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A Project of The Annenberg Public Policy Center

Striking Out on Antitrust

The liberal advocacy group Americans United for Change features the national pastime in a new ad that attacks the insurance industry and calls for competition in the field.

The ad says that "baseball and insurance are the only industries exempt from antitrust law." But that claim is about as accurate as Randy Johnson’s fastball to John Kruk in the 1993 All-Star game. Antitrust exemptions have been granted to quite a few different industries and groups through legislation and judicial review.

A quick bit of context: Antitrust law is intended to "combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade," according to the Cornell University Law School. Its history is often traced back to the Sherman Antitrust Act of 1890, though the field has evolved with a century’s worth of federal and state statutes and case law. The nonpartisan Congressional Research Service has an informative round up of the most frequently utilized federal laws.

Major League Baseball does indeed benefit from an exemption to antitrust law, except when it comes to labor issues; that’s thanks to the Curt Flood Act of 1998, named for the player who challenged the sport’s reserve system in a case that went to the Supreme Court. And with the 1945 McCarran-Ferguson Act, Congress gave the insurance industry (health, property, life, etc.) a "limited exemption from federal antitrust law to engage in cooperative activities that allow them to identify and measure risk, including joint collection, sharing, and analysis of loss cost data, and development of standardized policy forms," according to CRS. But these are hardly the only entities to enjoy such exemptions.

  • The National Football League and other professional sports leagues were  granted an antitrust exemption by Congress in the Sports Broadcasting Act of 1961, which allows the leagues to operate as single entities to negotiate broadcast rights with television networks.
  • Starting with the Shipping Act of 1916, "there has been an exemption, in one form or another, from the antitrust laws for ocean shipping carriers to engage in rate discussions and price-fixing agreements," as a Justice Department official explained in 2002 testimony before the House of Representatives.

And these examples are not the only ones. In fact, in 2007 the American Bar Association published a 426-page book titled "Federal Statutory Exemptions from Antitrust Law." Americans United for Change, whose former leader now heads the communications department of the Democratic National Committee, began running the ad this week, after the insurance industry’s trade group released a study attacking pending health care legislation that’s favored by the White House. The industry has lofted some ads as well.

We’re thinking this could be a slugfest.