12/06/2004

A Monopoly on Steroids

Although Major League Baseball is currently not in season, the steroid scandal and the underlying problem that it represents are big news. The recent admission by Jason Giambi that he used human growth hormone was quickly followed by the unsurprising revelation that Barry Bonds has used steroids. Bonds said that he didn't know he was using a product with a steroid in it.

Yeah.

MLB's impotence in dealing with this matter is well-established: the league only got around to banning steroids two years ago, and no major-leaguer has been suspended for their use. That impotence has drawn the attention of Congress, and they're making regulatory noises:

Sen. John McCain, the driving force behind changing how baseball polices performance-enhancing drug use, said Sunday he believes President Bush would sign a bill into law.

The House minority leader and the Senate majority leader agreed that the best solution would be for baseball to require stronger testing but said they would support legislation if the league failed to act on its own.

"They have a responsibility, not only to the sport, but to the children of America who look up to these players," Rep. Nancy Pelosi, D-Calif., said on NBC's "Meet the Press.""Quite frankly, it's overdue."

Sen. Bill Frist, R-Tenn., said the problem "could be ended, bang, just like that, if everybody from the owners to the unions just step up and face the reality that we've got a huge problem."
It's not made clear just what sort of "legislation" is being talked about here. What's probably likely is some sort of bill requiring a comprehensive testing regimen. While I do think that baseball should be testing aggressively, I don't think that Congress should be legislating it. Major League Baseball is a business, and it should be as free as possible to pursue its business with minimal interference from the government.

There is a more powerful tool at the Congress's disposal that could convince both the owners and the players to agree to an effective testing system: the anti-trust exemption. Currently, baseball is not subject to the sort of anti-trust laws that are often invoked against companies like Microsoft for monopolistic practices. As ESPN explains...
Baseball has been exempt from these antitrust laws since 1922, when the Supreme Court ruled in its favor in Federal Baseball Club of Baltimore, Inc. v. National Baseball Clubs. The Supreme Court determined even though there was scheduling of games across state lines, those games were intrastate events since the travel from one state to another was "not the essential thing," Justice Oliver Wendell Holmes wrote in the decision. There are several aspects to the exemption, but the primary issue right now is this means a team can't move unless MLB allows it to move.
The "antitrust exemption", as it is called, gives MLB a great deal of control over its business that is not afforded to other businesses. Exemptions for football, basketball, hockey, golf, and boxing have all been denied by the courts. The business flexibility that it represents makes it an excellent crowbar with which to pry MLB away from its intransigence on the steroids issue.

The exemption should probably be repealed regardless of the steroid issue. But, if the threat of its removal can bring about significant changes in the way that MLB deals with steroids, the exemption will have actually served the public good.