After nearly two years of litigation and intense competition for the world’s top golfers, the PGA Tour and LIV Golf have agreed to create a new, as-yet-unnamed, for-profit joint entity. Most headlines about the deal have focused on the ethical and geopolitical problems that accompany the PGA’s joining forces with LIV’s sponsor, the Saudi Arabian Public Investment Fund. Within policy circles, the pseudo-merger has also stirred concerns regarding potential antitrust violations and harm to competition should the major golf leagues join forces as planned. The Justice Department (DOJ) has announced an investigation into the merger.

But while safeguarding fair competition and protecting stakeholders’ interests are vital goals, the Federal Trade Commission (FTC) and DOJ face resource limitations. And given this scarcity of resources, pursuing a costly antitrust case to squelch this merger may not be the most pragmatic use of the agencies’ limited capacities.

The FTC and DOJ are responsible for enforcing antitrust laws and preventing anti-competitive practices—a duty that compels them to juggle numerous cases across diverse industries. The FTC recently requested $590 million for the next fiscal year, a $160 million increase over last year, signaling that the agency feels strapped for resources. The request is unlikely to be met, particularly given House Judiciary Committee chairman Jim Jordan’s (R-OH) recent threats to subpoena the commission over its failure to deliver documents pertaining to its allocation of resources.

Putting aside the dollars, the FTC is also scarce on workers. For a start, the agency is short of two of its five commissioners. Staff lawyers—those with experience bringing cases—have been leaving the FTC at the “fastest rate in years,” perhaps owing to chairwoman Lina Khan’s dramatic changes.

Assuming that the FTC does not receive a massive increase in its budget from a Republican-controlled House of Representatives and that it cannot immediately hire and train a new corps of antitrust lawyers, it will need to prioritize. With limited money and labor, the agency should focus on cases that offer the greatest potential to benefit consumers and foster fair competition. Protecting the world’s top golfers isn’t a top antitrust priority.

The proposed merger between the PGA and LIV undeniably raises legitimate antitrust concerns. It has the potential to consolidate significant monopsony power within the golfing industry. Critics argue that such consolidation will restrict choices and ultimately lead to lower pay for players.

Indeed, before the merger, LIV was doling out lavish payments to attract major players. Phil Mickelson, for example, was lured away from the PGA for $200 million. LIV CEO Greg Norman disclosed that Tiger Woods had turned down an offer in the range of $700 million–$800 million to stick with the PGA Tour. Facing competition from LIV, the PGA had to respond by increasing payouts to keep the biggest names. Those lucrative offers, reflecting intense competition for the world’s best golfers, will no longer be on the table if the merger goes through.

To the extent that players see their earnings drop because of the merger, antitrust authorities could challenge the deal on grounds that it hurts golfers. Such a case would resemble the DOJ’s successful lawsuit to block the merger of publishing houses Penguin–Random House and Simon & Schuster.

Yet in that case, the harm was alleged in the narrow market of book contracts with “top-selling authors,” defined as those who receive advances of $250,000 or more. Some of the advances described in the DOJ complaint were in the millions of dollars. Stephen King testified that the merger would reduce competition and hurt top-selling authors like himself.

In a potential golf case, the market would be even smaller. The players enjoy even higher incomes. Most of us won’t lose any sleep over Phil Mickelson having to take a cut on his $200 million contract; neither should the FTC and DOJ.

It is essential to weigh the potential consequences against the benefits of pursuing this particular case. Launching an antitrust case against the PGA–LIV merger would necessitate considerable resources, including financial investments, staff hours, and protracted legal proceedings. The new joint entity has the pocketbooks of the Saudi wealth fund behind it. Even if the agencies were successful, the long-term benefits would likely accrue predominantly to the already-prosperous individuals involved—namely, the millionaires and billionaires associated with the PGA and LIV.

Preserving fair competition is undoubtedly a commendable objective. But officials must gauge the impact of the proposed merger on the average consumer. Golf is a niche sport with a small set of players. Consequently, the potential harm caused by reduced competition in this industry isn’t as substantial or far-reaching as in sectors that directly affect the daily lives of ordinary Americans.

Pursuing an antitrust case that primarily benefits pro golfers doesn’t align with a pragmatic approach to resource allocation. Instead, the agencies should concentrate on cases with the potential to improve consumer welfare and promote competition in sectors that affect a broader spectrum of Americans. By strategically allocating their resources, the FTC and DOJ can ensure a fair and competitive marketplace for all, while making efficient use of their limited capacities.

Photo by GIORGIO VIERA/AFP via Getty Images


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