by: Pepe Urquiola

During the 2010 NBA free agency, LeBron James and Chris Bosh took their talents to South Beach to join forces with Dwayne Wade, and the trio eventually brought championships to Miami. But prior to this unprecedented signing, reports surfaced that a “summit” was conducted among the top NBA free agents of 2010, featuring the Miami Big 3, together with Amar’e Stoudamire, Carlos Boozer, and Joe Johnson,^[1] where they agreed to discuss together their options before finalizing a deal with a team.^[2] These free agents were then able to control the supply of talent by operating in unison which gave them the ability to augment the labor market, consult with other members of the group, or even boycott certain teams in favor of others.^[3]

Interestingly, then NBA Commissioner David Stern maintained that the “summit” was not in violation of the league’s rules, despite clamor for investigation from other teams.^[4] True enough, the NBA’s collective bargaining agreement (“CBA”) only prohibits team-level collusion, but nothing is provided when players themselves do the same.^[5] The “summit”, albeit giving leverage to some free agents and threatening the competitive balance of the league, did not violate any league or federal rules.^[6]

But what if player collusion also happens in the PBA? Is it allowed under Philippine laws? 

Let us first look at how PBA free agency works. Under the current rules, players that are drafted before 2014 do not really have a “free” agency because their mother team (the team that drafted the player) has the right to retain players who become “free” agents by matching any offer that a player may receive from other teams. A player may accept the mother team’s offer or he may refuse. In case of the latter, he will have to sit out for a period of five years before he can play for another team. Only those drafted after 2014 enjoy “true” free agency upon expiration of their initial contract.^[7] Also, note that PBA players are not covered by any CBA with their respective teams.^[8]

The absence of any prohibition on collusion under the PBA rules or CBA does not mean, though, that collusion is outright permissible. Republic Act No. 10667 or the Philippine Competition Act (“PCA”) prohibits anti-competitive agreements, i.e., those that control the forces of demand and supply or constrict the discipline of free markets.^[9] While the PCA deals largely with commercial transactions, it also covers any agreement that has the object or effect of substantially preventing, restricting or lessening competition.^[10] For instance, a group boycott, which is an agreement to withhold patronage or services from another, falls within the prohibitions of the PCA.^[11]

Considering that player collusion involves a group acting in unison to withhold signing from teams unless certain conditions are met, it falls within the definition of a group boycott. Nonetheless, competition laws, including the PCA, provide for a labor exception which removes CBAs from their coverage.^[12] This exception actually served as the basis of the legality of player collusion in the NBA. Since a CBA regulates the relationship of NBA players and teams, the labor exception operates to exclude player collusion from the American anti-competition law.^[13]

So if there is no existing CBA between PBA players and teams, does this mean that a PBA version of the “summit” is prohibited? The answer actually lies in yet another exception known as the Rule of Reason. Under the PCA, if the effects of an anti-competitive agreement are outweighed by a procompetitive justification, then the same will be exempted from the law’s coverage.^[14]

  From this, it would seem that a player-level collusion done by PBA free agents will not be outlawed by the PCA. Obviously, PBA free agents are situated differently from those in the NBA. Besides not having a CBA, PBA free agents, particularly those who are drafted before 2014, are in a precarious position of choosing to stay with his mother team or be idle for five years. Hence, based on the Rule of Reason, player collusion will provide a procompetitive effect by neutralizing the effects of the PBA’s team-favored free agency rules.

While markets ought to operate freely, not all collusions are anti-competitive. Player collusion can equalize power imbalances during negotiations. However, while there is indeed strength in numbers, the game plan at the bargaining table is more than just a numbers game.

Pepe Urquiola is a recent Ateneo Law School graduate (ALS ’22). He ranked 3rd in his graduating class and was also a member of the championship-winning team that won the 2022 ILC Cup.

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^[1] ESPN, Wade’s agent: Don’t call it a summit, available at https://www.espn.com/nba/news/story?id=5239414 (last accessed July 3, 2022).

^[2] Fred Mitchell, Wade questions Bulls’ loyalty, available at https://www.chicagotribune.com/sports/ct-xpm-2010-05-27-ct-spt-0527-bulls-dwyane-wade-chicago20100526-story.html (last accessed July 3, 2022).

^[3] Rodenber & Lovich, Ryan M. Rodenberg & Justin M. Lovich, Reverse Collusion, 4 Harv. J. Sports & Ent. L. 191, 206 (2013).

^[4] Chris Broussard & Marc Stein, Sources: Trio talk free agency scenarios, available at https://www.espn.com/nba/news/story?id=5338472 (last accessed July 3, 2022); Associated Press, Dallas Mavericks owner Mark Cuban says NBA should probe Miami Heat free agency recruitment, available at https://www.silive.com/knicks/2010/07/dallas_mavericks_owner_mark_cuban_says_nba_should_probe_miami_heat_free_agency_recruitment.html (last accessed July 3, 2022).

^[5] 2017 NBA & NBPA Collective Bargaining Agreement, available at https://cosmic-s3.imgix.net/3c7a0a50-8e11-11e9-875d-3d44e94ae33f-2017-NBA-NBPA-Collective-Bargaining-Agreement.pdf  art. XIV, § 1 (last accessed July 3, 2022).

^[6] Rodenber & Lovich, supra note 3. at 221.

^[7] Jonas Terrado, PBA implements new rules on free agency, rookie eligibility, available at https://mb.com.ph/2021/07/25/pba-implements-new-rules-on-free-agency-rookie-eligibility/ (last accessed July 3, 2022); Eros Villanueva, PBA announces new rules for free agents and rookies, available athttps://www.espn.ph/basketball/pba/story/_/id/31872752/pba-bares-new-rules-free-agents-rookies (last accessed July 3, 2022).

^[8] Trinca Diploma, Strength in Unity: Reviving the PBA Union, available at https://batassportiva.com/2019/09/10/strength-in-unity-reviving-the-pba-union/(last accessed June 18, 2022).

^[9] An Act Providing For A National Competition Policy Prohibiting Anti-Competitive Agreements, Abuse Of Dominant Position And Anti-Competitive Mergers And Acquisitions, Establishing The Philippine Competition Commission And Appropriating Funds Therefor [Philippine Competition Act], R.A. 10667, § 2 (b) (2015).

^[10] Id. at § 14 (c).

^[11] St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541 (1978).

^[12] Philippine Competition Act, § 3.

^[13] Rodenber & Lovich, supra note 3, at 221.

^[14] Id. at § 14 (c); see also United States v. Visa U.S.A., Inc., 344 F.3d 229, 238 (2003).