All I See Is Dolla Signs: Using the Supreme Court’s Rule of Reason Analysis of the NCAA’s Monopsony Power in Other Industries

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All I See Is Dolla Signs: Using the Supreme Court’s Rule of Reason Analysis of the NCAA’s Monopsony Power in Other Industries

Emily Polinski Kraus

Volume 32

, Issue 3

Introduction

Before NCAA v. Alston,¹ the NCAA thought it should be exempt from paying student-athletes fair wages because of the vague concept of amateurism.² In theory, it would be free to argue that “because of the special characteristics of [its] particular industry,”³—namely, its employment of amateurs—“it should be exempt from the usual operation of the antitrust laws,”⁴ but that argument falls flat under current law. Indeed, the NCAA’s reliance on amateurism as a justification for its anticompetitive behavior is losing favor. As Justice Brett Kavanaugh observed in NCAA v. Alston,⁵ “[t]he NCAA’s business model would be flatly illegal in almost every other industry in America.”⁶

The NCAA is the major governing body for college athletics, presiding over membership from over 1,200 colleges and universities.⁷ Within the NCAA, there are three divisions, with Division I schools having the highest athletic department budget and most competition, and Division III schools having the least.⁸ Currently, 204,000 student-athletes participate in a Division I program, 133,000 in Division II, and 202,000 in Division III.⁹ Athletic scholarships are offered in Division I and II, but not Division III.¹⁰

Because Division I schools are the largest economic institutions of the three with their budgets and scholarship offerings, this Comment focuses mainly on Division I athletics. There are fifty-one active Division I athletic conferences governing 355 colleges and universities.¹¹ Within the college athletics market, top conferences have market power in the recruitment of student-athletes for their athletic programs.¹² The top five conferences historically are the Big Ten, SEC, PAC 12, ACC, and Big 12.¹³

Through an antitrust labor lens, the NCAA itself may be viewed as a monopsony.¹⁴ A monopsony features concentrated market power in buying labor and generally generates wages that are below market value.¹⁵ Justice Kavanaugh’s concurrence in Alston argued that “the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws,” and the NCAA admits it underpays student-athletes.¹⁶

Alternatively, the NCAA may be viewed as a cartel collectively exhibiting monopsonistic power, which is “just a formal (overt) price-fixing agreement.”¹⁷ Justice Neil Gorsuch’s majority opinion in Alston stressed that individual conferences remain free to impose whatever rules they choose.¹⁸ “Individual” stresses that schools within each conference may enter into a joint agreement to underpay student-athletes, which would violate the Sherman Act.¹⁹ Regardless of a monopsony or cartel view, the result is suppressed wages for student-athletes.²⁰

For its part, the NCAA holds fast to arguments rooted in the value of amateurism.²¹ Recently, student-athletes have tried to make fair pay arguments under legislation like the Fair Labor Standards Act (“FLSA”).²² But this is not necessary to obtain fair pay—Justice Kavanaugh’s Alston concurrence makes it clear that antitrust labor may be an open door:

Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of antitrust law, it is not evident why college sports should be any different.²³

Following the Alston ruling, there is no mistake that the NCAA represents buyer-side monopoly power, known as monopsony power, of college athlete labor.²⁴ This power is addressed by the Sherman Antitrust Act.

Article 1 of the Sherman Act states: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”²⁵ Once a court determines that a “contract, combination in the form of trust or otherwise, or conspiracy” exists, one of three standards of legality applies.²⁶ Agreements that are nakedly anticompetitive are per se illegal; agreements that are obviously harmful but have some justification receive “quick look” review; and all others are analyzed under “rule of reason” analysis.²⁷ Alston looked at the NCAA’s practices through rule of reason analysis, a burden-shifting framework that ultimately balances anticompetitive harms and procompetitive justifications.²⁸

Other industries should take note of the Supreme Court’s growing embrace of this framework of remedying monopsony power. This Comment explains the economics and law behind monopsony and seeks to apply the relevant concepts to other industries where wages are also suppressed.

This Comment argues that workers in other industries employed by firms with monopsonistic power should use Alston’s reasoning to advance their arguments about antitrust labor violations in their industries. Section I discusses the economics and history of the labor and antitrust movement. Section II examines the NCAA’s amateurism policies, antitrust rulings before Alston, and Alston itself. After discussing Alston, Section II applies the economic principles outlined in Section I to the NCAA. Section III argues that antitrust laws should be used in lawsuits challenging suppressed wages for workers not formally defined as employees. This strategy, Section III further argues, would be more effective than other strategies currently employed in such litigation. Section IV argues that elements of NCAA labor antitrust concerns are present in other antitrust labor markets such as nurses in hospital systems with monopsonistic power; courts should accept antitrust labor jurisprudence in these areas to protect workers and circumvent employee status.

