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Fanatics Countersues Panini for Unfair Competition

 |  August 7, 2023

The feud between two of the most prominent companies in the sports collectibles space is heading to court as Fanatics countersues Panini for alleged “unfair competition”.

According to Reuters, this latest chapter in the ongoing legal battle between the industry giants began late last week when Panini filed an antitrust lawsuit against Fanatics, claiming that the sports merchandise giant had created a monopoly in the industry by securing exclusive licensing rights. Panini’s argument was that Fanatics had acquired Topps in early 2022, creating an unfair advantage by signing exclusive deals with star and rookie NFL and NBA players for their original autographs, thereby denying Panini access to them.

Expressing Panini’s concerns, attorney David Boies who is representing them in the case said, “When companies like Fanatics monopolize an important market, not by competition on the merits, but by anticompetitive agreements and practices, it obviously hurts competitors. But the primary victims are consumers who end up paying higher prices for fewer choices with less innovation.”

In response, Fanatics on Monday filed a countersuit against Panini in the Southern District Court of New York, claiming damages and other relieving factors as well. Their case alleges that Panini has been trying to sell its business for a decade and that Fanatics has suffered significant losses and missed valuable opportunities during the prolonged negotiations with them. Additionally, Fanatics also accused Panini of raiding its employees and holding them back by threatening them with frivolous lawsuits.

Expressing Fanatics’ response, lawyer Michael Carlinsky of Quinn Emanuel Urquhart & Sullivan said, “Panini of ‘sabotage and a baseless antitrust lawsuit’ in an effort ‘to try to cast blame on Fanatics for Panini’s failures.”

Related: Panini America Sues Fanatics for Monopolizing Trading Card Market

Fanatics’ countersuit against Panini marks a new chapter in their ongoing legal battle and with the trading card industry becoming highly competitive, the outcome of this case will have significant implications for the future of the space and the choices available to consumers.

The dueling lawsuits escalate the companies’ fight over control in the red-hot U.S. trading card market, which has grown in value since the start of the COVID pandemic. The relationship between Panini and Fanatics has been strained since Fanatics CEO Michael Rubin went public with his desire to make trading cards one of his company’s major verticals, alongside sports betting and the core merchandise business.

Fanatics presents its case of a ‘innovative disruptor’ taking on a ‘stagnant, long-time incumbent’ in Panini. To that end, Fanatics boasts how a ‘track record asa proven partner’ naturally appeals to leagues, especially when juxtaposed with Panini’s supposed ‘dismal customer service … egregious quality control issues, shoddy product offerings, and pervasive underinvestment.’

Panini on the other hand has accused Fanatics of not only abusing antitrust law by creating a monopoly but also of monopolizing the multibillion-dollar collectibles industry. The company has argued that if Fanatics’ ‘monopolistic control’ isn’t held illegal, ‘consumers will suffer, prices will rise, quality will fall, and innovation will be stifled.’ They also added that the ‘kid on the playground will have less options to buy trading cards after school in retail stores.’

Fanatics has also taken Panini to task over their alleged tactics including ‘threatening’ current and former employees with frivolous litigation should they join Fanatics as well as ‘deceptive negotiations—including through ‘inflated financial projections’—with Fanatics, which says it ‘missed out on hundreds of millions in revenue and earnings from competing licenses with NBA players and pre-draft NFL rookies.’

The legal battle between Fanatics and Panini highlights the intense competition in the trading card industry and the compatibility of exclusive contracts with antitrust law, an issue which has long been a source of controversy and debate due to their potential adverse impacts on competition, prices and innovation.

This latest legal development is sure to spark a lot of interest across the industry as the outcome of this case will have a far-reaching impact.

Source: Reuters