Extraterritorial effects of non-enforcement of the antitrust laws

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The League Championship Series are starting, whether the Mets have any starting pitchers or not. But today’s baseball news concerned the importation of a quality starter from Japan, Daisuke Matsuzaka. Matsuzaka was the MVP of the inaugural World Baseball Classic this year, a kind of World Cup for baseball.

What does this have to do with law? Matsuzaka, unlike say, Hideki “Godzilla” Matsui, does not have 10 years in Japanese baseball, and so he is subject to an agreement between Japanese baseball and American Major League Baseball (MLB), in which MLB teams will submit silent bids for his services to MLB’s league office, and then the highest bidder will get exclusive rights to negotiation with Matsuzaka. The amount of the winning team’s bid will go to Matsuzaka’s former team (the Seibu Lions) as a transfer fee. And then, since he will be unable to take bids from any other team, Matsuzaka will probably take less from his new American employers than a free agent would.

It seems to me that Matsuzaka might well be better off if, free from this system, he could negotiate a higher salary as a free agent by receiving bids from several American teams, and then just buy himself out of his contract with Seibu — an efficient breach. Indeed, the fact that MLB and the Japanese leagues agreed on this system after the high-profile move of Hideo Nomo seems to imply that it takes $/¥ out of Matsuzaka’s pocket, and puts it in theirs. But this appears to be a case where baseball’s antitrust exemption in the U.S. has been extended outside our borders by contract with the Japanese leagues. While no one cries for baseball millionaires, it may be worth noting that while other countries sometimes take offense at U.S. antitrust law sprawling into their economies, tolerance of anticompetitive practices can also have extraterritorial effect.

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