I. Time Is Money: The History of Monopsony in Labor and Antitrust Economics and Examples of Use in Caselaw

A. Where Did the Idea of Labor and Antitrust Come From?

Courts have seen a boom in antitrust-labor cases in the past decades, leading some to question where the application of antitrust principles to labor markets originated.²⁹ While traditional antitrust monopolies center around upward pricing pressure due to selling power, monopsonies are about downward pricing pressure due to purchasing power. For labor, downward pressure on prices means lower wages. Though observers may view the labor and antitrust movement as an innovation,³⁰ the ideas behind the movement have roots that are as old as antitrust itself. For example, Adam Smith observed in The Wealth of Nations that “masters” (employers, firms, buyers of labor, etc.) have an incentive to cartelize markets, tending toward monopsony, as sellers have an incentive to maximize profit by monopolizing.³¹ Following Smith’s line of thinking, employers or groups of employers with sufficient market power may suppress the wages of workers, paying wages below a competitive rate.³²

The concept of antitrust-labor law is rooted in the Sherman Act, the first federal antitrust law enacted in the United States in 1890.³³ Section I outlaws “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations.”³⁴ Section II makes punishable “[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce . . . .”³⁵ Litigation under the Sherman Act is nearly as old as the law itself,³⁶ but antitrust-labor cases have only been occasionally litigated.³⁷

For years, antitrust-labor has taken a back seat to other kinds of antitrust litigation. Professor Eric Posner notes that until 2010, “workers rarely sued employers for antitrust violations and were even more rarely successful.”³⁸ That changed when the U.S. Department of Justice (“DOJ”) Antitrust Division sued Google, Apple, and other Silicon Valley firms for agreeing not to solicit each other’s software engineers.³⁹ There is some limit to the power of antitrust-labor cases: The DOJ recently lost a string of criminal cases against companies and executives accused of violating antitrust laws for reasons related to labor.⁴⁰

B. Key Cases in Labor, Sports, and Antitrust

Antitrust-labor enforcement is not a sudden invention in American courts. Cases over the last century have embraced an analysis of antitrust to enforce fair labor markets. Indeed, from the beginning of American antitrust jurisprudence, courts have recognized labor as covered by antitrust.⁴¹

One relatively early antitrust-labor case was Anderson v. Shipowners Ass’n of the Pacific Coast,⁴² decided by the Supreme Court in 1926. In Anderson, the members of the associations owned, operated, or substantially controlled all American merchant vessels engaged in interstate commerce.⁴³ The plaintiff alleged that the associations and members within the associations entered into a combination to control the employment of all seamen on all vessels on the Pacific Coast.⁴⁴ Acknowledging the value of labor, the Court reasoned that “[i]t is not important . . . to inquire whether . . . the object of the combination was merely to regulate the employment of men and not to restrain commerce.”⁴⁵ The Court ultimately held that the shipowners associations had entered into a combination that violated the Sherman Act.⁴⁶

Sports have also been a consistent feature of the antitrust-labor movement.⁴⁷ Analyzing what he believes were the top ten professional sports cases before 2003, Professor Stephen Ross argues that antitrust intervention in those cases was in the public interest.⁴⁸ Of these ten cases, five relate to labor in some way.⁴⁹ This list is not all-encompassing on sports and antitrust, however: Since Professor Ross compiled his list, there have been other sports antitrust cases, and Professor Ross focused on professional sports, omitting NCAA cases from his list.⁵⁰

The earliest of Professor Ross’s six antitrust-labor cases is Radovich v. NFL,⁵¹ decided in 1957.⁵² The Court in Radovich found football subject to the antitrust laws and remanded the case to find whether the blacklisting of players for participating in a rival league violated antitrust laws.⁵³

The 1970s saw three of Professor Ross’s antitrust-labor cases.⁵⁴ First, in 1971, the U.S. District Court for the Central District of California decided Denver Rockets v. All-Pro Management, Inc.⁵⁵325 F. Supp. 1049 (C.D. Cal. 1971). In that case, the court found that the National Basketball Association’s agreement not to draft players until their collegiate eligibility expired was unreasonable and violated antitrust laws.⁵⁶ Second, in 1972, the U.S. District Court for the Eastern District of Pennsylvania decided Philadelphia World Hockey Club, Inc. v. Philadelphia Hockey Club, Inc.⁵⁷351 F. Supp. 462 (E.D. Pa. 1972). There, the court decided that the National Hockey League was subject to antitrust enforcement, and it held that standard player agreements tying up players for three years after their contracts ended unreasonably excluded a new rival league.⁵⁸ Third, in 1976, the U.S. Court of Appeals for the Eighth Circuit decided Mackey v. NFL.⁵⁹ In Mackey, the court found punitive compensation for any player signed from another team to be an unreasonable restraint of trade and a per se violation of Section 1 of the Sherman Act.⁶⁰

