Hoosier Racing Tire (“Hoosier Tire”) won a victory in the antitrust case brought by Specialty Tires of America/ Race Tires of America, (“STA”) concerning exclusive contracts for the supply of racing tires.

On July 23, 2010, the Court of Appeals for the Third Circuit confirmed that single-tire or “spec tire” rules in dirt oval track racing were legal under the antitrust laws, and that Hoosier Tire had not violated the law in contracting to supply such spec tires. The Court affirmed the dismissal of all claims against it and co-defendant Dirt Motor Sports. The case is Race Tires of America, Inc., et al. v. Hoosier Racing Tire Corp., et al.

The Court ruled that sanctioning bodies should have the discretion to determine their own rules of the game, including specifying a single-supplier’s products be used in the race, and created a bright-line rule: Sanctioning bodies can legally enter exclusive contracts where they have in good faith “freely adopted their own equipment rules and then freely entered into exclusive contracts with the respective suppliers.” It also noted that in this case, the evidence supported the sanctioning bodies’ good faith belief that single-tire rules benefit racers and motorsports in general, including by promoting parity among racers, increasing safety, and controlling overall costs of so-called “tire wars.”

The Court explained that a clear rule was needed because sanctioning bodies have ultimately won antitrust challenges to their specification rules in the past, but only after incurring considerable legal expenses. “Motorsports sanctioning bodies, as well as similar organizations in other sports, deserve a bright-line rule to follow so they can avoid potential antitrust liability as well as time consuming and expensive antitrust litigation… Contrary to the pro-competitive purposes of antitrust law, this expense may have real anti-competitive effect, especially on the smaller sanctioning bodies….”

This ruling should have applicability to sanctioning bodies in other sports as well. As the Court noted, “the importance of this case goes far beyond” the parties, and that the “result and reasoning could have an effect beyond the world of dirt oval track racing (or even motorsports in general).” Other racing sanctioning bodies, including NASCAR, IMCA and USAC, had filed a brief in support of Hoosier Tire’s position.

Dennis Sherman, Hoosier’s Vice President of Sales, was very pleased with the result. “This ruling is a win not just for Hoosier,” he said, “but is also a win for motorsports generally. Sanctioning bodies can now choose the rules they believe will be best for their sport without the concern of having to defend an antitrust suit at every turn.”