[e] the economic interests of the
parent firms,” Broadley, Joint Ventures and Antitrust
Policy, 95 Harv. L. Rev. 1521, 1526 (1982) (emphasis
added), but the teams still have distinct, potentially com­
peting interests.
   It may be, as respondents argue, that NFLP “has served
as the ‘single driver’’ of the teams’ “promotional vehicle,”
“ ‘pursu[ing] the common interests of the whole.’ ” Brief for
NFL Respondents 28 (quoting Copperweld, 467 U. S., at
770–771; brackets in original). But illegal restraints often
are in the common interests of the parties to the restraint,
14            AMERICAN NEEDLE, INC. v. NATIONAL 

                     FOOTBALL LEAGUE                                   

                      Opinion of the Court 


at the expense of those who are not parties. It is true, as
respondents describe, that they have for some time mar­
keted their trademarks jointly. But a history of concerted
activity does not immunize conduct from §1 scrutiny.
“Absence of actual competition may simply be a manifes­
tation of the anticompetitive agreement itself.” Freeman,
322 F. 3d, at 1149.
  Respondents argue that nonetheless, as the Court of
Appeals held, they constitute a single entity because
without their cooperation, there would be no NFL football.
It is true that “the clubs that make up a professional
sports league are not completely independent economic
competitors, as they depend upon a degree of cooperation
for economic survival.” Brown, 518 U. S., at 248. But the
Court of Appeals’ reasoning is unpersuasive.
  The justification for cooperation is not relevant to
whether that cooperation is concerted or independent
action.6 A “contract, combination . . . or conspiracy,” §1,
that is necessary or useful to a joint venture is still a
“contract, combination . . . or conspiracy” if it “deprives the
marketplace of independent centers of decisionmaking,”
Copperweld, 467 U. S., at 769. See NCAA, 468 U. S., at
113 (“[J]oint ventures have no immunity from antitrust
laws”). Any joint venture involves multiple sources of
economic power cooperating to produce a product. And for
many such ventures, the participation of others is neces­
sary. But that does not mean that necessity of cooperation
transforms concerted action into independent action; a nut
and a bolt can only operate together, but an agreement
between nut and bolt manufacturers is still subject to §1
——————
  6 As discussed infra, necessity of cooperation is a factor relevant to

whether the agreement is subject to the Rule of Reason. See NCAA,
468 U. S., at 101 (holding that NCAA restrictions on televising college
football games are subject to Rule of Reason analysis for the “critical”
reason that “horizontal restraints on competition are essential if the
product is to be available at all”).
                     Cite as: 560 U. S. ____ (2010)                   15

                          Opinion of the Court

analysis. Nor does it mean that once a group of firms
agree to produce a joint product, cooperation amongst
those firms must be treated as independent conduct. The
mere fact that the teams operate jointly in some sense
does not mean that they are immune.7
  The question whether NFLP decisions can constitute
concerted activity covered by §1 is closer than whether
decisions made directly by the 32 teams are covered by §1.
This is so both because NFLP is a separate corporation
with its own management and because the record indi­
cates that most of the revenues generated by NFLP are
shared by the teams on an equal basis. Nevertheless we
think it clear that for the same reasons the 32 teams’
conduct is covered by §1, NFLP’s actions also are subject
to §1, at least with regards to its marketing of property
owned by the separate teams. NFLP’s licensing decisions
are made by the 32 potential competitors, and each of
them actually owns its share of the jointly managed as­
sets. Cf. Sealy, 388 U. S., at 352–354. Apart from their
agreement to cooperate in exploiting those assets, includ­
ing their decisions as the NFLP, there would be nothing to
prevent each of the teams from making its own market
——————
  7 In any event, it simply is not apparent that the alleged conduct was

necessary at all. Although two teams are needed to play a football
game, not all aspects of elaborate interleague cooperation are necessary
to produce a game. Moreover, even if leaguewide agreements are
necessary to produce football, it does not follow that concerted activity
in marketing intellectual property is necessary to produce football.
  The Court of Appeals carved out a zone of antitrust immunity for
conduct arguably related to league operations by reasoning that coordi­
nated team trademark sales are necessary to produce “NFL football,” a
single NFL brand that competes against other forms of entertainment.
But defining the product as “NFL football” puts the cart before the
horse: Of course the NFL produces NFL football; but that does not
mean that cooperation amongst NFL teams is immune from §1 scru­
tiny. Members of any cartel could insist that their cooperation is
necessary to produce the “cartel product” and compete with other
products.
16           AMERICAN NEEDLE, INC. v. NATIONAL 

