UFC/Zuffa, LLC Purchase of Strikeforce Passes the Scrutiny of the Federal Trade Commission!

Zuffa, LLC (Zuffa), the majority owners of the Ultimate Fighting Championship (UFC) have escaped from a potential U.S. government strange-hold on their mixed martial arts (MMA) acquisition of competitor Strikeforce (Explosion Entertainment, LLC).

We are not surprised for many reasons.  First, what government agency wants to be on record causing jobs to be down-sized when the U.S. economy is still recovering?  Second, MMA is growing rapidly and there are many arguments for consolidation to strengthen the competition and provide more funding for events.  Just like the National Football League, National Basketball League, and National Hockey League.  In contrast, MMA is a much younger sports than baseball in North America.  Baseball was were held by the U.S. Supreme Court is not even be subject to the anti-trust laws of the United States of America.

Third, there are reports that former Strikeforce CEO Scott Coker and many former Strikeforce fighters praised the acquisition.  The more interesting question is whether Zuffa's imposition of much higher fees for sports sponsorship for products that directly compete with Zuffa's products (clothing and energy drinks) violate competition (anti-trust) law?

UFC President Dana White's possible reaction

Federal Trade Commission’s Bureau of Competition has closed their nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade Commission Act.  Now the FTC has announced that the investigation is closed, as detailed in a letter to the New York City-based law firm Axinn-Veltrop-Harkrider, LLP, which had been retained by Zuffa as its representation before the FTC.


UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary

January 25, 2012
Stephen Axinn, Esq.
Axinn Veltrop, and Harkrider LLP
1330 Connecticut Ave., NW
Washington, DC 20036

Re: Acquisition of Explosion Entertainment, LLC (Strikeforce) by Zuffa, LLC (UFC)
FTC File No. 111 0136

Dear Mr. Axinn:
The Federal Trade Commission’s Bureau of Competition has been conducting a
nonpublic investigation to determine whether Zuffa, LLC’s acquisition of Explosion
Entertainment, LLC may violate Section 7 of the Clayton Act or Section 5 of the Federal Trade
Commission Act.

Upon further review of this matter, it now appears that no further action is warranted by
the Commission at this time. Accordingly, the investigation has been closed. This action is not
to be construed as a determination that a violation may not have occurred, just as the pendency
of an investigation should not be construed as a determination that a violation has occurred. The
Commission reserves the right to take such further action as the public interest may require.
By direction of the Commission.

Donald S. Clark
Secretary

See http://www.ftc.gov/os/closings/comm/120125zuffa.pdf

UFC President Dana White vs MFC's Mark Pavelich: The Fight Occurs Outside The Cage!

UFC President Dana White's Clothing Sponsorship Deals Were Discussed Today By Maximum Fighting Championship (MFC) Owner and President Mark Pavelich. 

 

 

The following message was posted  Today (word-for-word) by Pavelich

 

"A message from MFC Owner/President Mark Pavelich: 

I am disgusted by the way MMA clothing brands are buckling to “DW’s” handling of contracts regarding the sponsorship of specific fighters. It’s almost comical – not on his part but on the part of these clothing companies. They cave in and pay his organization a great deal of money just to have the opportunity to sponsor fighters, who they then pay an individual fee to as well. What these clothing brands fail to understand is that the entire organization that “DW” runs is sponsored by a competing clothing company. These other brands are paying to represent themselves, yet they will never get the brand recognition they are seeking since the company itself has what would be considered a title sponsorship with another clothing brand – probably the most-recognizable brand in the industry. You are competing in an uphill battle that you can never win. Now “DW” has instructed these other clothing brands that they have to stop sponsoring other MMA events or they will not be allowed to sponsor fighters in his event – even after fully paying him for the right to sponsor and paying the fighters individually. He is collecting money by the armored truck full from these companies, and yet he’s still able to tell them where to spend the rest of their money at the same time. Has he or anyone in his company ever heard of something called “restraint of trade?” In a million years, you would never get away with this is other sports. I would like to see Nike, Adidas, or Reebok be told how and where they can spend their sponsorship dollars. It would never happen. Maybe it’s time the Maximum Fighting Championship stopped helping MMA clothing brands build their business, and for these businesses to be bullied into these types of situations, caving in, and walking away from what helped them get launched in the first place. 

These companies are compromising their long-term futures and don’t even realize it. Right now they are not even running their own companies. “DW” is running his show … and yours."

 

 

Questions by MMAMaxim.com

This sport is bigger than any one fight competition!  The fighters, fans, and other stakeholders deserve this.

Which clothing business do you think he is Pavelich is referring to in this message?  TapouT or Silver Star (both now owned by ABG)?  Probably not TapouT as some fighters in Strikeforce still wear their clothing.  Almost certainly not Affliction because of Zuffa's disputes in the past with Affliction's rival MMA competition's with Fedor (see pictures below). 

Zuffa sells their own line of clothing but it does not state in their 2010 catalog who makes it.  This will be an interesting battle. 

It will be interesting to tabulate which media sources DO NOT discuss this story when it concerns how competition keeps GLOBAL MMA Strong!  Consider that for any awards in the future for best media source which advances true freedom of the press.

 

Which MMA Clothing Businesses Are Missing From These Pictures Of Sponsored Strikeforce Fighters?

 

 

Affliction Fights: