VOLUME 2 ISSUE 3 MARCH 2019 ISSN: 2456-9666

COMPETITION LAW AND SPORTS

- TEJASWINI1 & UTTAKARSH MATTIKOP2

ABSTRACT

Sports right from ancient times has not been the same as it was before. In ancient times sports was played pleasure, then slowly it became a part of culture of a country and now in the present day it has become a business. Sports today is one of the biggest money-making industries with lots of money being spent. Cricket today has become a world-wide business, especially in a country like India cricket is not just a game but also a religion.

Competition laws are framed so that unfair trade practices are prevented. Not only unfair trade practices but also prevent monopolistic trade activities, cartelization and other anti-competitive agreements. With Competition Act, 2002 substituting MRTP Act, the scope has now widened. With sports being now an industry there is now a need to include sports in the ambit of . With BCCI misusing its position has given invitation to Competition Commission of India (CCI) to keep a check in the sports industry so that fair trade practice is followed.

INTRODUCTION

In India, sports is having its own 8000 years old history since early civilization, Atharvaveda also holds the traditional Olympic oath. And in this modern era, cricket, hockey, tennis etc. growing immensely and also the players have been recognised and appreciated internationally. But as we can see that, the government is neglecting the sports sector, as there are institutions like Ministry Of Youth Affairs And Sports that is, the apex body which provides planning and a good infrastructure to it3. The government made or passed many rules regarding sports, and also made rules regarding competition between the institutions. Sports is expanding remarkably that

1 Student, B.B.A LL.B 4th Year, New Law College Bhartiya Vidyapeeth Deemed University 2 Student, B.B.A LL.B 4th Year ,New Law College bhartiya Vidyapeeth Deemed University 3 Dr. Vijay Kumar Singh, a primer on „sports and competition law interface‟ in India https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2973042

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VOLUME 2 ISSUE 3 MARCH 2019 ISSN: 2456-9666 some people make sports their business and making multi-millions from the billons of fans of sports and also enjoying the dominant position in the market as well.

The scope of competition law in India is getting wider day by day, to remove the wrongful activities done by the huge organisation, like abuse of dominant position, unfair trade practices, restrictive trade practices, monopolistic trades, because nowadays sports is also falling into the same category of abuse of dominance in the market because there are various sports organisations who all are into this business. Sport‟s is becoming a global business and yet there are multiple ways for the sports organisations to significantly getting different from the other organisations and also maintaining competitive balance between the organisation.

APPLICABILITY OF COMPETITION LAW INTO SPORTS

In India cricket is on the peak level and other sports like football, basketball, tennis are also gaining popularity with the large corporate who all are interested in investing in it and also in the sponsorship of it as well, which is attracting huge young audience towards it.

Basically for every sport there is a body which lays down the rules, regulations, criteria, eligibility of that sport. International federation with various national sports federations, which governs all the regulatory aspect of it.

A sport basically follows the pyramid structures of it because of the multiple federations of sports have been recognized internationally. The European commission‟s Helsinki report was about the integrity, uniformity and control over the non-discriminatory rules applied to the sports globally and also encourage the immense growth of it worldwide.

The International federation of sports is having their own set of regulations for restricting rival tournaments, but in country like India where sports is unique because it follows the pyramid structure of sports that ensures to maintain the unity and integrity in sports but there are many industrial thrives as well who just want to earn by unfair use of it. And for these kind of industries there is anti-competitive agreements to stop their dominance in the market by unfair means, therefore the competitive environment in the market of sports gave birth to competition law for sports industries as well. That is the reason why European Court created an exception,

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VOLUME 2 ISSUE 3 MARCH 2019 ISSN: 2456-9666 and that is divided into two parts, that is first being pure sporting function and second being activities having a substantial economic impact.

COMPETITION ISSUES IN SPORTS SECTOR:

The following five basic competition questions were identified during a Roundtable on sports organized by OECD24 in which various countries participated:

(i) The nature of sports federations (should they be considered as normal commercial enterprises subject to competition law or as private non-profit making bodies which merely regulate the sports?)

(ii) The relationship between sports federations or leagues and the constituent clubs (should the federations or leagues be viewed as of clubs or as bodies independent of the clubs?)

(iii) The nature of the product or service provided by the professional sports (should the matches be viewed as separate events or is there a positive externality in that a championship is more than a set of matches?)

(iv) The nature of the (are different sports substitutable for one another or within the same sport are different competitions substitutable, particularly from the broadcasting perspective?)4

In India, there are cases of All India Chess federation and of BCCI and of Indian hockey Federation are some examples of it.

These three cases decided by Competition Commission of India (CCI) are the important source of Competition law to be in the market of sports in India.

