KEEPING THE COMPETITIVE SPIRIT ALIVE: A COMPARATIVE STUDY OF COMPETITION LAW IN PROFESSIONAL SPORT IN EUROPEAN UNION, UNITED STATES OF AMERICA & INDIA
Dissertation submitted in part fulfillment for the requirement of the Degree of
LL.M.
Submitted by: Submitted to:
ADITI SINGH Prof. ANIL KUMAR RAI
27 LLM16 NATIONAL LAW UNIVERSITY, DELHI
NATIONAL LAW UNIVERSITY
DELHI (INDIA)
2017 ACKNOWLEDGEMENT
No research project is possible without cooperation and collaboration. This dissertation could not have been completed without the great support that I have received from so many people. I wish to offer my most heartfelt thanks to the following people.
I would like to thank my Supervisor, Prof. Anil Kumar Rai, National Law University, Delhi for allowing me to find my way through this exercise, for giving valuable input time to time. I am highly indebted to him for providing constant support and supervision despite his busy schedule. His untiring support and swift responses has been great source of inspiration in completion of work.
I would further like to acknowledge the help extended to me by Library staff of National Law University, Delhi in assisting me in my research work.
Finally, I must express my very profound gratitude to my parents for providing me with unfailing support and continuous encouragement throughout my years of study and throughout the process of researching and writing this dissertation. This accomplishment would not have been possible without them.
ADITI SINGH
27 LLM16 LIST OF CASES
1. American Needle, Inc. v. New Orleans La. Saints, 496 F. Supp. 2d 941, 943 (2007) 2. American Needle, Inc. V. National Football League ET AL 560 U.S. 183 (2010) 3. BCCI vs CCI Appeal No.17 of 2013 With I.A. No.26 of 2013 4. Belaire Owners’ Association vs. DLF Limited Case No. 19/2010
5. Chicago Board of Trade v. United State246 U.S. 231, 38 S. Ct. 242, 244, 62 L. Ed. 683 6. Chicago Prof ‘l Sports Ltd. Partnership v. NBA (Bulls III), 808 F. Supp. 646, 650 (N.D. Ill. 1992) 7. Christelle Deliège v. Ligue ECR 2000 I-2549 8. Copperweld Corp. v. In-dependence Tube Corp 467 U.S. 752 (1984) 9. David Meca-Medina & Igor Majcen vs Commission C-519/04P, (2006) ECR I- 6991 10. Dhanraj Pilly & Others Vs M/S Hockey India 2013CompLR543(CCI) 11. Distribution of package tours during the 1990 World Cup OJ [1992] L 326/31, [1994] 5 CMLR 253 12. Donà vs. Mantero CASE 13/76, (1976) ECR 1333 13. Federal Baseball Club Of Baltimore Vs. National League 259 U.S. 200 (1922) 14. Flood vs. Kuhn 407 U.S. 258 (1972) 15. Hemant Sharma & Ors. vs Union of India W.P.(C) 5770/2011 16. Höfner and Elser v Macrotron GmbH Case C- 41/90, [1991] ECR I- 1979 17. In re: Department of Sports & Athletics Federation of India Ref. Case No. 01 of 2015 18. Italy v Sacchi [1974] ECR 409 19. Joint selling of the commercial rights of the UEFA Champions League COMP/C.2-37.398 (2003/778/EC) 20. Ministero dell'Economia e delle Finanze v Cassa di Risparmio di Firenze SpA, Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San Miniato SpA, C-222/04 [2006] ECR I-289 21. Motosykletistiki Omospondia Ellados NPID (MOTOE) v. Elliniko Dimosio Case C-49/07, [2008]ECR I-4863 22. Pavel Pavlov and Others v Stichting Pensioenfonds Medische Specialisten Cases C- 180/98, [2000] ECR I- 6451 23. Piau vs Commission Case T-193/02, (2006) ECR I-37 24. Scottish Football v Commission Case T-46/92, [1994] ECR II-1039 25. SELEX Sistemi Integrati SpA v Commission Case T- 155/04 [2006] ECR II- 4797, [2007] 4 CMLR 372 26. Surinder Singh Barmi Vs Board Of Cricket Control In India [2013]113CLA579(CCI) 27. Toolson vs New York Yankees 346 U.S. 356 (1953) 28. United States v. International Boxing Club, 348 U. S. 236 (1955) 29. United States vs Sealy Inc. 388 U.S. 350, 352-356 30. United States vs. National Football League, et al 196 F. Supp. 445 (1961) 31. United States vs. National Football League116 F. Supp. 319 (E.D. Pa. 1953) 32. Van Landewyck v Commission [1980] ECR 3125 33. Walrave vs Union Cycliste Internationale Case 36/74, [1974] ECR 1417 34. Wouters v Algemene Raad van de Nederlandsche Orde van Advocaten Case C-
309/99 [2002] ECR I- 1577, [2002] 4 CMLR 9 TABLE OF CONTENTS