Professor Ross also identified two key cases from 1992.⁶¹ First, McNeil v. NFL upheld a jury finding that the NFL’s preclusion of contract competition for the best thirty-seven players on each team’s roster was unreasonable.⁶² Professor Ross’s last important antitrust-labor case is Chicago Professional Sports Ltd. v. NBA, which held that the NBA’s limit on the number of Chicago Bulls games that could be shown on the WGN Continental Broadcasting, Inc. superstation was unreasonable.⁶³

Since Professor Ross’s paper, there has been a boom of antitrust-labor cases and policy statements, both sports and nonsports related.⁶⁴ Professor Posner points to the importance of DOJ Antitrust Division’s decision in 2010 to sue Google, Apple, and other Silicon Valley firms for agreeing not to solicit each other’s software engineers as a particular turning point for antitrust-labor, since the case began to spur further action from the Obama administration.⁶⁵ Other antitrust-labor cases are in the pipeline, including at least one case that could overturn professional baseball’s antitrust exemption.⁶⁶

However, the entire judicial system did not suddenly turn to support antitrust-labor, and plaintiffs do not win all cases.⁶⁷ Professor Posner identifies a few key reasons why plaintiffs may struggle.⁶⁸ First, though sports cases have popped up over the last several decades, there are relatively few antitrust-labor cases compared to other areas of antitrust law.⁶⁹ Second, labor markets are more complicated than product markets because of employees’ relationships with their employers. There may be more entry and exit friction than product markets, and judges may not understand that reducing labor costs is not always a positive outcome.⁷⁰ Third, class action lawsuits are difficult to assemble, particularly in such complex markets.⁷¹

Nonetheless, policies are shifting. In 2016, the Antitrust Division and the Federal Trade Commission (“FTC”) issued joint guidance warning companies that labor market collusion would mean criminal penalties.⁷² The same year, the Obama administration issued a statement indicating that it would prioritize antitrust-labor enforcement.⁷³ Both the Trump and Biden administrations issued statements that they would prioritize monopsony concerns.⁷⁴ And in the summer of 2023, the DOJ Antitrust Division and FTC issued draft merger guidelines that directly address labor markets.⁷⁵ Draft Merger Guideline 11 was titled: “When a Merger Involves Competing Buyers, the Agencies Examine Whether It May Substantially Lessen Competition for Workers or Other Sellers.”⁷⁶ It advised:

Labor markets are important buyer markets. The same general concerns as in other markets apply to labor markets where employers are the buyers of labor and workers are the sellers. The Agencies will consider whether workers face a risk that the merger may substantially lessen competition for their labor. Where a merger between employers may substantially lessen competition for workers, that reduction in labor market competition may lower wages or slow wage growth, worsen benefits or working conditions, or result in other degradations of workplace quality. When assessing the degree to which the merging firms compete for labor, any one or more of these effects may demonstrate that substantial competition exists between the merging firms.⁷⁷

On December 18, 2023, the DOJ and FTC issued a final version of the 2023 Merger Guidelines, featuring “both significant and subtle changes” from the Draft Merger Guidelines.⁷⁸ While the title of the guideline, now Guideline 10, changed slightly between the draft and final version, the exact language above remained the same.⁷⁹ The 2023 Merger Guidelines describe why buyer-side market power can be problematic for workers looking for jobs: There are high costs of switching between jobs for workers and this friction can occur in finding the right match between employer and worker.⁸⁰ The 2023 Guidelines will continue to have life under the Trump administration, with FTC Chair Andrew Ferguson noting that “the clear lesson of history is that we should prize stability and disfavor wholesale recission [of merger guidelines].”⁸¹

Given these new guidelines and expanding caselaw, antitrust-labor is an ideal testing ground for unusual labor markets, like student-athletes.⁸² As Part II, infra, describes, the NCAA is a clear example of antitrust-labor’s caselaw evolution.

C. Money Left on the Table: The Impact of Monopsony and Monopsonistic Cartel Power on Compensation

The antitrust-labor movement seeks to maximize consumer welfare given how firms “buy” labor.⁸³ Monopsony power is power on the buyer side of the market.⁸⁴ For that reason, as Part II illustrates, the NCAA as an entity can be viewed as a monopsony.⁸⁵ Alternatively, the NCAA can be viewed as a cartel or collusive monopsony, which is an “overt price fixing agreement,” made up of athletic conferences. As with any good, the basic economic principles of supply and demand affect labor. In a competitive market, firms will buy labor where the supply of labor at the competitive price intersects with firms’ demand.⁸⁶ Firms paying in competitive markets in the diagram at Figure 1 below are price-takers.⁸⁷

On the other hand, firms in monopsonistic or collusive markets are price-makers. Figure 1 depicts what happens to wages and quantity of labor supplied in a cartel or in a monopsony.

