The Biden Department of Justice is set to launch an antitrust review of the proposed deal between the PGA Tour and Saudi-backed LIV Golf following a surprise announcement of the agreement earlier this month according to The Wall Street Journal, "initiating a regulatory obstacle to the stunning deal that the warring golf bodies hope will stabilize the divided sport."
Justice Department to Investigate PGA Tour-LIV Golf Pact - WSJ https://t.co/1645jLyqfC
— Jacqui Heinrich (@JacquiHeinrich) June 15, 2023
Reports of the Justice Department's decision follow calls from Democrats on Capitol Hill — including Senators Elizabeth Warren (D-MA) and Ron Wyden (D-OR) — to "closely scrutinze" the PGA Tour-LIV Golf deal.
The DOJ's decision to investigate "makes it probable that any transaction that is hammered out between the rivals won't take effect for some time," WSJ noted, and the final outcome "likely won't be known for at least a year." It's even possible that the announced deal "will fall apart entirely if the sides cannot settle on specific terms."
While a DOJ review of the deal might mean a drawn-out agreement process between the PGA Tour and LIV Golf — or even the beginning of the end of the deal that shocked players and fans — it's hardly the first time the PGA Tour has faced federal scrutiny.
Via WSJ:
A review by the Justice Department—which had already been investigating the PGA Tour and other leading golf bodies for anticompetitive behavior—introduces uncertainty to the planned joint venture between the PGA Tour and Saudi Arabia’s Public Investment Fund. It also makes it probable that any transaction that is hammered out between the rivals won’t take effect for some time...
Federal antitrust scrutiny had been widely anticipated in the wake of the announcement, which came on the heels of the existing Justice Department investigation into the PGA Tour and other golf institutions including Augusta National Golf Club.
Antitrust lawyers have been quick to point to potentially problematic aspects of the deal, including statements by [PGA Tour Commissioner] Monahan, who told reporters that it would be good for the Tour “to take the competitor off of the board, to have them exist as a partner, not an owner.”
People familiar with the agreement have said it wouldn’t be surprising if the Justice Department examined the deal, but that regulators should be happy with it because it benefits everyone within the industry.
Somewhat ironically, the PGA Tour previously faced antitrust scrutiny as the result of an August 2022 complaint from 11 professional golfers including Phil Mickelson "for the actions it took against the golfers — including suspension from PGA Tour events — for their participation in events" with LIV Golf.
More on the PGA Tour's history with antitrust laws:
There is ample precedent in the intersection of sports and antitrust law that may impact an eventual antitrust fight here. First, notably, professional golf does not enjoy a general exemption from the antitrust laws. In fact, in a 1957 case where the National Football League blacklisted players who played for rival leagues, the Supreme Court found that professional football was subject to antitrust laws, and expressly limited the sports exemption to baseball...
In 1994, the Federal Trade Commission (FTC) investigated two PGA Tour rules: one relating to players’ appearance on television and the other about playing in non-PGA Tour events without the commissioner’s express permission. Notably, the FTC dropped its investigation by 1995.
So, the PGA Tour faced complaints about antitrust issues when it was directly competing with LIV Golf, and now the PGA Tour is set to face a probe of antitrust issues as it seeks to merge with LIV Golf.
If only the PGA Tour and LIV Golf had announced that Hunter Biden would lead the new joint organization, perhaps they could have escaped the Justice Department's attention.
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