INTRODUCTION ...... 3
1.1 EVOLUTION OF SPORT ...... 3
1.2 SPORT AS AN ECONOMIC ACTIVITY ...... 5
1.3 LITERATURE REVIEW ...... 9
1.4 RESEARCH QUESTIONS ...... 11
1.5 RESEARCH METHODOLOGY ...... 11
1.6 RESEARCH HYPOTHESIS ...... 11
EUROPEAN UNION ...... 12
2.1 CONCEPT OF UNDERTAKING...... 12
2.2 SPECIFICITY OF SPORT: THE SPORTING EXCEPTION ...... 18
2.2.1 HELSINKI REPORT ...... 19
2.2.2 DAVID MECA-MEDINA & IGOR MAJCEN VS COMMISSION ...... 24
2.3 THE WHITE PAPER ON SPORT...... 28
2.4 ECONOMIC FUNCTIONS: MEDIA RIGHT ...... 33
2.4.1 UEFA CHAMPIONS LEAGUE CASE ...... 35
UNITED STATES OF AMERICA ...... 44
3.1 SPORTS BROADCASTING ACT OF 1961 ...... 44
3.2 SINGLE ECONOMIC ENTITY ...... 48
3.3 EXEMPTION TO BASEBALL ...... 52
3.3.1 FEDERAL BASEBALL CLUB OF BALTIMORE VS. NATIONAL LEAGUE .. 52
3.3.2 TOOLSON VS. NEW YORK YANKEES...... 53
3.3.3 FLOOD VS. KUHN ...... 54
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INDIA ...... 57
4.1 SURINDER SINGH BARMI VS BOARD OF CRICKET CONTROL IN INDIA 59
4.2 DHANRAJ PILLY & OTHERS VS M/S HOCKEY INDIA ...... 65
4.3 OTHER CASES ...... 71
4.4 LEGAL TRANSPLANT ...... 72
CONCLUSION ...... 74
BIBLIOGRAPHY ...... 78
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INTRODUCTION
Sport is not a modern phenomenon. It did not come into existence within a day but gradually evolved over the centuries. Here, it is important that sport be differentiated from ‘play’. Play is ‘an activity where entry and exit are free and voluntary, rules are emergent and temporary, fantasy is permitted, utility of action is irrelevant, and the result is uncertain’.1 Sport, on the other hand, is much more than play. It is more institutionalized in its structure and practice. It is an institution or social behavior based on competitiveness, skill and strategy.2
1.1 EVOLUTION OF SPORT Anthropologists believe that originally, the main purpose of sport for humans was enjoyment and it was essentially a leisure activity to derive pleasure from participation. One cannot trace the exact timeline of origin and evolution of sport. There are references to wrestling as a sport in Bible. Many ancient civilizations have left evidence to indicate that there sport was part of their social living. The first evidence of sport was found on the walls of the pyramids in Egypt depicting wrestling.The Minoan Civilization had a rich sporting culture of bull-fighting and gymnastics post 1550 BC and it was depicted in various artifacts found by the archeologists. Romans enjoyed a variety of sport in Colosseum, ranging from horse racing to gladiator combats. However, the first recorded sporting event was ancient Olympic Games held in 760 BC to celebrate the Greek God, Zeus. India has been witnessing sports like chess, wrestling, boxing and archery since Vedic period. Each sport evolved with the passage of time. For example, football is said to have originated in China around 5000-300 BC as a ball-game, called Tsu Chu. With the advent of time and increased trade amongst civilizations, there was exchange of sporting rituals and formats. It has travelled all across the globe from Mexico to Japan, over centuries to finally attain its present status. Many sports like golf
1 J. Frey & D.S. Eitzen, Sport and Society, Vol. 17 ARS, 503, 508 (1991) 2 G. Luschen, Sociology of Sport: Development, Present State, and Prospects, Vol. 6 , ARS, 315, 315- 316(1980)
3 | P a g e and cricket are said to have originated in Great Britain and colonization helped in spreading the game to far-away lands.
Sport originated asa social practice but soon became a social indicator as well. People from different socio-economic backgrounds came to be associated with different sports. Certain sports were strictly viewed as endowing social status, such as golf. Sport also became a reflection of cultural values and beliefs. Many cultures across the globe, such as Pentecost Island in South Pacific bid adieu to the harvest season by ‘bungee- jumping’ as a part of celebration. In Kerala, Aranmula Boat Race has a history of nearly 500 years. It marks the installation of a Krishna idol at the temple in Alapuzzah and is held each year during Onam.