Figure 1: The Effect of Monopsony on Wages

Figure 1 depicts the buyer-side economics of any firm with buyer-side market power. In this firm-level diagram, the downward sloping line is the demand curve, ML stands for marginal cost of labor, and S stands for supply.⁸⁸ In a competitive market, point b is the competitive amount of labor and the wage paid.⁸⁹ To maximize profit, a monopsonist will reduce employment from L1 to L2 and reduce the wage paid from W1 to W2, at point e.⁹⁰ Employer surplus would rise, and employee surplus would fall, as employee surplus equal to (W1 – W2)L2 is converted into employer surplus.⁹¹ The triangle d-e-b represents overall welfare loss.⁹² As Professors Roger Blair and Wenche Wang explain, “The main economic objection to buyer cartels is the loss in social welfare. But the importance of the wealth redistribution from labor to the firms should not be ignored.”⁹³

Bringing the economics back to the NCAA, the difference between W1 and W2 above represents the loss in wages to student-athletes.⁹⁴ One can argue that W2 equals the value of an education and other benefits derived from NCAA plus any name, image, and likeness (“NIL”) payment.⁹⁵ Recognizing that NCAA and its top conferences make incredible profit, however, as shown in Figure 2, student-athlete wage suppression only becomes more worrying.⁹⁶

Figure 2: Every FBS School’s Football Expenses and Revenues

If the NCAA is viewed as a monopsonist, the NCAA has virtually all of the market power for collegiate athletics.⁹⁷ Alternatively, considering schools and their conferences as a cartel, we can look at the market power demonstrated by the “Power Five” conferences.⁹⁸ The Power Five Conferences were the SEC, Big Ten, ACC, Pac-12, and Big 12, and they have had incredible market power as demonstrated by the revenues shown above.⁹⁹ The Pac-12 has since disbanded, evidence of further consolidation.¹⁰⁰

In 2019, for instance, Texas A&M brought in the most football revenue of any Football Bowl Series (“FBS”) school with over $120 million in profit.¹⁰¹ And with few exceptions, like Notre Dame, which does not play in any conference, the Power Five conferences brought in more revenue than any other conference. Thus, whether we examine the NCAA as a monopsonist or its most powerful conferences as a cartel, market power exists to reduce wages and amount of labor.

It is clear wages were suppressed by the NCAA and its members in the leadup to Alston. Previously, athletes were limited to receiving compensation beyond scholarships and some education-related costs.¹⁰² NIL has changed that.¹⁰³ And one of the cases in the wake of Alston, the recently approved settlement in House v. NCAA¹⁰⁴545 F. Supp. 3d 804 (N.D. Cal. 2021). is changing that and allowing some compensation for athletes.¹⁰⁵

Moreover, part of monopsony power is also a reduction in the amount of labor. With so few competitive spots at top schools, an inference can be made that concentrated power restricts recruiting to only the top athletes, and other good athletes are passed over by top programs, going instead to less competitive programs.

Since 2021, the NCAA has allowed players to make money off of NIL.¹⁰⁶ While this does not necessarily represent the full pay the student-athlete would earn at a competitive level, it better approximates this value than scholarship money alone. Table 1 below represents NIL value (which can be correlated to social media presence) for the top five active student-athletes as of February 15, 2025.¹⁰⁷ As far as wages, there is clearly an abundance of money in the industry.

Table 1: Current NIL Value of Top Five Student-Athletes

II. The NCAA, Labor, and Antitrust: Before, During, and After Alston

A. Before Alston—The Founding of the NCAA and Cases Depicting the NCAA’s Relationship to Antitrust

While Alston most recently paved the way for increased student-athlete compensation, the debate about compensation began decades earlier.¹⁰⁸

The NCAA was conceived by President Theodore Roosevelt and others with two purposes in mind: (1) setting standards for the health and safety of players and (2) ensuring that no student representing a university in collegiate sports be paid.¹⁰⁹ Since the beginning, the NCAA has been unable to keep all money outside of college sports.¹¹⁰

In 1948, the NCAA adopted the “Sanity Code,” in which the NCAA committed to opposing “promised pay in any form” to student-athletes and authorizing grant-in-aid scholarships.¹¹¹ In the following decades, the codes expanded the limitation on payments to “room, board, books, fees, and ‘cash for incidental expenses such as laundry’; permit[ed] paid professionals in one sport to compete on an amateur basis in another sport; and most recently, allow[ed] ‘athletic conferences to authorize their member schools to increase scholarships up to the full cost of attendance.’”¹¹²

By 1984, when NCAA v. Board of Regents of the University of Oklahoma¹¹³468 U.S. 85 (1984). was decided, the NCAA’s commercialization was obvious.¹¹⁴ Large schools like the University of Oklahoma and the University of Georgia wanted to televise more games nationally than the NCAA would allow.¹¹⁵ In the 1980s, the NCAA limited the number of nationally and regionally televised football games to four national appearances and six total appearances in two years.¹¹⁶ While the universities argued that the NCAA’s conduct violated Section 1 of the Sherman Act, the NCAA argued that televising games reduced in-person attendance.¹¹⁷ Ultimately, the Supreme Court agreed with the universities and found that the NCAA’s restrictions violated the Sherman Act, stating that “consistent with the Sherman Act, the role of the NCAA must be to preserve a tradition that might otherwise die; rules that restrict output are hardly consistent with this role.”¹¹⁸

