anxious to avoid conflict with Topps.(Miller Dep. 430).
100. In its discussions with agents of the Association, Topps often cites marbles as an example of a "sham" product, that is, a product which, if sold with baseball cards, would effectively infringe Topps's rights to sell baseball cards "alone." In 1965, the Federal Trade Commission specifically mentioned marbles as a product with which baseball cards could be sold in competition with Topps. In re Topps Chewing Gum, Inc., 67F.T.C. 744, 839 (1965).
101.In 1974, topps objected to the sale of baseball cards by the Kellogg Company. Based upon a license from the Players Association, Kellogg sold packages of 54 baseball cards for $1.50, plus a box-top from a 60 cent (approximate) package of cereal. (P-85; P-338, p. 9). The Players Association did not yield to Topps's pressure, but instead obtained formal waivers from Topps to continue to license the product. (P-87, P-89, P-137, P-138).
102. Topps has never stated its opinion as to what the minimum value of a nonconfectionary premium must be to avoid infringing Topps's rights to sell baseball cards "alone." Fleer'sevidence supports the inference, and a finding, that Topps's policy of objecting to baseball card products sold either with confectionary products or with low cost non-confectionary premiums continues at present. Topps has presented no evidence that suggests the contrary.
103. The royalty income from sales of Topps's baseball cards is paid directly into the Association's group licensing program. In 1978, the licensing program generated about $1.1 million; Topps's royalty payments accounted for about $847,000 of that total, or more than 75% (P-119; TR 2331).
104. The Association has never licensed a baseball card product that promised to provide meaningful competition to Topps's product.
105. Before the signing of the agreement between Topps and the Players Association (P-1), the Association aggressively challenged Topps's market position, explored with competitors the possibilities of licensing a product to compete with Topps, and even contemplated using its influence with the players to gain all of the rights held by Topps.The signing of P-1 enabled the Association's group licensing program to share in the revenues of Topps's gum and baseball card product.
106. However, P-1 has also been a disincentive for the Association to explore the limits of Topps's rights, especially in the Association's licensing of non-confectionary baseball card products. The evidence shows that, had P-1 not been signed, the Players Association would have continued to test Topps's rights. As it is, the Association's incentive to challenge Topps has been greatly reduced by the substantial income generated by P-1.
107. In 1970, the Association licensed an organization known as Sports Promotions to sell packages containing four baseball cards and two iron-on patches. Topps objected to the product as an infringement of its rights. Notwithstanding that the licensed product included a non-confectionary product that very arguably did not infringe Topps's rights to sell baseball cards "alone," the Association did not seek to test the extent of Topps's rights. Rather, the Association licensed the product only for 1970, and with the understanding that it would not be sold in the same channels of distribution as Topps's product.
108. The Association has licensed products that arguably infringed Topps's rights -- as, for example, when it licensed Beatrice Foods and ITT Continental Baking Co. to sell baseball cards as a premium to candy and cakes respectively. It has never, however, granted a license for a product whose principal attraction was the baseball cards themselves, with the possible exception of one stamp album. That product, however, included an album that was at least equal in value to the stamps.
109. P-1 is not, on its face, anticompetitive. However, because the Association holds and protects all of the rights to market groups of pictures of major league players not held by Topps, the effect of P-1 is seriously and unreasonably to restrain competition. Because Topps has agreed to pay the Association royalties on its baseball card sales, no competition to Topps has arisen.
110. Topps and the Players Association possess, and have exercised, the power to exclude Topps's competitors from the baseball card market.
111. Fleer has made a reasonably persuasive showing that Topps's profits on baseball cards are, at the very least, consistent with the existence of monopoly power, although not, in the Court's view, dispositive of the question. Topps's profits on baseball cards are equal to or higher than its profits on high-risk, "fad" trading cards. (Topps's objections to the plaintiff's methodology in calculating relative profits have been considered, and are explicitly rejected as nit-picking). Baseball cards involve virtually no risk of failure each year. Competitors ought to be attracted to the marketing of a low risk product that is as profitable as other high risk products. (Fleer's analogy to bonds is quite apt --under normal market circumstances, the return to investors should decline, rather than rise, as risk decreases.) That no competitors have appeared and profits have stayed high suggests that Topps has the power to control prices and exclude competition. (P-338, pp. 60-64).
112. Topps's exclusive contracts with the players do not promote competition. Infact, they contain a number of seriously restrictive clauses. For example, during the term of the contract a player cannot assign to another the rights held by Topps, even to take effect after the contract expires. Moreover, a player is under contract to Topps for his first five major league seasons whenever they occur . If a player spends seven years in the minor leagues after signing his first Topps contract, he is committed to Topps, and Topps alone, for twelve years.
113. Topps's contracts certainly improve Topps'scompetitive position, and any businessman would consider them desirable rights. Nevertheless, they impede rather than promote competition.
114. Both Topps and the Players Association have acted to exclude competitors who sought to market baseball cards with low cost premiums.
115. The Association's conduct in (1) refusing to license baseball cards to be sold with low cost premiums, and (2) challenging direct solicitation of the players for marketing rights, inhibits rather than promotes competition in baseball cards.
116. Topps and the Players Association have combined to restrain trade unreasonably in the baseball card submarket.
117.Fleer has shown that it was excluded from any meaningful opportunity to compete for player contracts. It has not shown that it suffered any arguably quantifiable pecuniary loss as a result of its exclusion.
118. Fleer has struggled to make a profit in a number of the years during the 1970's. Its net income (loss) in eight of those years was as follows:
1977 $ 346,621
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