As the civilization evolved, so did the culture and form of sports with it. For the longest time, the Church had condemned ‘play’ as being unsanctioned by their religion. However, once the Church lost its hold over the masses in the late nineteenth century due to growing stature of scientific knowledge along with the advent of industrial revolution, there was a change in the lifestyle of people and thus, a change in the pattern of leisure activity. This phase witnessed a surge in the popularity of sport, music, theater, and other recreational activity.3 Soon, in industrialized societies, sport became more organized and specialized. There was a movement from its amateur status to professionalism. There was mass movement of population across the globe due to colonialism and discovery of new trade routes.This ensured exchange of culture and modes of recreational activity. More and more educational institutions stared giving value to sport and embedded it within its curriculum. England and United Sates of America witnessed established of professional ‘sport clubs’ in football and baseball respectively in the late ninetieth and early twentieth century. This gave birth to private professional sports as we understand now.Modern sport is essentially different from sport is earlier eras due to certain qualities that it exhibited. These are ‘secularity, equality, bureaucratization, specialization,
3Early History of Leisure and Recreation, Jones & Bartlett Learning (May 29, 2017, 6.03 pm), http://www.jblearning.com/samples/0763749591/49591_ch03_mclean.pdf
4 | P a g e rationalization, quantification, and record keeping.’4 Children and young were encouraged by parents and schools to participate in sport as it was deemed that it would inculcate positive character traits such as self-discipline, hard work and sportsmanship through socialization.
1.2 SPORT AS AN ECONOMIC ACTIVITY Gone are the days when sport was merely a social or recreational activity. With the corporatization of sports, this business runs in billions of dollars worldwide. The economics of sports is multi-layered. From sponsorship to broadcasting rights, the sport associations come in contact with third parties to make monetary profits, which in turn provide for the sustenance of the association as well as the sport itself. For decades, professional sport has developed a symbiotic economic relationship with other economic sectors such as media, advertisingetc. For example, the coverage of professional sport constitutes vital input for media content providers, as it is capable of attracting large audiences. Conversely, media content providers act as an important revenue source and promotional tool for sport.Before the technological boom and liberation of market, broadcasting markets, in various countries such India or E.U, were characterized by natural state monopolies. This limited the number of broadcasts and kept the prices paid for sports broadcasting rights down. The progressive liberalization of the broadcasting markets in the late 1980s–1990s combined with technological developments (such as the emergence of digital television and new media services), however, led to an explosion in the number of actors on the demand side. The unprecedented demand for premium content dramatically increased competition for sports media rights. Given the scarcity and exclusivity of truly attractive sporting events, the adjustment was made by price. As a result, sports media rights became big business capable of attracting enormous sums of money. Sports, especially, football in Europe, baseball in the United States of America and cricket in India, hold economic importance and are more than just a sporting activity.
4 S. A. Riess, The New Sport History, Vol. 18, No. 3, R.A.H., 311, 311-312 (1990)
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As per Forbes,5 the total worth of sport industry in North America was $60.5 billion and is expected to cross $73 billion by 2019. The cost of acquiring media rights is predicted to grow from $14.6 billion in 2014 to $20.9 billion in 2019. Further, revenue from sale of entry tickets is also likely to increase from $17.7 billion in 2014 to $20.1 billion in 2019. Sponsorship money would also witness a boost by 4.5% and sale of merchandize is estimated to reach $14.5 in 2019 from $13.5 billion in 2014.
As per Delloite’s Annual Review of Football Finance, 25th Edition,6 the six Premier League Clubs each generated more revenue in 2014-15 than the entire top division in 1991-1992. Some of the key observations of the Report were: The EU football market is expected to exceed €25 billion in 2016-17. In 2016-17, the Premier League Clubs would witness a 20% growth in their revenue, crossing £4.3 billion. As many as 30 million people attended Premier League and Football League matches in 2015-16.
