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Culinary Union Asking The FTC To Investigate Zuffa Much Ado About Nothing

On Wednesday, the Culinary Workers Union Local 226, which is based out of Las Vegas, sent a letter to the Federal Trade Commission imploring them to investigate the business practices of Zuffa LLC.  Also on Wednesday: the crazy 92-year-old lady who lives across the street from me called the local field office of the Federal Bureau of Investigation, accusing my Guatemalan next door neighbor of being “one of them Al Qaeda terrorists” because of the color of his skin and the fact that he speaks with an accent.  What do these two incidents have in common?  Both the Culinary Union letter and the phone call are meaningless, and at the end of the day, will have zero legal impact on their intended targets.

You probably don’t care about my neighbor, so let’s take a closer look at the Culinary Union’s letter and what it means – and doesn’t mean – to Zuffa.  Some facts first, just to make sure we’re all on the same page:

– Station Casinos does not employ union workers, and the Culinary Workers Union Local 226 doesn’t like that.  The man in charge of Station Casinos and the man in charge of Zuffa share the same last name (Fertitta).  And as we all know, Zuffa runs the UFC.

-The Federal Trade Commission (a.k.a., FTC) is the federal government agency charged with protecting consumers and stamping out anti-competitive business practices.

-Antitrust law is the backbone of the FTC, and it’s the area of the law that deals with regulating anti-competitive business practices.

Now, on to the union’s letter.

“Zuffa has achieved a dominant position in the market for professional mixed martial arts.  Since purchasing the UFC in 2001, Zuffa has acquired for of its key rivals, including Pride Fighting Championship, World Extreme Cagefighting, the World Fighting Alliance and Strikeforce.  In 2008, an independent equities research firm estimated that the UFC controlled 80 to 90 percent of the mixed martial arts market.

Zuffa has preserved and strengthened this dominant market position through exclusionary conduct by refusing to co-promote events, as well as anticompetitive contractual restraints that severely limit a professional athlete’s freedom of movement.”

The letter goes on to pinpoint Zuffa’s alleged antitrust infractions, and cites:

-The “champions” clauses in fighter contracts, which extends the contract of anyone with a belt.

-The exclusive negotiation and “right to match” clauses in fighter contracts, which can keep a fighter from immediately jumping ship and fighting for someone else.

-The agreements fighters sign that give away their images and likeness rights in perpetuity.

-Zuffa’s unwillingness to co-promote.

According to the letter, these clauses make it too hard for UFC fighters to move freely throughout the market, as well as prevent them bargaining for better pay.  Also, somehow the consumer is harmed in all this, because maybe the quality and supply of MMA events takes a hit in all this alleged market-suppression.  Or something.  Who knows.  The point of all of this legal jibber-jabber is that Zuffa is bad, and FTC, can you please do something about it?

Arguing the merits of those allegations would be fruitless.  Not so much because they’re strong allegations – some may hold water, others seem to be a complete joke – but because the letter is not a civil suit plainly stating claims that must be answered.  It’s just a very public letter sent to a federal agency and leaked to the press.  The only time Zuffa must respond those kinds of questions is when the FTC brings them before a judge.

The funny thing about the letter is that it comes after a rumored FTC investigation has already begun.  And while tips from eye witnesses are great for solving crimes like hit and runs, muggings and murders, when it comes to antitrust violations – as pointed out by a third party with no vested interest in the MMA world – they are about as useful as, well, an old lady calling the FBI about the hard-working busboy who lives on her street, a person who she thinks is Middle Eastern but is really Central American.  When it comes to the documents subpoenaed and gathered by FTC investigators and mulled over by FTC attorneys, the letter and its allegations are irrelevant.

The one thing the letter does do is tip the hand of the Culinary Union in terms of their gripe with the Fertittas.  The only time we’ve had evidence of the animosity between Zuffa and the union is when Dana White brought it up.  Now, however, we have proof.

Does any of this have anything to do with the situation in New York?  Ultimately, the Culinary Union’s letter has little to no bearing on the MMA sanctioning issues Zuffa faces in New York, especially if what Peter Lampasona over at USCombatSports says is true about the New York branch of the union being totally cool with Zuffa (and the dollars they’ll bring into the state).

The letter ends with this:

“We strongly encourage the FTC to use its statutory power to investigate the anticompetitive practices outlined above.  The contract between promoters and athletes are generally confidential, which means it may require a government investigation to determine whether the terms of these contracts unreasonably restrain trade and violate US antitrust laws.”

The Culinary Union also offers up to the FTC whatever assistance it can provide.  Methinks those union folks in Las Vegas would be better served helping that Guatemalan busboy next door.

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