                    FOOTBALL LEAGUE                                      

                     Opinion of the Court 


decisions relating to purchases of apparel and headwear,
to the sale of such items, and to the granting of licenses to
use its trademarks.
   We generally treat agreements within a single firm as
independent action on the presumption that the compo­
nents of the firm will act to maximize the firm’s profits.
But in rare cases, that presumption does not hold. Agree­
ments made within a firm can constitute concerted action
covered by §1 when the parties to the agreement act on
interests separate from those of the firm itself,8 and the
intrafirm agreements may simply be a formalistic shell for
ongoing concerted action. See, e.g., Topco Associates, Inc.,
405 U. S., at 609; Sealy, 388 U. S., at 352–354.
   For that reason, decisions by the NFLP regarding the
teams’ separately owned intellectual property constitute
concerted action. Thirty-two teams operating independ­
ently through the vehicle of the NFLP are not like the
components of a single firm that act to maximize the firm’s
profits. The teams remain separately controlled, potential
competitors with economic interests that are distinct from
NFLP’s financial well-being. See generally Hovenkamp,
1995 Colum. Bus. L. Rev., at 52–61. Unlike typical deci­
sions by corporate shareholders, NFLP licensing decisions
effectively require the assent of more than a mere majority
of shareholders. And each team’s decision reflects not only
an interest in NFLP’s profits but also an interest in the
team’s individual profits. See generally Shusido, 39 Hast­
ings L. J., at 69–71. The 32 teams capture individual
——————
  8 See Areeda & Hovenkamp ¶1471; Elhauge & Geradin 786–787, and
n. 6; see also Capital Imaging Assoc. v. Mohawk Valley Medical Assoc.,
Inc., 996 F. 2d 537, 544 (CA2 1993); Bolt v. Halifax Hospital Medical
Center, 891 F. 2d 810, 819 (CA11 1990); Oksanen v. Page Memorial
Hospital, 945 F. 2d 696, 706 (CA4 1991); Motive Parts Warehouse v.
Facet Enterprises, 774 F. 2d 380, 387–388 (CA10 1985); Victorian
House, Inc. v. Fisher Camuto Corp., 769 F. 2d 466, 469 (CA8 1985);
Weiss v. York Hospital, 745 F. 2d 786, 828 (CA3 1984).
                     Cite as: 560 U. S. ____ (2010)                    17

                          Opinion of the Court

economic benefits separate and apart from NFLP profits
as a result of the decisions they make for the NFLP.
NFLP’s decisions thus affect each team’s profits from
licensing its own intellectual property. “Although the
business interests of” the teams “will often coincide with
those of the” NFLP “as an entity in itself, that commonal­
ity of interest exists in every cartel.” Los Angeles Memo
rial Coliseum Comm’n v. NFL, 726 F. 2d 1381, 1389 (CA9
1984) (emphasis added). In making the relevant licensing
decisions, NFLP is therefore “an instrumentality” of the
teams. Sealy, 388 U. S., at 352–354; see also Topco Asso
ciates, Inc., 405 U. S., at 609.
   If the fact that potential competitors shared in profits or
losses from a venture meant that the venture was immune
from §1, then any cartel “could evade the antitrust law
simply by creating a ‘joint venture’ to serve as the exclu­
sive seller of their competing products.” Major League
Baseball Properties, Inc. v. Salvino, Inc., 542 F. 3d 290,
335 (CA2 2008) (Sotomayor, J., concurring in judgment).
“So long as no agreement,” other than one made by the
cartelists sitting on the board of the joint venture, “explic­
itly listed the prices to be charged, the companies could act
as monopolies through the ‘joint venture.’ ” Ibid. (Indeed,
a joint venture with a single management structure is
generally a better way to operate a cartel because it de­
creases the risks of a party to an illegal agreement defect­
ing from that agreement). However, competitors “cannot
simply get around” antitrust liability by acting “through a
third-party intermediary or ‘joint venture’.” Id., at 336.9
——————
  9 For the purposes of resolving this case, there is no need to pass upon

the Government’s position that entities are incapable of conspiring
under §1 if they “have effectively merged the relevant aspect of their
operations, thereby eliminating actual and potential competition . . . in
that operational sphere” and “the challenged restraint [does] not
significantly affect actual or potential competition . . . outside their
merged operations.” Brief for United States as Amicus Curiae 17. The
18            AMERICAN NEEDLE, INC. v. NATIONAL 