Student-athlete compensation first became a significant issue in 2006 in White v. NCAA.¹¹⁹ In White, a group of student-athletes challenged the NCAA’s limitation on its “full grant-in-aid athletic scholarships” that included tuition, mandatory fees, room, board, and required books but did not include optional fees, school supplies, and other expenses.¹²⁰ The student-athletes in White alleged that the NCAA and its member institutions agreed to limit student-athlete compensation that “‘unreasonably restrained trade through the imposition of a cap on athletic-based financial aid in violation of § 1 of the Sherman Act’ because the cap prevented them from covering the complete cost of their attendance.”¹²¹ The parties ultimately settled before trial, with the NCAA allowing schools to purchase health insurance for student-athletes and establishing 10 million fund to compensate past student-athletes.¹²²

The first significant case involving student-athletes’ NIL, a form of payment not directly provided by schools, was O’Bannon v. NCAA.¹²³ A group of student-athletes led by Edward O’Bannon—a basketball player, former All-American, and 1995 National Champion for the University of California, Los Angeles—sued the NCAA under Section 1 of the Sherman Act for using their NIL in video games without consent or compensation.¹²⁴ The NCAA contended (1) that its amateurism rules were “valid as a matter of law” under Board of Regents, (2) that the compensation rules were not covered by the Sherman Act, and (3) that the plaintiffs did not have antitrust standing.¹²⁵ The court found “none of these three arguments persuasive.”¹²⁶ It largely agreed with the district court:

(1) that a cognizable “college education market” exists, wherein colleges compete for the services of athletic recruits by offering them scholarships and various amenities, such as coaching and facilities; (2) that if the NCAA’s compensation rules did not exist, member schools would compete to offer recruits compensation for their NILs; and (3) that the compensation rules therefore have a significant anticompetitive effect on the college education market, in that they fix an aspect of the “price” that recruits pay to attend college (or, alternatively, an aspect of the price that schools pay to secure recruits’ services).¹²⁷

Nonetheless, O’Bannon was a key victory for student-athletes because “the Ninth Circuit recognized and defined the student athletes’ cognizable labor market, which the NCAA had vehemently opposed as a lynchpin of its argument for the necessity of its compensation restraints.”¹²⁸

Between O’Bannon and Alston, states like California began passing “Fair Pay to Play” Acts.¹²⁹ The acts allow student-athletes to profit from their NIL and forbid NCAA rules that prevent student-athletes from earning compensation.¹³⁰ But the NIL laws were not nationwide; labor was still unpaid aside from grant-in-aid. The stage was set for Alston.

B. Alston

A class of student-athletes filed a lawsuit in federal district court against the NCAA, alleging that the NCAA’s limits on student-athlete compensation violated Section 1 of the Sherman Act.¹³¹ The district court opinion “cut both ways,” with partial victories for the athletes and the NCAA.¹³² The NCAA was not satisfied with the decision and appealed.¹³³ The Supreme Court granted certiorari to address the NCAA’s argument it had “immunity from the normal operation of the antitrust laws” and its argument that “the district court should have approved all of its existing restraints.”¹³⁴

Justice Gorsuch authored the majority opinion in Alston.¹³⁵ He began by noting that the Court “took this case to consider [the NCAA’s] objections” to the antitrust laws.¹³⁶ In section I.A, he discussed the NCAA’s commercialism since its inception.¹³⁷ With clarity, he noted: “Over the decades, the NCAA has become a sprawling enterprise” and calls the NCAA “a massive business.”¹³⁸ To emphasize this point, the opinion called out the NCAA’s greed:

Those who run this enterprise profit in a different way than the student-athletes whose activities they oversee. The president of the NCAA earns nearly $4 million per year. Commissioners of the top conferences take home between $2 to $5 million. College athletic directors average more than $1 million annually. And annual salaries for top Division I college football coaches approach $11 million, with some of their assistants making more than $2.5 million.¹³⁹

In section 1.B, the Court discussed the district court’s ruling, and in section 1.C, the Court discussed which issues both sides agreed on.¹⁴⁰

Getting to the key argument in section II, the Court stated: “The NCAA accepts that its members collectively enjoy monopsony power in the market for student-athlete services, such that its restraints can (and in fact do) harm competition. . . . [T]he NCAA’s status as a particular type of venture categorically exempt its restraints from ordinary rule of reason review.”¹⁴¹ The Court further opined whether the NCAA’s restrictions “yield benefits in its consumer market that can be attained using substantially less restrictive means.”¹⁴²

