On August 3, 2023, Panini filed a lawsuit in the U.S. District Court in Florida against Fanatics. The lawsuit alleges that Fanatics has engaged in unfair practices, using its financial advantage to “monopolize the markets for Major U.S. Professional Sports Leagues trading cards (and others) even before its exclusives begin. In short, Fanatics seeks to cripple Panini both for the short term— the remaining years on Panini’s current exclusive license agreements—and the long term.”
The lawsuit also claims that Fanatics CEO Michael Rubin has offered to purchase Panini but has yet to receive a negative answer. However, he did not take no for an answer and has since used the significant leverage of his company to try and force a sale.
Background: Why Panini Sues Fanatics
In 2021 Fanatics purchased the long-term rights to produce NBA Basketball cards, NFL Football cards, and MLB Baseball cards for a period of 15 to 20 years. This forced Topps, which held the license for baseball cards, to sell to Fanatics. Since then, the Fanatics trading cards division has become an entity valued at 10.4 billion dollars. Panini claims that “Topps had almost no choice but to sell. This practical effect of its exclusive deals was what Fanatics intended all along, which was that not only would Topps give in, but Panini would also fall like a domino in the wake of Fanatics’ Anticompetitive Conduct.”
Panini alleges that “By combining long-term exclusive licenses for every Major U.S. Professional Sports League, Fanatics positioned itself to drive Panini and other potential competitors out of the market, and erected barriers to entry blocking their return. A monopolistic outcome here will harm the public, consumers, and competition by allowing Fanatics complete control to set and raise prices for MLB player trading cards, NBA player trading cards, and NFL player trading cards.”
What Panini Is Arguing
Panini is basing its claim on its interpretation of several events. They say that Fanatics used existing solid relations with the NBA, NFL, and MLB to ensure that their card rights bidding process was unfair. Indeed, Panini claims they have yet to receive an opportunity to make a counteroffer.
Another allegation is that Fanatics has purchased majority ownership of the printing company, which makes 90% of Panini’s cards. The lawsuit alleges that “GC Packaging work against the interests of Panini. Or as the lawsuit puts it: “Because Fanatics has control over GCP, Panini is now beholden to Fanatics for its lifeblood—the production of nearly all its trading cards.”
How Have Fanatics Responded?
Fanatics released a relatively diplomatic official statement: "Panini’s meritless allegations won’t distract or slow us down, and we will vigorously defend the lawsuit. Fanatics remains committed to providing a better model for our partners and creating the best possible experience for collectors across the globe.”
But a spokesperson made a particularly acerbic statement that the lawsuit is a “baseless last-gasp, flailing effort by a company that has lost touch with its consumers.”
What Does This Mean?
Panini seems to have a pretty good case. If even some of these claims are substantiated, they could receive significant damages. However, we should note that the American legal system, despite having strong anti-trust legislation on the books, such as the Sherman Act, has been lax in enforcing it. One thing is for sure: even if Panini wins, this will not put much of a dent in the Fanatics juggernaut. Their utter domination of the hobby seems assured.
