Department of Justice Investigating PGA Tour Regarding Anticompetitive Behavior

On Monday, The Wall Street Journal reported that the United States Department of Justice is investigating the PGA Tour regarding possible anticompetitive behavior on behalf of the PGA Tour in response to the launching of the LIV Golf Invitational Series.

The Department of Justice probe comes on the heels of the DP World Tour (a PGA Tour partner) losing an arbitration in the United Kingdom against three players that participated in the LIV Golf Invitation Series event in London, which stayed the suspensions and fines levied by the DP World Tour against the players and will allow them to participate in DP World Tour events in the future. An alarming ruling for the DP World Tour and PGA Tour alike.

According to The Wall Street Journal, the probe involves the PGA Tour’s bylaws governing players’ participation in other golf events and the PGA Tour’s actions relating to LIV Golf.

Since the LIV Golf Invitational Series was first announced, the PGA Tour and LIV Golf have been at odds. In February, Jay Monahan, commissioner of the PGA Tour, hinted during a meeting with the players that there would be ramifications if players participated in the LIV Golf Invitational Series. In response, Greg Norman, CEO of LIV Golf, issued a memorandum rebuking the PGA Tour’s ability to ban players from participating in PGA Tour events due to players’ independent contractor status and the PGA Tour’s non-profit status. Despite Norman’s reassurance, the PGA Tour consistently made it clear to players that it will act against players leaving for the PGA Tour. Such conduct could be the focus of the Department of Justice’s probe.

In early June, the PGA Tour announced suspensions for players participating in the LIV Golf Invitational Series. When Commissioner Monahan announced the suspensions, without a specific timeframe for the suspensions, Commissioner Monahan was clear that the suspensions were due to the players violating the PGA Tour’s tournament regulations, including failure to apply for releases to play in non-PGA Tour-sanctioned events. Therefore, due to Commissioner Monahan citing the PGA Tour regulations or bylaws as the reason for suspending LIV Golf players, it is no surprise that the Department of Justice is reviewing the PGA Tour’s rules regarding player participation.

The Supreme Court of the United States made it clear in Lorain Journal Co. v. United States that outright bans/long-term suspensions violate the Sherman Antitrust Act.

“It seems clear that if all the newspapers in a City, in order to monopolize the dissemination of news and advertising by eliminating a competing radio station, conspired to accept no advertisements from anyone who advertised over that station, they would violate §§ 1 and 2 of the Sherman Act.”

Therefore, the Antitrust Division of the Department of Justice has its sights set on the PGA Tour. The probe should reveal more information on the player suspensions, including the length of any suspensions. However, some LIV Golf players have made it clear that they have no interest in returning to the PGA Tour due to the shorter season and larger purses in the LIV Golf Invitational Series.

One thing is clear: LIV Golf is already making an impact. Beginning next year, the PGA Tour will inject an additional $54 million into purses for eight events next season, which the PGA Tour hopes will keep players away from the significant purses available on the LIV Golf Invitational Series.

Between the Department of Justice probe and keeping players from joining LIV Golf, the PGA Tour has its hands full.

Landis Barber is an attorney at Safran Law Offices in Raleigh, North Carolina. You can connect with him via LinkedIn or via his blog offthecourtdocket.com. He can be reached on Twitter @Landisbarber.