With its reach to over 200 million viewers, the Indian Premier League generated Rs 1,100 crore through advertising itself in its ninth season in 2016.7 The total revenue generated by the event in 2016 was close to Rs. 2,500 crore ($25 billion).8 The BCCI is reported to have earned Rs.220-250 crore from the event just from sponsorships, apart from the Rs. 820 crore per year from sale of media rights to SPN.9It is claimed by the
5D.Heitner, Sports Industry To Reach $73.5 Billion By 2019, Forbes, (May 28, 2017, 4.50 pm), https://www.forbes.com/sites/darrenheitner/2015/10/19/sports-industry-to-reach-73-5-billion-by- 2019/#7b1eb5c1b4b9 6Annual Review of Football Finance 2016, Deloitte (27 May, 2017, 8.05 pm), https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual-review-of-football- finance.html 7 U. Malvania, IPL ad revenue to touch Rs 1,100 crore in 2016, Business Standard, (27 May, 2017, 8.05 pm), http://www.business-standard.com/article/companies/ipl-ad-revenue-to-touch-rs-1-100-crore-in-2016- 116030901029_1.html 8G. Laghate, IPL is a money-spinner as it amasses Rs 2,500 crore in its ninth season, The Economic Times, (27 May, 2017, 8.05 pm), http://economictimes.indiatimes.com/industry/media/entertainment/media/ipl-is- a-money-spinner-as-it-amasses-rs-2500-crore-in-its-ninth-season/articleshow/52720049.cms 9id
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BCCI that in 2015, IPL contributed Rs.11.5 billion ($182 million) to India’s Gross Domestic Product (GDP).10
Hockey India’s Hockey India League that started its journey in 2013 reported a profit of Rs. 3.17 crore in the first year.11 This profit has to be seen against the previous years’ balance sheet for Hockey India. In the preceding financial year, it had reported a loss of Rs. 2 crore and the financial years before that year had never seen a profit above Rs. 60 lakh.12Similar is the case with Premier Badminton League which was expected to earn Rs. 35 crore as revenue in its second season in 2017 and had earned Rs. 20 crore on 2016.13
Forbes reports that in 2016, the highest earning sportsperson, ChristianoRonaldo, made $56 million through salary and $32 million through endorsements and he generated $176, in value for his sponsors on social media.14The collective earning of top 100 players from across the globe was estimated was being $3.15 billion.15 In India, the highest earning sportsperson, ViratKohli’s yearly income through IPL and endorsements is estimated to be around $26.9 million.
While sports and economics appeared mutually exclusive decades ago, with the rise of private professional sport, they have become a reality so intertwined with each other that its opening new arenas for litigation, especially in younger economies like India, that did not exist a couple of decades ago. The sports industries run in millions and billions and functions as a traditional market that seeks profits though providing services
10IPL 2015 contributed Rs. 11.5 bn to GDP: BCCI, The Hindu, (21 May, 2017, 3.50 pm) http://www.thehindu.com/sport/cricket/2015-indian-premier-league-ipl-contributed-rs115-billion-182- million-to-indias-gross-domestic-product-gdp-says-bcci/article7823334.ece 11T. Dutt, Hockey India rings in the riches, The Times of India, (21 May, 2017, 3.50 pm), http://timesofindia.indiatimes.com/sports/hockey/top-stories/Hockey-India-rings-in-the- riches/articleshow/46941479.cms 12id 13 A. Bhattacharyya, Premier Badminton League: Revenue set to soar 75% to Rs 35 cr, Financial Express, (21 May, 2017, 3.50 pm), http://www.financialexpress.com/india-news/premier-badminton-league- revenue-expected-to-go-up-75-to-r35-crore/507556/ 14The World’s Highest Paid Athletes, Forbes, (21 May, 2017, 3.50 pm), https://www.forbes.com/athletes/#70cbc29755ae 15 id
7 | P a g e to viewers. Therefore, it becomes important that this market is not left unregulated for entities having market power to indulge in exploitative and exclusionary practices which calls for an intervention by Competition Law authorities. It ensures that the struggle or contention for superiority in the commercial world in maintained through a regulatory and adjudicatory framework. It fosters competition which is ‘a process of rivalry between firms..seeking to win customers and business over time.’16Competition law revolves around market and market power by ensuring such conditions that foster pro competitive practices and deter anti-competitiveness. However, when change is the only constant, markets have evolved past their traditional understanding. One such unconventional market is private professional sports. In this light, the European Court of Justice's ruling in the Walravecase17 established that European Union Law on competition law and policy applies to sports, insofar as the practice constitutes an economic activity within the Union.
The increased overlap between sports and business has opened up avenues for exploitation just like the ones in a traditional market set-up. Major competition law concerns arise out of management of sports media rights or sale of merchandized goods or player auction as well as authorization for organization of sports etc. For example, as a result of technological developments, there is a vast market to be exploited for sale and purchase of media rights. Broadcasting rights are now offered for several forms of exploitation (e.g. live, recorded, in its entirety, highlights, terrestrial, cable, pay-per-view, and satellite). The emergence of new media platforms and services (e.g. mobile, tablet, podcasts, and web TV) further inverse the exploitability.
The dissertation explores the evolution and development of competition law principles in private professional sports from a comparative perspective. After this brief introduction, the next chapter is an account on the growth of competition law in European Union with respect to private professional sport. The third Chapter deals with the peculiar progression of anti-trust laws in the United States. The fourth chapter explores the
16 M. Dabbah, EC & UK Competition Law: Cases & Commentaries at 577 (1st ed. 2004) 17[1974] ECR 1405
8 | P a g e possibility of application of principles and rules developed in the two mature jurisdictions, given that in India competition law as well as private sport is in its nascent stage.
1.3 LITERATURE REVIEW The EU Court of Justicein its Bosman (1995) ruling cleared the air around freedom of movement of persons/players in EU in the light of transfer rules between football clubs.It was stated that professional sport was in the nature of gainful employment in the light of the EU Treaty. Community law mandates freedom of movement of persons for employment along with providing them with equal opportunity of services. Therefore, any rules laid down by sporting authorities that restricted this movement of players would be against the Community Law. This case confirmed the application of community law on sports. This application was based on the fact that sports in EU not only occupied an important social positionbut held economic significance as well.