The opinion went on to dispose of the NCAA’s reliance on Board of Regents as allowing restriction of payment for student-athletes.¹⁴³

Id. at 2157 (internal quotation marks omitted) (quoting NCAA v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 120 (1984)). The Court noted the market for student-athlete labor has changed since 1984, and concluded that “it would be particularly unwise to treat an aside in Board of Regents” as more than dicta.¹⁴⁴ In other words, student-athletes are now treated as more than amateurs.¹⁴⁵ The Court then eliminated the NCAA’s blanket antitrust immunity, noting that its appeal should be more properly placed in a plea to Congress.¹⁴⁶ It stated:

To the extent it means to propose a sort of judicially ordained immunity from the terms of the Sherman Act for its restraints of trade—that we should overlook its restrictions because they happen to fall at the intersection of higher education, sports, and money—we cannot agree. This Court has regularly refused materially identical requests from litigants seeking special dispensation from the Sherman Act on the ground that their restraints of trade serve uniquely important social objectives beyond enhancing competition.¹⁴⁷

Though the Court agreed that the proper antitrust test is not “the least restrictive means” but is the “degree[] of reasonable necessity,”¹⁴⁸ the Court noted that “we see nothing about the district court’s analysis that offends the legal principles the NCAA invokes.”¹⁴⁹ Ultimately, the majority affirmed the district court’s decision, noting that “[s]ome will think the district court did not go far enough.”¹⁵⁰ Nonetheless, the Court did not alter the district court’s finding that the NCAA’s rules limiting undergraduate athletic scholarships and compensation for athletic performance were proper, and it upheld the NCAA’s rules limiting the education-related benefits schools may offer student-athletes, like graduate or vocational scholarships.¹⁵¹

Justice Kavanaugh would have gone further than the majority in supporting compensation for student-athletes and noted “that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws.”¹⁵² He emphasized three points: (1) that the Court did not address the remaining compensation rules; (2) that the rule of reason should govern NCAA rules; and (3) that the NCAA lacks the requisite procompetitive justification for the rules.¹⁵³ He concluded with clarity:

C. Alston’s Immediate Impact

Alston’s impact was clear: The 2023 Merger Guideline used Alston as its primary support for antitrust-labor guidelines.¹⁵⁵ And the NCAA changed its NIL guidelines shortly after the Alston decision, giving the three NCAA divisions the ability to manage student-athlete compensation guidelines for NIL.¹⁵⁶

For student-athletes, the change in policy for NIL has meant a windfall.¹⁵⁷ Overall, an estimated $917 million was spent by companies on paying student-athletes for their NIL in 2022, the first full year of data as noted in Figure 3 below.¹⁵⁸ Figure 3 notes that the average NIL deal increased from $1,524 in the first year to $1,815 in the second year. Although the women’s overall average was just $1,084, the average deal for women’s gymnastics, featuring stars like Livvy Dunne, was over $7,000.¹⁵⁹

Figure 3: A Snapshot of NIL Spending

And in the lower courts, student-athletes continue to speak up for their rights. In Johnson v. NCAA,¹⁶⁰ the plaintiff student-athletes claimed “‘that as college athletes they were employees of their respective institutions and that the NCAA was their joint employer,’ and in turn, the student athletes argued they were owed ‘a required minimum wage pursuant to the Fair Labor Standards Act (FLSA).’”¹⁶¹

III. Antitrust Jurisprudence Does Not Require Formal Employment, an Advantage for Informal Employees Seeking Recourse

Antitrust-labor analysis is a better avenue for informal workers than the FLSA, however, because the FLSA requires formal employment. Indeed, in Johnson, the district court noted that “[i]n order to state cognizable claims for violation of the FLSA, . . . the Complaint must plausibly allege that Plaintiffs are employees of the colleges and universities they attend.”¹⁶²

To state cognizable labor antitrust claims, in contrast, plaintiffs need only survive a rule of reason analysis, and need not specify employment status.¹⁶³ As the Alston majority noted, “Determining whether a restraint is undue for purposes of the Sherman Act ‘presumptively’ calls for what we have described as a ‘rule of reason analysis.’”¹⁶⁴ Unlike identifying employment status, “[t]hat manner of analysis generally requires a court to ‘conduct a fact-specific assessment of market power and market structure’ to assess a challenged restraint’s ‘actual effect on competition.’”¹⁶⁵ Justice Kavanaugh similarly explained in his Alston concurrence that the compensation rules at issue “should receive ordinary ‘rule of reason’ scrutiny under the antitrust laws.”¹⁶⁶

So, when examining labor in areas where employment status is tenuous, antitrust analysis should be used as a framework for obtaining higher pay. A complaint need not allege employment, but rather only a “fact-specific assessment of market power and market structure’ to assess a challenged restraint’s ‘actual effect on competition.’”¹⁶⁷