 Surrender Singh Barmi v BCCI (CCI, 61/2010) In this case, the competition commission of India passed an order under section 27 of the competition act, 2002 that the Board of control for cricket in India was found in contravention of the provision of section 4 of the Competition act, 2002. In this case the commission found that the BCCI at the dominant position in the market. It was given that

4 Dr. Vijay Kumar Singh, a primer on „sports and competition law interface‟ in India, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2973042

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the BCCI made an agreement with the broadcasters of the (IPL) that they are not allowed to make this kind of agreement with any company in the market that is using the dominant position which is found to be in contravention of section 4(2)(c) of the Competition act, 2002. Afterwards CCI directed the Director General to carry out the investigation of 60 days, and it was found that it is the prima facia case of abuse of dominance under section 4 of the act5. The CCI imposed a penalty of Rs. 52.24 crores, being 6% of the average annual revenue of BCCI for the past three years6.

 Dhanraj pillay vs. M/s Hockey India (CCI, 73/2011) In this case, the competition commission of India charged Hockey India into anti- competitive practices and abuse of dominance in the market under section 3 and 4 of the act. It was found in the case that Indian Hockey federation (IHF) and Nimbus Sports with International Hockey Federation (FIH), and in that regulation it was notified related with to the events sanctioned and unsanctioned and also the same was communicated to all the National Associations, but afterwards the change in Code of Conduct agreement that participation in the unsanctioned events is against the disciplinary clause. After considering all the aspects of the case it was held that there is no contravention of section 3 and 4 of the Competition act 2002. Because there is no other competitor of Hockey India and they are having the economic power in their hands to regulate it accordingly7.  Hemant sharma & others vs. All India Chess Federation (CCI, 79/2011) In this case, the complaint was filed against the All India chess federation, with the direction of Delhi High court in 2011 the writ petition was filed and in this petition it was asked that to direct All India Chess Federation and Ministry of Youth affairs and Sports

5 Competition Commission Of India, https://www.cci.gov.in/sites/default/files/61%20of%202010.pdf 6 SHRI Surinder Singh Barmi v. Board of Control of Cricket in India (BCCI) (case No. 61/2010), LEXOLOGY, February 28 2013 https://www.lexology.com/library/detail.aspx?g=ce867123-0993-4908-8cf0-1afc943f0ff2 7 Dollbonline, Dhanraj pillay v. M/s. Hockey India 2013 comp LR 543 (CCI), August 29, 2017 https://nujssitc.wordpress.com/2017/06/15/an-equal-ground-regulation-of-sports-governing-bodies-analysis- through-competition-law/amp/#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s

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not to ban certain players for the life time, who had associated with rival body. The All India chess federation also written to International governing body of chess to not to remove the players for the unauthorised participation. In the order of 2018, CCI concluded with that the AICF code of conduct is very harsh against the players, so there should not be the provision of ban from the game for life time. Further, it was held that there are no such laws and bylaws against the unauthorised participation in any event of rival body, the players should get the liberty to participate in any tournament. Therefore, it was held that there is no abuse of dominance by the side of the company, there is no restriction for the players as well to move for any event but foreclosing the entry of the potential organizers that will amount to the abuse of dominance in the other way8.

MAJOR ISSUES IN THE SPORTS INDUSTRY WHICH HAS RESULTED IN THE NEED FOR COMPETITION LAWS:

The sports industry has now become a centre for money making and thus there is likely that there will be a violation of competition laws. Since the major popular sports in India like Hockey, Cricket etc., the organisation structure is also a reason why there is creation of some of the major issues.

1. Abuse of Dominant Position: “Absolute power corrupts absolutely” The Competition Act, 2002 defines dominant position (dominance) in terms of a position of strength enjoyed by an enterprise, in relevant market in India, which enables it to: • Operate independently of competitive forces prevailing in relevant market; or

8 Saurabh bhattacharjee, ‘how competition law is affecting sports in India: a look at the emerging case law‟, 6thSeptember, 2018, https://www.lawinsport.com/topics/sports/item/how-competition-law-is-affecting-sports-in- india-a-look-at-the-emerging-case-law.

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• Affect its competitors or consumers or relevant market in its favour9. In sports industry, the organisations which regulate and promote the sports hold a position where no other body is available to keep a check. The majority of organisations for different sports have pyramid structure wherein one single authority is responsible for controlling and promoting the game world-wide, for example International Cricket Council (ICC) for cricket, International Hockey Federation (FIH), International Olympic Committee, World Chess Federation, etc. When the Zee launched Indian Cricket League, the BCCI sacked Kapil Dev as chairman of the National Cricket Academy for aligning with ICL and barred all the 44 defecting players from playing for India or at the domestic level. It made clear that any cricketer who aligns with ICL will be banned for life from playing for India. Such practice on part of the BCCI may attract liability under the provisions of the Competition Act, 2002. As per Section 4(2) (c) of the Act if any enterprise “indulges in practice or practices resulting in denial of market access in any manner”, then it shall be liable for abuse of dominant position. Thus, such practice of banning players from domestic tournaments on account of joining the rival leagues may prove expensive for the BCCI, which may face a challenge on grounds of abuse of dominant position. The denial of stadiums by the BCCI can attract liability for abuse of dominant position under s.4(2)(c) of the Competition Act, 2002 as by denying the use of essential facility under its control it raises the in the market for its competitors, resulting effectively in denial of market access.10 2. Bid Rigging Issue: Bid rigging is another major issue which needs to be dealt with strictly. It is a form of where one party is promised a commercial contract even though for the sake of appearance other parties are present. Sub-section (3) of Section 3, of the Act defines “bid rigging” as “any agreement, between enterprises or persons referred to in sub-section (3) engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the