In Champions League (2003) the EU Court of Justice (ECJ) examined the economic aspect of football in the UEFA Champion’s League. The contracts to sell broadcasting rights for the League were tested at the touch-stone of Article 81 [now Article 101]. The joint selling of various broadcasting rights was found to be restrictive of completion in the market. However, exemption was granted under Clause 3 of the Article.
In Meca-Medina and Majcen (2006),the ECJ delivered the decision that changed the face of the interface between sports and competition law. It reinvented the Doctrine of ‘sporting exception’. Two professional swimmers had been banned for two years under anti-doping regulations and these regulations were challenged under the community competition law. The Commission, Court of First Instance as well as the ECJ rejected the plea. However, it is the rationale which bears importance. Whereas the CFI attempted to insist that anti-doping rules concern exclusively non-economic aspects of sport, designed to preserve ‘noble competition’, the ECJ instead stated that ‘the mere fact
9 | P a g e that a rule is purely sporting in nature does not have the effect of removing from the scope of the Treaty the person engaging in the activity governed by that rule or the body which has laid it down’.
Baseball has an exemption from antitrust laws in the United States by virtue of Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs (1922). The Court held that antitrust laws do not apply to professional baseball because it did not amount to trade and commerce.
In Wood v. National Basketball Association(1987), the U.S. Court of Appeals for the Second Circuit assessed the salary cap in National Basketball Association, the NBA draft, and restricted free agency. The court found that the challenged provisions were mandatory subjects of collective bargaining and therefore were protected by the non-statutory labor exemption. This exemption describes the court’s holdings that any Collective Bargaining Agreement (CBA) will receive protection from federal antitrust laws.
In American Football League v. National Football League (1963), the American Football League claimed that the NFL was a monopoly and sued alleging antitrust violations. However, the Fourth Circuit Court held that the NFL was a natural monopoly and did not violate antitrust laws.
In Law v. NCAA (1998), the National Collegiate Athletic Association was found to be in violation of federal antitrust laws when it implemented the REC (Restricted- earnings Coaches) Rule. Also, National Collegiate Athletic Association was held not to be exempt from anti-trust laws.
In Surinder Singh Barmi vs BCCI(2010) The Commission held that BCCI was abusing its dominant position by foreclosing the market and preventing new entrants in the relevant market. A hefty fine of Rs. 50 crore was levied upon BCCI.
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1.4 RESEARCH QUESTIONS 1. Whether these sports authorities qualify as ‘undertaking’ or ‘enterprises’ as defined under the EU Competition Law and Indian Competition Law? 2. Whether private professional sports satisfy the conditions necessary to warrant the application of competition law in EU, United States and India, like existence of relevant markets? 3. Whether there have been practices in private professional sports in EU and US with respect to violation of competition law principles and have, thus, been decreed as being anti-competitive by the court of law? 4. Whether the EU and American Anti- Trust Law be applied to the Indian scenario and to what extent?
1.5 RESEARCH METHODOLOGY The researcher has adopted doctrinal research method. Researcher has relied on statutes, case laws from European Union, United States and India. Various books, articles and journals have also been relied upon.Sources available in public domain have also been used.
1.6 RESEARCH HYPOTHESIS India, EU and United States have similar sporting conditions to warrant similar application of competition law and policy. Therefore, there can be a legal transplant of laws and principles with respect to application of competition law in private professional sport from EU & United States into India.
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EUROPEAN UNION
The European Competition law is a community law and can be found under Article 101 and Article 102 of the Treaty for the Functioning of the European Union (TFEU), 2007.1The interface between competition law and sports in EU has revolved around three issues that have been dealt with in detail in the subsequent sections. These are: Sports authorities as undertakings, Specificity of Sport, and Exploitation of media rights
2.1 CONCEPT OF UNDERTAKING Under EU competition law, only an ‘undertaking’ can violate competition law. This means that for an entity to be held liable for violation of Article 101 or Article 102, it must do so in the capacity of an undertaking or an association of undertakings.2 Where the said entity could not be said to be an undertaking, no competition law issue arises. The word undertaking has not been defined anywhere in the treaty. However, the meaning and scope of the term has been unambiguously explained by the Commission and ECJ in a series of decisions.
In Höfner and Elser v Macrotron GmbH3, the ECJ has stated that: “The concept of an undertaking encompasses every entity engaged in an economic activity regardless of the legal status of the entity and the way in which it is financed.”
Further, in Pavlov4, the Court stated that:
1Formely, Article 81 and Artcile 82 of the EC Treaty and Article 85 and 86 before that. 2 Article 101 reads as ‘(1) The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and…’ Article 102 reads as ‘Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may…’ 3 Case C- 41/90, [1991] ECR I- 1979 at ¶ 21
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“It has also been consistently held that any activity consisting in offering goods or services on a given market is an economic activity.”