IV. Courts Should Accept This Monopsony Rule of Reason Framework in Other Industries

A. Applying the Rule of Reason Framework from Alston

1. What Does Monopsony Mean Post-Alston?

Because monopsony power exists in industries other than college or professional athletics, the rule of reason framework used in Alston can and should be applied in other industries where monopsony power exists. As Professor Alan Manning of the London School of Economics noted:

The key idea behind monopsony is that the labor supply curve to an individual employer is not infinitely elastic so that an employer that cuts wages by 1 cent may find it harder to recruit and retain workers but does not immediately lose all its existing workers to competitors as is predicted by the perfectly competitive model.¹⁶⁸

While the consensus around monopsony used to be based on uniqueness and idiosyncrasies in job type, a modern view of monopsony is based on the idea that it takes time for workers to find and change jobs.¹⁶⁹ Embracing friction in the labor market, as opposed to focusing on the uniqueness of the type of labor, is key to understanding this framework. Where there is friction, there is the potential for monopsony power, “even in online markets that, a priori, one might have thought would be very competitive.”¹⁷⁰ Even when employment status is unclear, like in the case of independent contractors, antitrust analysis can provide insight in a monopolistic market.

One example of a market where there may be some surprising amount of friction and monopsony power is the rideshare industry, where drivers are typically independent contractors.¹⁷¹ While the FLSA could be little help to rideshare drivers due to the difficulty in finding that drivers are employees rather than independent contractors,¹⁷² antitrust jurisprudence has no such requirement.¹⁷³ Indeed, plaintiffs have already found some success in negotiating wages under antitrust jurisprudence.¹⁷⁴

Friction occurs even amongst rideshare platforms. Where Uber and Lyft both operate, friction between jobs is lower but still “very considerable potential monopsony power” can occur.¹⁷⁵ So, while monopsony power may be less when Uber and Lyft both share a market, it still exists.¹⁷⁶ Though arguing the market for rideshare drivers is a monopsony has not entirely been tested, when drivers filed a wage theft case after Alston against Uber and Lyft, the case settled, resulting in higher wages for drivers.¹⁷⁷

As this Uber and Lyft example illustrates, one possible solution to the challenges facing labor litigation is to require a measurement of wage elasticity as part of Alston’s rule of reason analysis. Unfortunately, this is not entirely feasible: “Very few papers seek to estimate directly the overall wage elasticity of labor supply to the firm, perhaps because it is hard to find suitably exogenous variation in wages in a single firm.”¹⁷⁸ While demonstrating monopsony power through wage elasticity may bolster evidence for monopsony power, requiring elasticity is too difficult in general.

Instead, courts should take a looser approach to monopsony power and accept plaintiffs’ arguments demonstrating that there is a high degree of friction in their respective industries. This is in line with “modern monopsony” theory.¹⁷⁹ By providing evidence that there is some friction in switching jobs, plaintiffs seeking higher wages can show that monopsony power exists and that the court in question should apply the Alston framework. Consequently, in some industries, there would not need to be any inquiry whether plaintiffs are independent contractors or workers under the FSLA—they could seek relief through antitrust proceedings.

2. How Nurses Can Use the Rule of Reason to Successfully Argue Claims of Suppressed Wages

Other than Uber and Lyft drivers, one class of potentially underpaid workers is nurses.¹⁸⁰ In particular, nurses in large hospital systems could argue that they are underpaid due to hospital systems’ monopsony power exerted on their labor.¹⁸¹ Nurses can work either as employees or independent contractors within the healthcare field.¹⁸² In addition, nurses working in large hospital systems may find difficulty switching jobs to a different hospital system due to the sheer size of the hospital systems and other regulatory and licensing barriers.¹⁸³ To illustrate, Table 2 below compares the size of the largest five hospital systems in the United States with the number of nurses those hospital systems employ.

Table 2: Nurse Quantity by Hospital System

Because it is the largest hospital system, this Comment uses HCA Healthcare as an example of hospital systems’ ability to exert monopsony power and keep wages lower than a competitive rate for nurses. Demonstrating the sheer size of this hospital system, forty-five of HCA Healthcare’s offices are in Florida alone.¹⁸⁴

Nurses who work for HCA Healthcare went on strike in 2024 due to poor staffing, poor recruitment, and poor retention.¹⁸⁵ Indicating that other healthcare systems face similar labor concerns, in response to the strike, a representative from HCA Healthcare noted that “[t]oday’s small protest by NNU (National Nurses United) is no different than their protests against countless health systems across the country.”¹⁸⁶ Furthermore, nurses in HCA Healthcare hospitals report that they do not or cannot take breaks during their shifts.¹⁸⁷ The logical conclusion from the sheer size of HCA Healthcare and the fact that nursing is highly regulated and requires special skills is that large hospital systems demonstrate monopsony power.¹⁸⁸ This leads to lower wages, which are suppressed due to HCA Healthcare’s monopsony power over registered nurses.