                     FOOTBALL LEAGUE                                     

                      Opinion of the Court 


                            VI
  Football teams that need to cooperate are not trapped
by antitrust law. “[T]he special characteristics of this
industry may provide a justification” for many kinds of
agreements. Brown, 518 U. S., at 252 (STEVENS, J., dis­
senting). The fact that NFL teams share an interest in
making the entire league successful and profitable, and
that they must cooperate in the production and scheduling
of games, provides a perfectly sensible justification for
making a host of collective decisions. But the conduct at
issue in this case is still concerted activity under the
Sherman Act that is subject to §1 analysis.
  When “restraints on competition are essential if the
product is to be available at all,” per se rules of illegality
are inapplicable, and instead the restraint must be judged
according to the flexible Rule of Reason.10 NCAA, 468
——————
Government urges that the choices “to offer only a blanket license” and
“to have only a single headwear licensee” might not constitute con­
certed action under its test. Id., at 32. However, because the teams
still own their own trademarks and are free to market those trade­
marks as they see fit, even those two choices were agreements amongst
potential competitors and would constitute concerted action under the
Government’s own standard. At any point, the teams could decide to
license their own trademarks. It is significant, moreover, that the
teams here control NFLP. The two choices that the Government might
treat as independent action, although nominally made by NFLP, are for
all functional purposes choices made by the 32 entities with potentially
competing interests.
   10 Justice Brandeis provided the classic formulation of the Rule of

Reason in Board of Trade of Chicago v. United States, 246 U. S. 231,

238 (1918): 

“The true test of legality is whether the restraint imposed is such as 

merely regulates and perhaps thereby promotes competition or whether
it is such as may suppress or even destroy competition. To determine
that question the court must ordinarily consider the facts peculiar to
the business to which the restraint is applied; its condition before and
after the restraint is imposed; the nature of the restraint and its effect,
actual or probable. The history of the restraint, the evil believed to
exist, the reason for adopting the particular remedy, the purpose or end
                     Cite as: 560 U. S. ____ (2010)                   19

                          Opinion of the Court

U. S., at 101; see id., at 117 (“Our decision not to apply a
per se rule to this case rests in large part on our recogni­
tion that a certain degree of cooperation is necessary if the
type of competition that petitioner and its member institu­
tions seek to market is to be preserved”); see also Dagher,
547 U. S., at 6. In such instances, the agreement is likely
to survive the Rule of Reason. See Broadcast Music, Inc.
v. Columbia Broadcasting System, Inc., 441 U. S. 1, 23
(1979) (“Joint ventures and other cooperative arrange­
ments are also not usually unlawful. . . where the agree­
ment . . . is necessary to market the product at all”). And
depending upon the concerted activity in question, the
Rule of Reason may not require a detailed analysis; it “can
sometimes be applied in the twinkling of an eye.” NCAA,
468 U. S., at 109, n. 39.
   Other features of the NFL may also save agreements
amongst the teams. We have recognized, for example,
“that the interest in maintaining a competitive balance”
among “athletic teams is legitimate and important,”
NCAA, 468 U. S., at 117. While that same interest applies
to the teams in the NFL, it does not justify treating them
as a single entity for §1 purposes when it comes to the
marketing of the teams’ individually owned intellectual
property. It is, however, unquestionably an interest that
may well justify a variety of collective decisions made by
the teams. What role it properly plays in applying the
Rule of Reason to the allegations in this case is a matter to
be considered on remand.


——————
sought to be attained, are all relevant facts. This is not because a good
intention will save an otherwise objectionable regulation or the reverse;
but because knowledge of intent may help the court to interpret facts
and to predict consequences.” See also Leegin Creative Leather Prod
ucts, Inc. v. PSKS, Inc., 551 U. S. 877, 885–887 (2007); National Soc. of
Professional Engineers, 435 U. S., at 688–691.
20         AMERICAN NEEDLE, INC. v. NATIONAL 

                  FOOTBALL LEAGUE                              

                   Opinion of the Court 


                        *     *  *
  Accordingly, the judgment of the Court of Appeals is
reversed, and the case is remanded for further proceedings
consistent with this opinion.
                                           It is so ordered.