In Wouters v AlgemeneRaad van de NederlandscheOrde van Advocaten5 the Court said: “that the competition rules in the Treaty: do not apply to activity which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity . . . or which is connected with the exercise of the powers of a public authority.”
Whether an entity is an undertaking or not for the purposes of EU law competition law is a matter of analysis. Some cases may clearly fall under the umbrella of undertaking, for example a manufacturer selling goods in the downstream market, whereas some may require a deeper analysis. Even so, as observed by Dr. Whish, there are two principles that lie at the core of this analysis: 1. Detecting an undertaking mandates a functional approach, and 2. Such an entity must necessarily be involved in an economic activitywhich is to be distinguished from its activities as a public authority.6
The concept of economic activity can further be clarified by the following three statements:7 1. In simple terms, it means offering goods or services in a given market.8 2. There is no need for a profit- motive,9 or economic purpose.10 3. It is regardless of the legal status of the entity and the way in which it is financed.11
4Pavel Pavlov and Others v StichtingPensioenfondsMedischeSpecialisten, Cases C- 180/98, [2000] ECR I- 6451 at ¶75 5 Case C- 309/99 [2002] ECR I- 1577, [2002] 4 CMLR 913 at para 57 6 R. Whish & D. Bailey, Competition Law at 84-85 (7th ed. 2012) 7id at 85-87 8 Spanish Courier Services case [1991] 4 CMLR 560 9 Van Landewyck v Commission [1980] ECR 3125 10 Italy v Sacchi [1974] ECR 409 11 P & I Clubs OJ [1985] L 376/2,
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It is vital that both these conditions are satisfied in order to label an entity as an undertaking for the purpose of EU competition law. The importance of a functional approach can be understood from the fact that an entity may be performing a variety of functions, ranging from administrative actions to social work. Most of these functions may not be economic. This distinction becomes all the more blurred in case of exercise of power as a public authority. Therefore, in such cases, the determination of the core character of this multi-functional entity becomes complex. A classic case of this complexity is SELEX SistemiIntegratiSpA v Commission.12 This European Organization for the Safety of Air Navigation (Eurocontrol) worked towards harmonization and integration of the EU airspace aswell as maintenance of air safety. It facilitated standardization of technology by providing assistance in acquisition of intellectual property to national administrations. It also provided assistance in the planning, specification and setting up of air traffic systems and services to the national administrations under the Convention on the Safety of Air Navigation. Basically, the Eurocontrol was acting under two capacities- first, as an Executive organ for the preparation and production of standards, and secondly, as a Legislative organ i.e. the Council of Eurocontrol which adopts these standards and acts as a public authority.13 The status of Eurocontrol as an undertaking was under consideration before the European Court of Justice. The Court observed that one entity may be carrying out a variety of functions including exercise of power as a public authority. This exercise of public power, however, must not preclude a scrutiny of other functions that the entity is performing. Such functions, if severable, are capable of inviting individual analysis for their economic aspect.14It was observed that the adoption of standards was done under the capacity of public authority, which was distinguishable from preparation and production of technical standards.15 Therefore, whether this preparation and production of technical standard would amount to carrying out an economic activity became the moot point. Since there was no market for these ‘prepared and produced’ technical standards, it was held that even this severed activity of Eurocontrol did not amount to an economic
12 Case T- 155/04 [2006] ECR II- 4797, [2007] 4 CMLR 372 13id at ¶ 59-61, 65 14 supra 12 at ¶ 50, 54, 55 15id¶ 86-92
14 | P a g e activity.16Eurocontrol was not offering goods or services to the States as these standards did not have a market of their own and the only purchasers were the States acting as Air Traffic Control Authorities to further the cause of standardization.17
Similarly, if we consider a local authority which performs two sets of activities, firstactivity with respect to power to adopt bye-laws to dictate where cars may or may not be parked and the second activity in relation to ownership of a parking lot. The first activity would fall in the domain of exercise of public authority and hence, would be immune from community competition law. However, the second activity which is economic in nature and severable from first one would be liable to scrutinized under competition laws. Therefore, the local authority would be deemed to be acting as an undertaking for that limited scope.