The HCA Healthcare spokesperson recognized that these concerns came against the backdrop of contract negotiations,¹⁸⁹ which concluded in October 2024.¹⁹⁰ Underpaid nurses in a large hospital system such as HCA Healthcare could continue to argue for a better contract at their next negotiation. In a negotiation context, the nurses could use the rule of reason framework within antitrust as leverage in negotiation for higher wages and better retention. Or, in a litigation context, they could also file an antitrust suit and actually use the Alston framework. Below, this Comment argues that the nurses should be successful in such a challenge and illustrate how such arguments would proceed.

As required by the Sherman Act and antitrust caselaw, the plaintiffs would have to prove that the hospitals had an agreement that unreasonably restrained trade.¹⁹¹ Such an agreement would be between the individual hospitals that are part of the hospital system. In line with Alston’s rule of reason, the burden of production would fall on plaintiffs to identify anticompetitive practices.¹⁹² Here, they would explain the hospital systems’ monopsony power, which would exist due to friction in changing nursing jobs from regulatory requirements and the size of the hospital systems.¹⁹³ The plaintiffs would have an opportunity to present economic evidence explaining the effects of monopsony on suppressed wages.

Then, the burden of production would shift to the defendant to provide procompetitive justifications for their practices. Here, like in Alston, the nature of the industry would not be a valid excuse for exercising monopsony power.¹⁹⁴ The hospital system could potentially counterargue that since nurses contend there is understaffing in the hospitals, that indicates nurses are free to move to other hospitals that pay better. However, their argument should not be successful. Exercising monopsony power means that quantity of labor is likely restricted in the market, below competitive levels.¹⁹⁵ In practice, this means that fewer nurses are hired than the optimal competitive level across the market—in other words, nursing shortages.¹⁹⁶

Hospital systems would also likely argue that patient care is not compromised due to nurses’ wages.¹⁹⁷ Like in Alston, the test is not necessarily finding the least restrictive alternative to paying a fair wage; the test is the “degree[] of reasonable necessity” of the challenged practices.¹⁹⁸ Lower wages have no reasonable necessity besides profits for a large hospital system, and nursing shortages decrease patient care.¹⁹⁹ A court would therefore likely not find procompetitive justifications persuasive in this case.

Finally, in balancing the anticompetitive effects and procompetitive justifications, the court should find in favor of plaintiffs, assuming they provide sufficient evidence of wage suppression compared to a competitive market. Put simply, in a monopsonistic market for nurses, there is a restriction in wages and quantity of nurses that likely harms both nurse wages and patient care. Even weighing any procompetitive justification, lower nurses wages and worse patient care would tip the scales toward the conclusion that a hospital system with monopsony power violated antitrust laws.

B. If There Is No Friction, There Is Not Sufficient Monopsony Power

This framework would not hold up well in industries where workers typically quickly change from job to job.²⁰⁰ Put simply, monopsony power is weakened by the ability to change jobs easily.²⁰¹ So, the Alston framework would not hold up in markets where there are numerous, interchangeable employers for an employee to move to when wages are below market value.

One example where Alston may not work would be in the market for entry-level fast-food workers. Entry-level fast-food work is relatively undifferentiated and requires little to no education or training, especially when compared to managerial positions even within the same company. Indeed, plaintiffs tried cases in the fast-food market against McDonald’s and Jimmy John’s shortly after Alston, endeavoring unsuccessfully to use Alston’s rule of reason framework for underpayment issues in monopsony.²⁰² Both cases attempted to certify nationwide classes of fast-food workers.²⁰³ In both cases, however, each court found that “competition from other quick-service restaurant employers and others would ‘push the worker’s wages . . . up to the competitive level associated with the worker’s skills.’”²⁰⁴

However, even in the fast-food worker example, a smaller geographic cross-section of fast-food workers could be specific enough to demonstrate friction and monopsony power. To demonstrate, all Jimmy John’s workers in the United States may be too broad a class to show monopsony power in franchise agreements. A rule of reason analysis should not support a market for workers where the workers can seamlessly move between jobs within the market. But a class of Jimmy John’s managers, or a class of Jimmy John’s workers in a defined, remote area on an interstate may be more likely to show friction in ability to change jobs. If there are fewer options for jobs within the relevant market in these defined areas, then the increased friction should show evidence of monopsony power that plaintiffs can use in a rule of reason analysis.

Thus, the Alston framework likely cannot be used as an argument to raise wages in extremely large markets where workers and their job opportunities are plentiful, because sufficient monopsony power does not exist in such cases.

Conclusion

The NCAA’s experience in Alston is a clear indicator that the Supreme Court is taking notice of monopsony within antitrust laws. Labor and antitrust are as old as capitalism itself. In contrast with the FSLA, the Sherman Act does not require proof of formal employment status. Courts can and should recognize the rule of reason for other monopsonies in the realm of antitrust-labor, particularly in industries that have less formal employment structures where employment versus independent contractor status is a concern.

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