9 Isha Balla, Sports and Competition Law, Page No. 11, 2013 10Gaurang Kanth, Emergence of Sports Laws in India, Volume 3, http://www.indialawjournal.org/archives/volume3/issue_2/article_by_Gaurang.html

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process for .” 11Usually bid rigging activities are done by the league bosses. Lalit Modi was accused of bid rigging in the Indian Premier League (IPL). 3. Player Restraints: Players are usually bought by the franchisee for certain period of time in the leagues. Even takes place between the franchisees. Different players are capped under different price. With signing the contract players also have to agree to terms and conditions specified in the contract. Even while entering these leagues, players have to agree to the terms and conditions of the league if they ever want to be a part of that league. These restraints sometimes result in anti-competitive agreements which are violative of the Competition Act, 2002. In the case of Sh. Dhanraj Pillay and Others vs M/S Hockey India – India‟s officially sanctioned hockey body was allegedly discriminating against a few former players who had wanted to participate in the World Series Hockey (WSH) tournament, run on the lines of the now disbanded Indian Cricket League. The players, including former hockey captain Dhanraj Pillay, had approached the CCI in 2011 alleging abuse of dominance by Hockey India, which had warned players against participating in the WSH, terming it an “unsanctioned” event. Allegedly, players who had signed up to play in various franchisees of the WSH – which is organised by the rival Indian Hockey Federation (FIH) – were deliberately not selected for the Indian national hockey team. In its order, the CCI barred the two bodies from placing any restriction on players to play in sanctioned or unsanctioned events12.

11Provisions relating to Bid Rigging, Competition Commission of India pdf, https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/Bid%20Rigging.pdf 12Nihal Zachariah, Hockey or Hookey? Case Review: Dhanraj Pillay & Ors v. M/S Hockey India (Case No. 73/2011), SLPC Blog, 22- 07-2013, https://lawnk.wordpress.com/2013/07/22/hockey-or-hookey-case-review-dhanraj-pillai-ors-v-ms-hockey-india-case-no- 732011/

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Possible solutions for the issues:

To tackle the issues in the Sports industry, there is a need for the Competition Commission of India (CCI) to come up with rules and regulations that the governing bodies of the respective games must strictly follow so that there is no violation of Competition laws. Some of the approaches that can be taken by the CCI are:

1. Non-Discriminatory and Transparent Tendering: For every bidding processes transparency must be ensured to avoid any illegal activity and ensure that there is no discrimination being done amongst the bidders. 2. Unbundling: One of the common themes relating to the collective selling of broadcasting rights is the concern that rights should be unbundled into several packages in order to give a fair opportunity to broadcasters to compete for them (as opposed to allowing a structure which tends to result in a single broadcaster acquiring all of the rights).13 3. Pooling agreements for the Joint Exploitation of Broadcasting Rights: Pooling agreements by which broadcasters jointly exploit rights have been found to constitute horizontal agreements which can hinder competition. The cooperation agreement actually prevented the elimination of competition on the market.14 4. The governing bodies must be kept under regular check by the CCI so that there is a prevention of abuse of dominant position by these bodies.

CONCLUSION:

Competition law in sports is today one of the most important aspect that needs to be implemented. Because of the structure of sports organisations in India as well as internationally their tends to be abuse of dominance positions as seen above in the case of BCCI and ICL. Another important factor that needs attention is to keep check on the regulating bodies which are set up to promote the sports in the country. Through this research article we also draw a distinction on the activities of the regulating bodies those are; (1) economic activities and (2)

13Isha Balla, Sports and Competition Law, Page No. 26, 2013 14Isha Balla, Sports and Competition Law, Page No. 28, 2013

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VOLUME 2 ISSUE 3 MARCH 2019 ISSN: 2456-9666 promotion of game. These are the two basic functions that a regulation body performs; therefore there is a need for competition laws in the aspect of economic activities only. Increasing involvement of politics in the sports industry has encouraged match fixings; bid rigging etc. there is a need for competition laws to avoid political involvements, Competition Commission of India as a watchdog needs to have more powers so that there is a proper check maintained on these regulating bodies.

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