In Distribution of package tours during the 1990 World Cup18 case, a travel agency was denied permission by the World Cup organizers (OC) to acquire stadium tickets to be sold later as part of a package deal. This denial was with respect to the tickets that were meant to be sold by a third party under a contract in Italy. This OC was constituted jointly by Federation Internationale De Football Association (FIFA) and the FederazioneItalianaGioco Calcio (FIGC) for the purpose ofcarrying on all activities relating directly or indirectlyto the technical and logistical organization of the World Cup, along with establishment and implementation of ticket distribution arrangements.19 In order to assess whether OC was an undertaking for the purpose of competition law, the Commission examined the commercial nature of the World Cup itself, along with FIFA’s and FIGC’s. The Commission was of the opinion that both FIFA and FIGC were undertaking for the purpose of the Treaty as they were engaged in a variety of economic activities such as exploitation of the World Cup.20 The OC was also involved in generating revenue from exploitation of the event through television rights, advertising
16id 17 id at ¶ 86-92, 107 18 OJ [1992] L 326/31, [1994] 5 CMLR 253 19id at ¶ 54 20id at ¶ 44-53
15 | P a g e rights, sale of tickets etc. Therefore, even the OC was deemed to an undertaking for the said purpose.21
Keeping in mind the research questions, the most important case is MotosykletistikiOmospondiaEllados NPID (MOTOE) v. EllinikoDimosio.22 The case has the answers to many pertinent questions, such as: Whether a legal person, which is a non-profit-making association falls within the scope of competition law when its activities consist not only in taking part in administrative decisions authorizing the organisation of any sports event, but also in organizing such events itself and in entering, in that connection, into sponsorship, advertising and insurance contracts etc.
In the present case, MOTOE was a non-profit making association of various regional motorcycling clubs, which organizes motorcycling events in Greece. As per the Greek Road Traffic Code, any party interested in organizing motorcycling competition in Greece had to seek permission from EllinikiLeskhiAftokinitou kai Periigiseon (ELAP). ELAP is a non-profit making organization which represents Greece in Fédération Internationale de Motocyclisme (International Motorcycling Federation).23 Therefore, not only did it grant permission to others to organize motorcycling events in Greece, ELAP, itself was an organizer of the same. In spite of repeated requests and fulfillment of all the formalities, MOTOE’s application for organization of the event was impliedly rejected by ELAP.24 MOTOE brought an action for damages it suffered due to ELAP’s abuse of dominant position.25 The first stage of scrutiny was the character of ELAP as an undertaking. The European Court of Justice maintained that the essence of undertaking lied in performance of an economic activity which is related to offering of goods or services. This has to be analyzed irrespective of the legal form of the entity as well as the way in which it is financed.26 The Court affirmed that if these prerequisites are met, ‘the
21id at ¶ 55-57 22Case C-49/07, [2008]ECR I-4863 23id at ¶ 6 24id at ¶ 9-11 25id at ¶ 11 26id at ¶ 21
16 | P a g e fact that an activity has a connection with sport does not hinder the application of the rules of the Treaty…governing competition law’.27 The Court further explained that ELPA had two personalities. One was in the capacity of a decision-making public authority which granted consent to applications for organization of motorcycling events in Greece and the other was dealt with organization and commercial exploitation of the motorcycling events through sponsorship, advertising and insurance etc.28The Court, however, decreed that distinguished personality should not prevent the application of competition rules to the economic activities. It was decreed that: “A legal person whose activities consist not only in taking part in administrative decisions authorizing the organization of motorcycling events, but also in organizing such events itself and in entering, in that connection, into sponsorship, advertising and insurance contracts, falls within the scope of Articles 82 EC and 86 EC. Those articles preclude a national rule which confers on a legal person, which organizes motorcycling competitions and enters, in that connection, into sponsorship, advertising and insurance contracts, the power to give consent to applications for authorization to organize such competitions, without that power being made subject to restrictions, obligations and review.”29
The Court further relied upon a previously decided case Cassa di Risparmio di Firenze and Others30 to state that the not-profit making motive does not affect the status of an entity as an undertaking if it performs economic activity. The fact an entity does not intend to make profits does not prevent it from carrying out anti-competitive practices in the market which would hamper ultimate goal of competition law.31
Therefore, the law with regard to the status of sport authorities in EU has been settled. As long as the authority is involved in the performance of economic functions with respect to sport, neither its capacity as public authority, nor its non-profit motive can shield it from the application of competition law.
27id at ¶ 22 28id at ¶ 26 29id at ¶ 54 30Ministerodell'Economia e delleFinanze v Cassa di Risparmio di Firenze SpA, Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San MiniatoSpA, C-222/04 [2006] ECR I-289 at ¶ 122, 123 31id at ¶ 27
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2.2 SPECIFICITY OF SPORT: THE SPORTING EXCEPTION One of the first and obvious arguments raised against application of competition law to sports was with respect to the inherent difference between business and sport. It was argued that the nuances of competition law cannot be applied to sports because it threatens the autonomy of sport organization and undermines the indispensability of certain rules for the organization of the sport. The source of ‘sporting exception’ can be traced to the ECJ rulings in Walrave and Dona. In simpler terms, it meant that there would be a certain domain under sports that would be outside the purview of community competition law. Ideally, sports must be differed from other industries due to its socio- cultural dimension and hence, warranted a tailor-made application of competition law.
