OPINION OF THE COURT AMERICAN NEEDLE, INC. V. NATIONALFOOTBALL LEAGUE 560 U. S. ____ (2010) 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
arrangement is a contract, combination, or conspiracy is different
from and antecedent to the question whether it unreasonably
restrains trade. This case raises that antecedent 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 coverage 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 unincorporated association that now includes 32
separately owned professional football teams.[ Footnote 1 ] Each team has its own name, colors,
and logo, and owns related intellectual property. Like each of the
other teams in the league, the New Orleans 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
manufacture and sell apparel bearing team insignias. Petitioner,
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 International Ltd. an exclusive
10-year license to manufacture and sell trademarked headwear for
all 32 teams. It thereafter declined to renew American Needle’s
nonexclusive license.

															   American Needle filed this action in the
Northern District 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 to the conduct challenged.” App.
99. After limited discovery, the District Court granted summary
judgment on the question “whether, with regard to the facet of
their operations 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 competition among the
teams regarding the use of their intellectual 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 controls the promotion of NFL football,” and “it makes little
sense to assert that each individual team has the authority, if not
the responsibility, to promote the jointly produced 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 engaging 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 company’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 competition 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, 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 action’ ” 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,” Copperweld, 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 individual action.

															   Congress used this distinction between
concerted and independent action to deter anticompetitive conduct
and compensate its victims, without chilling vigorous competition
through ordinary business operations. The distinction also avoids
judicial scrutiny of routine, internal business 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.[ Footnote 2 ] See
Areeda & 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] monopolization,” Ibid . And therefore, an arrangement must embody concerted
action in order to be a “contract, combination … or conspiracy”
under §1.

															III

															   We have long held that concerted
action under §1 does not turn simply on whether the parties
involved are legally distinct entities. Instead, we have eschewed
such formalistic distinctions in favor of a functional
consideration of how the parties involved in the alleged
anticompetitive 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 licensed the
Sealy trademark to the manufacturers, and 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 instrumentality 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., concurring); 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
organizations[ Footnote 3 ] or
trade groups.[ Footnote 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 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
conspiracy 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 necessarily 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 cooperatives 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 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 observed that “ ‘corporate
interrelationships … are not determinative,’ ” id. ,
at 116, “looked to economic substance,” 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 inconsistent with the “ ‘basic distinction between
concerted and independent action.’ ” Id. , at 767.
Considering it “perfectly 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
subsidiary “are incapable of conspiring with each other for
purposes of §1 of the Sherman Act,” id., at 777. We
explained that although a parent corporation and its wholly owned
subsidiary are “separate” for the purposes of incorporation or
formal title, they are controlled by a single center of
decisionmaking and they control a single aggregation of economic
power. Joint conduct by two such entities does not “depriv[e] the
marketplace of independent 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 of §1.[ Footnote
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 sometimes described as asking whether
the alleged conspirators are a single entity. That is perhaps a
misdescription, however, because the question is not whether the
defendant 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 pursuing separate economic interests,” id. , at 769, such that the agreement “deprives the
marketplace of independent centers of decisionmaking,” ibid. , and therefore of “diversity 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
addressed by Sherman Act §1” is the “elimin[ation of] competition
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
structure 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
independent 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
violation are legally distinct entities. Nor, however, is it
determinative that two legally distinct entities have organized
themselves under a single umbrella or into a structured joint
venture. The question is whether the agreement joins together
“independent centers of decisionmaking.” Id. , at 769. If
it does, the entities are capable 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 decisionmaking quality or the single aggregation
of economic power characteristic of independent action. Each of the
teams is a substantial, independently owned, and independently
managed business. “[T]heir general corporate actions are guided or
determined” by “separate corporate consciousnesses,” and “[t]heir
objectives are” not “common.” 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 performance 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 marketplace 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 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 combination 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
similar 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 necessarily 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 competing
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, at the expense of those who are not
parties. It is true, as respondents describe, that they have for
some time marketed their trademarks jointly. But a history of
concerted activity does not immunize conduct from §1 scrutiny.
“Absence of actual competition may simply be a manifestation 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.[ Footnote 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 necessary. 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 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.[ Footnote 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 indicates 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 assets. Cf. Sealy , 388 U. S., at
352–354. Apart from their agreement to cooperate in exploiting
those assets, including their decisions as the NFLP, there would be
nothing to prevent each of the teams from making its own market
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 components
of the firm will act to maximize the firm’s profits. But in rare
cases, that presumption does not hold. Agreements 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,[ Footnote 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
independently 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 decisions 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 Hastings L. J., at 69–71. The 32 teams
capture individual 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 commonality of interest exists in every
cartel.” Los Angeles Memorial 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 Associates, 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 exclusive
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, “explicitly 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 decreases the risks of a party to an
illegal agreement defecting from that agreement). However,
competitors “cannot simply get around” antitrust liability by
acting “through a third-party intermediary or ‘joint venture’.” Id. , at 336.[ Footnote
9 ]

															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., dissenting). 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.[ Footnote 10 ] NCAA , 468 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 recognition that a certain degree of cooperation
is necessary if the type of competition that petitioner and its
member institutions 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 arrangements are also not
usually unlawful… where the agreement … 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.

															*  *  *

															   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. Footnote 1 The NFL was founded in Canton, Ohio as the
“American Professional 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. Footnote 2 If Congress prohibited independent action
that merely restrains 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 restrained 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”). Footnote 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). Footnote 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). Footnote 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). Footnote 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”). Footnote 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 coordinated 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 scrutiny. Members
of any cartel could insist that their cooperation is necessary to
produce the “cartel product” and compete with other products. Footnote 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). Footnote 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 Government urges that the choices “to offer only a blanket
license” and “to have only a single headwear licensee” might not
constitute concerted action under its test. Id. , at 32.
However, because the teams still own their own trademarks and are
free to market those trademarks 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. Footnote 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 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
Products, Inc. v. PSKS, Inc. , 551 U. S. 877 , 885–887
(2007); National Soc. of Professional Engineers, 435 U.
S., at 688–691.

Summary: The Supreme Court ruled that the National Football League's (NFL) licensing activities, including the decision to grant an exclusive license to Reebok, are considered concerted actions that fall under the Sherman Act's purview. The Court rejected the argument that the NFL and its teams are a single entity incapable of conspiring under Section 1 of the Sherman Act. The legality of the NFL's actions will be judged under the Rule of Reason, considering the specific facts and potential competitive impact within the industry.