Panini files anti-trust lawsuit against Fanatics

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https://twitter.com/WSJ/status/1687127502290866177?t=A7O4k5g1-ObLfoFmzMb7mg&s=19

https://www.wsj.com/sports/fanatics-panini-america-trading-cards-nfl-nba-mlb-177975a1?mod=e2tw

I was told a while back by friends on the autograph side of things that Fanatics was on the verge of acquiring Panini America and when that didn't happen, those who told me were left stunned. Turns out the deal was done but was killed at the very last second:

Our sources say Fanatics was about to acquire Panini in the Fall of 2022, and an announcement was planned for The Industry Summit, which took place from October 2-5, 2022 in Las Vegas, Nevada.

The deal was done and ready to be signed, but due to some last minute language that Fanatics snuck in to protect themselves in case of an antitrust lawsuit, the deal was nixed by Panini’s owner when he received the paperwork in Italy. Panini even canceled travel for their employees to attend the 2022 Industry Summit, due to the deal falling through at the last minute. This information apparently was kept private at the time, and Panini employees ended up attending The Industry Summit in spite of the deal falling through due to Panini’s owner pulling out as a result of the anti-trust language protecting Fanatics.

As a retaliation of sorts, The Fanatics-owned Topps Company then purchased the manufacturing plant that Panini had relied upon to produce all or at least most of their releases. This put the squeeze on Panini, and continues to hinder their ability to produce cards to meet the market demand. This - not necessarily just “supply chain issues” are some of the real reasons Panini has had to consistently push back release dates over the last several months.

I'm certain Fanatics was expecting something like this to happen. It'll be interesting to see this play out.
 
Very interested to see how this plays out.

Even if it doesn't rise to the level of anti-trust/Sherman Act etc. level protections, what Fanatics did by limiting the means by which cards could be produced (i.e., vertical integration), does feel very anti-competitive.

Question will be (among others) whether there were other manufacturing means that Panini could have used (and/or what it would have cost/how difficult it would have been for them to set up their own).

Also, what is the "market" - i.e., is it "sports cards", is it "collectibles" generally, is it something else? Depending on how narrowly this is defined, it could have far reaching knock-ons to the success of the suit IMO.

Fanatics' concerns about anti-trust feel well founded (i.e., their decision to add in what I expect were termination rights to the stock purchase or similar agreement) on the basis that:

(i) their activities have thus far been to effectively corner the market and horizontally and vertically integrate and if you consider that the market share that JetBlue had was sufficient for the FTC/DOJ to disallow JetBlue to continue its code share program with American Airlines, then hard to see how the FTC/DOJ wouldn't view what Fanatics has done in cornering even more of the market by its proposed acquisition of Panini after already buying Topps and already owning a huge amount of related assets as problematic...;

(ii) as mentioned above, the FTC/DOJ under Biden/Commissioner Khan has been quite aggressive in anti-trust litigation and generally in favor of workers' rights (e.g., the proposed ban on all non-competes) and not allowing mergers/acquisitions to move forward.

That said, I wonder whether there was something that came up late in Fanatics' due diligence prior to the announcement of the deal that was potentially toxic that meant that using the anti-trust wording was a plausible means for Fanatics to put the onus on Panini to end the transaction.

Last minute changes to SPAs/transactions prior to announcement are pretty common - less common is new termination rights at the 11th hour, but still not totally off market that they would capsize a deal.

More may be at play here.

Very curious how all of the indirect owners of Fanatics are thinking about this litigation - i.e., the players/leagues. Can't imagine they are excited about what it could mean to the price of their asset in Fanatics....

Definitely will be following this closely.
 
Fanatics files a counter suit and Paul Lesko chimes in:

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Sent from my iPhone using Tapatalk
 
…and this is part of the reason all you folks with old outstanding panini redemptions are getting dealt with… lol
 
In terms of printing facilities, one or both of the companies already squeezed out Upper Deck during the pandemic boom. Will be interesting to see if that information comes out and if it works in favor of one side or the other.
 
DCUnited96 said:
In terms of printing facilities, one or both of the companies already squeezed out Upper Deck during the pandemic boom. Will be interesting to see if that information comes out and if it works in favor of one side or the other.
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I wonder how would be a hockey market with a monopoly of Fanatics. I miss the good old days of having 3-4 card companies with a license.
 
odjickfan said:
I wonder how would be a hockey market with a monopoly of Fanatics. I miss the good old days of having 3-4 card companies with a license.
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We all do :(

Leagues are too lazy nowadays though. They only want to deal with one company and get them to overpay for the privilege of an exclusive.
 

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