Even a cursory look into the proposed settlement raises serious questions
about the health of competition in post-merger markets. For example, the
NCAA would be in a position, post-merger, to impose its “mandatory participation”
rule for both the NIT and its own tournaments. This would erect an insurmountable
barrier to entry into post-season play. In enhancing their market power in acquiring
tournament teams, the NCAA would in turn enjoy significantly more market power
in sales of broadcast rights, sponsorships, concessions, and event tickets. The
proposed deal thus packs a double punch for consumers. Schools would have fewer
options and face potentially non-competitive terms for post-season tournament play.
And sponsors and consumers of the tournament games would potentially face higher
prices.
Based on information that is publicly available, AAI believes that there is a significant
probability that the effect of the proposed merger may be to significantly lessen (or
eliminate entirely) competition between organizers in acquiring men’s Division I basketball
teams for participation in post-season tournaments. NCAA President Myles Brand could
not have said it more succinctly when he noted in regard to the August 16th settlement:
“We’ve now unified post-season basketball.”
The merger would spell an end to the NIT which, once upon a time, was an equally-matched
and vigorous competitor to the NCAA. But a series of actions by the NCAA has diminished
that competition, to the detriment of consumers. The proposed consolidation would further
hurt consumers and preclude the emergence of a stronger rivalry between the NCAA and NIT
(and with respect to new upstarts). An antitrust investigation of the merger could focus on
such key issues as market definition (which was controversial in the MIBA v. NCAA litigation);
the significant potential for unilateral exercise of market power; and the entry barriers created
by the merger. Moreover, the inquiry should extend to the likely effects of the merger on pre
season tournaments by giving the NCAA the “green light” to enact a pending rule that
would replace independent tournaments with events the NCAA can control.
(Sept. 13, 2005)
Of course, few readers of this weblog are old enough to remember the time when the NIT “was