As part of the ongoing 23XI Racing and Front Row Motorsports v NASCAR antitrust lawsuit and countersuit, the teams have motioned the federal judge overseeing the case to issue a judgment on the relevant market.
The short version is that NASCAR has historically been recognized as the same market as other motorsport entities in that the Cup Series is a place for any definition race team to field cars within it.
23XI and Front Row have argued for the better part of the past year that the Cup Series is such a specialized field that teams that compete in it have no other relevant market. In other words, to paint NASCAR as violating federal antitrust laws, they have to prove (amongst other things) that the teams have nowhere else to race within this market.
From the Wednesday night filing packet:
“Indeed, it was because the chartered racing teams had no alternative purchaser for their services that NASCAR’s executives concluded the teams would have no choice but to accept whatever charter terms NASCAR offered or not compete at all.”
23XI and Front Row is asking Judge Kenneth D. Bell to issue a summary judgment over how broad NASCAR’s market reaches. The judge doesn’t have to render a decision, and could instead leave it to the jury as part of the scheduled trial in December, but the teams suggest a decision would simplify the trial.
“The Court should grant partial summary judgment on the issues of relevant market and monopoly power because there is no material dispute that the input market for premier stock car racing is the relevant market or that NASCAR is the sole purchaser in that market — a durable 100 percent market share from which monopsony power should be inferred.”
The teams want the court to rule that the market is limited to a very specific type of racing organization because that could constitute monopoly power over the market.
“There is no genuine dispute of fact that NASCAR is, and has been for decades, the sole purchaser in the relevant market, and that the market is characterized by high barriers to entry. A buyer with decades-long, durable dominant market share in a market characterized by high barriers to entry has monopsony power (and necessarily also market power), and Defendants cannot raise a material factual dispute or triable issue on this point.”
NASCAR will have a chance to respond by October 15 but their argument will no doubt point to previous legal rulings that suggest the market for a Cup Series race team is quite vast.
In previous filings and oral arguments, NASCAR has suggested that 23XI and FRM could simply compete in the IndyCar Series or Formula 1 if dissatisfied with the terms of the charter agreement that dictates the business of Cup Series competition.
23XI and Front Row have asked the court for oral arguments in front of the judge over this matter in advance of the December 1 trial.
To illustrate its point, 23XI and Front Row’s legal representation filed on Wednesday that NASCAR has already agreed with the teams over what that market definition is. There is a degree of word play involved, but 23XI and FRM state that the court has also already agreed with that definition and should issue summary judgment accordingly.
The teams have also said declarations submitted by NASCAR experts in depositions also reach the same conclusion.
“In its amended counterclaim, NASCAR alleges that there is a ‘market for entry of cars into NASCAR Cup Series races.’ This allegation directly matches Plaintiffs’ alleged ‘input market for premier stock car racing teams,’ of which ‘NASCAR’s Cup Series is currently the only’ buyer. Recognizing this, in opposing Plaintiffs’ motion to dismiss those claims, NASCAR affirmatively represented to the Court that Plaintiffs’ alleged market for premier stock car racing is equivalent to NASCAR’s alleged market ‘for entry of cars into NASCAR Cup Series race.’ … The Court subsequently denied Plaintiffs’ motion to dismiss the amended counterclaim, finding that NASCAR’s ‘proposed market appears to mirror Plaintiff[s’] allegation that NASCAR controls the ‘input market for premier stock car racing teams.’ NASCAR has thus admitted the existence of Plaintiffs’ relevant market, and partial summary judgment should be granted on the basis of this admission alone.”
There is a lot of legalese here but the key takeaway is that 23XI and FRM are attempting to use a combination of written deposition, oral arguments and previous filings to show that NASCAR is effectively admitting to the court that they are the sole buyers of Stock Car racing teams.
The teams suggest that Judge Bell reached that same conclusion too, and are urging the federal judge to take that conclusion a step further and render summary judgement before the trial begins, which would also have the effect of damaging a key component of NASCAR’s presumed defense.
23XI and Front Row also suggest that such a decision would then force Judge Bell to potentially dismiss NASCAR’s counterclaim because it has argued two contradictory positions over its own market position.
Legally, arguing two contradictory positions in called estoppel.
“NASCAR’s assertion of the market in its amended counterclaim is inconsistent with any argument against the validity of Plaintiffs’ proposed relevant market, meeting the first factor. The Court accepted this factual position when it denied Plaintiffs’ motion to dismiss, meeting the second factor. And NASCAR intentionally took this position to assert a counterclaim and survive a motion to dismiss, which substantially increased the complexity and cost of the present litigation, burdening Plaintiffs, which meets the third factor.
“Because it would be inequitable to allow NASCAR, having intentionally asserted the existence of the relevant market in order to gain discovery and multiply Plaintiffs’ costs, to now disclaim that market, NASCAR should be judicially estopped from doing so, and partial summary judgment should be granted on the relevant market issue in favor of Plaintiffs.”
One last notable quote from the filing:
“There is no genuine dispute that NASCAR is the only purchaser of premier stock car racing services in the relevant and therefore has 100% market share, which it has maintained for decade. Neither NASCAR’s executives nor its experts have identified even a single other purchaser of premier stock car racing team services in the relevant market. That leaves intact the Court’s prior conclusions that ‘NASCAR’s Cup Series is the only premier stock car racing series in the United State’ and that ‘NASCAR fully control which race teams can compete at the highest level of stock car racing – effectively, it has 100% market share.’ Dr. Hubbard could not identify any other purchaser in the relevant market other than NASCAR. Nor could Dr. Murphy identify any other purchaser of the services of a premier stock car racing team, other than NASCAR, to race in premier stock car racing events.”
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