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What to expect from the DOJ’s investigation into the PGA Tour and LIV Golf

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PGA Tour’s Resolution ban golfers Those who joined the breakaway LIV Golf Invitational Series have renewed speculation about the legitimacy of the tour’s policies – and whether government intervention could ultimately determine the viability of the Saudi-funded league.

The issue has gained more attention recently, with reports that the US Department of Justice is investigating the PGA Tour for possible antitrust violations, an investigation that could determine the tour’s ability to control where and when golfers play.

But with the tour ruling out any concerns about the investigation and LIV continuing to add high-profile players while launching plans for its second season, there were few indications of how potential legal drama might unfold.

Gabe Feldman, director of the Tulane Sports Law Program, which studies antitrust issues in the school, said the results of DOJ investigations are often impossible to predict. But the general arguments that both sides would likely make are less ambiguous.

Feldman said the investigation is likely to focus on whether the PGA Tour rules “cause more harm than benefits,” whether the “anti-competitive effects of the restrictions outweigh any pro-competitive benefits” and whether “applicable rules” are not reasonably necessary to achieve any legitimate commercial justification.” The Tour does not allow its members to play unauthorized events without permission. Releases are regularly given to players to participate in tournaments outside North America—particularly those organized by the DP World Tour in Europe, with which the PGA Tour has an operating agreement—but Deny permission for LIV events.

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The DOJ will likely explore whether there is sufficient evidence to determine “whether some of the actions the PGA Tour is taking are designed to harm competition rather than designed to make its product more attractive,” Feldman said. “And is the PGA doing something that makes competing rounds more difficult and potentially limiting the ability of golfers to make more money?”

But Jacob S. Frenkel, head of government investigations and securities enforcement at the Washington law firm of Dickinson Wright, said the PGA could say it has a legal reason to ban LIV players.

“The PGA will argue that its refusal to engage with the LIV Golf and its participants is designed to protect or further the legitimate business purposes and interests of the PGA,” Frenkel said. “Demonstration of an objective and valid commercial justification shall nullify any allegation of violation of antitrust laws.

“An entity with monopoly power does not have a general duty to cooperate with its commercial competitors and may even refuse to do business with them if the company can provide an acceptable commercial reason for the refusal.”

The PGA Tour could also argue that having the best golfers competing together is better for consumers of the sport, and that the “pro-competitive benefits” of organizing attractive tournaments will outweigh the anti-competitive effects of restricting where and when golfers can play, Feldman said.

“So the PGA would have to argue, ‘Well, for our product to be popular, we need the best golfers playing in all the same tournaments, because people want to see the best versus the best,’” Feldman said. What is better at the same time, and the only way to achieve it, [the PGA Tour] You’ll argue, by having these rules.”

Frenkel said an antitrust investigation, particularly one that is not considered complex, could be completed in a year or less, and could lead to a range of results, from none to a criminal indictment, which could then lead to either an acquittal or an admission guilty. , or condemnation. Usually, he said, if the Department of Justice finds that an organization like the PGA Tour has committed a violation, the two sides will agree to a “deferred trial or non-prosecution agreement where the PGA enters into some sort of compliance agreement, and implement remedial action.” Measures and fine.

“But that’s a big deal,” Frenkel said, adding that an investigation into an organization whose competitor appears to be doing well appears unlikely to result in a significant penalty.

The Department of Justice, which has not confirmed it is investigating the PGA Tour, did not respond to a request for comment. Investigation It was first reported by The Wall Street Journal advance this month.

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If a LIV player or the league itself sues the PGA Tour on antitrust grounds, they will need to prove they have suffered actual damages. And the that the PGA Tour’s actions reduced competition in violation of federal law. Proving the damage “won’t be particularly easy when they are compensated in a way that may be greater than the final compensation from the PGA Tour,” Frenkel said.

“They made a personal decision not to be associated with the PGA and to join a competition tour. They didn’t have to do that,” Frenkel said. “As PGA Tour participants, they also agreed to certain standards, not just organization standards but standards of personal conduct. To me, it’s hard to craft a viable theory that would survive litigation for individual golfers to sue the PGA Tour, but then again, in our society, it’s easy to sue. Being right and cushions is the ultimate challenge in any lawsuit.”

However, Feldman said LIV golfers can still get a case, despite their winnings. They could argue, for example, that they would have had such bigger incomes in years had it not been for the rules of the PGA Tour.

The LIV Tour itself could argue that it hurt because the PGA Tour’s actions have raised acquisition costs – and the cost of doing business – through sanctions against dissidents.

“And even if they survived, and even if they did, they could hypothetically argue that they paid players twice as much because of the PGA restrictions,” Feldman said, “and therefore they deserve the difference between what they are Will be I paid and what It had to Pay.”

The PGA Tour has been on this track once before. in 1994antitrust lawyers at the Federal Trade Commission have tried to persuade the US government to repeal the rule requiring golfers to get permission to play on conflicting events — and another said players need to get permission to appear on TV shows that the PGA Tour hasn’t approved — because they created Unfair competition methods.

But after intense lobbying by then-Commissioner Tim Finchim – a former official in President Jimmy Carter’s administration – the four FTC commissioners voted unanimously to reject an antitrust attorney’s recommendation for employees to take legal action against the PGA Tour.

“We went through this in 1994 and are confident of a similar outcome,” the tour said in a statement after the Wall Street Journal story.

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