The first case that attracted the attention of community law towards the known territory of sporting activity wasWalrave vs Union CyclisteInternationale.32Walrave and Koch offered their services as pacemakers on motorcycles in medium distance cycle races. Such services were provided under a contract with either the stayers or the cycling associations or sponsors. In the year 1973, the World Cup organizers declared a new rule that the pacemaker must be of the same nationality as the stayer. Walrave and Koch challenged this rule as being violative of Article 48 EEC or the Treaty of Rome, along with other provisions because it prevented movement of persons from one Member State to another. This case was referred to the ECJ by the Arrondissementsrechtbank, Utrecht as it involved interpretation of Community law. The broad question before the ECJ was whether Treaty law would apply to sports. The ECJ remarked: ‘Having regard to the objectives of the Community, the practice of sport is subject to Community law only in so far as it constitutes an economic activity within the meaning of Article 2 of the Treaty.’33
32 Case 36/74, [1974] ECR 1417 33id at ¶4; Article 2 EEC read as, ‘The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing common policies or activities referred to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the
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It was further added that: ‘This prohibition however does not affect the composition of sport teams, in particular national teams, the formation of which is a question of purely sporting interest and as such has nothing to do with economic activity.’34
Further, a cautionary note was added by stating by such restriction of the scope of application of Treaty law must ‘remain limited to its proper objective.’35
Similarly, in Donàvs.Mantero36, the ECJ upheld the exception of purely sporting interest while determining the validity of a rule by the Italian Football Federation, according to which only players who are affiliated to the Federation could take part in the matches. This affiliation was granted only to players of Italian nationality. The ECJ reiterated that Community law applied to economic aspect of sport, categorically to professional and semi-professional football players who were hired in ‘the nature of gainful employment or remunerated services.’37Therefore, discrimination of the ground of nationality was deemed as anti-competition. Nonetheless, the rule did not apply to formation and selection of national teams.
2.2.1 HELSINKI REPORT In December, 1999, the Commission of European Communities adopted a Report on ‘preserving sports structures and the social function of sport within the Community framework.’38 The Report emphasizes on the social importance of sport in European society by quoting that “..more than half of them (citizens of European Union) regularly do sport, either in one of the 700 000 clubs that exist in the Union or outside these clubs. Almost two million teachers, instructors and voluntary workers spend their
raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.’ 34supra 32 at ¶ 8 35id at ¶ 9 36 CASE 13/76, (1976) ECR 1333 37id at ¶ 12 38Helsinki Report on Sport: the Commission favours a new approach, IP/99/918, European Commission (27 May, 2017, 8.05 pm), http://europa.eu/rapid/press-release_IP-99-918_en.htm
19 | P a g e working or leisure time organising sporting activities.”39 However, this social dimension of sport in European was under threat from the changing dynamics of the game. In sport, the move from being a social experience to commercialism was questioning the ethics and principles on which it was organized. Therefore, in order to reconcile the ‘popular, educational, social and cultural dimensions’40and economic aspect of sport in EU, the Commission communicated this Helsinki Report.
The Report identifies certain developments that were molding the face of European sport. These were: The rise in popularity in sports in terms of viewership, Internationalization of sport in European Union, The ‘unprecedented development’ of the economic dimension of sport.41
These developments lead to an increase in jobs related to sport in EU, packed sporting calendar, increased pressure on players, more demand for sponsors etc. The economics of sport assumed more importance and over-shadowed its social appeal, which was further leading to: Loss of ethics and principles in sport, Increased incidents of doping, Reduced solidarity between professional and amateur sport leagues, Distortion of system of regulation and promotion of sport federations, Complete disregard to physical and mental health of young players.42
Additionally, there was an increased litigation in the area of sport with respect to: Television and broadcasting rights, Transfer rules and freedom of movement of workers, Taxation of professionals and clubs, Monopolization of sport.43
39The Helsinki Report on Sport, (10 December 1999) , COM(1999) 644 final at 3 40Ibid 41id at 3-4 42id at 4
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Therefore, this Report sought to revive the lost essence of sport i.e. equal opportunities, fair play, solidarity, etc. and the cause of social integration and education.44 The Commission, however, was wary of commercial revolution in sport. Earlier in May, 1999, the European Union Conference on Sport had realized that the times had changed and that sport was assuming the status of a business. Rationally, the Conference remarked that ‘sport must be able to assimilate the new commercial framework in which it must develop, without at the same time losing its identity and autonomy, which underpin the functions it performs in the social, cultural, health and educational areas.’45 The Report called for a convergence of the traditional values of sport with the changing economic and legal needs. The report made an attempt to reconcile sport under the existing legal framework for the purpose of this assimilation by declaring that ‘in terms of the economic activity that it generates, the sporting sector is subject to the rules of the EC Treaty, like the other sectors of the economy.’46 Nevertheless, the specificity of sport with respect to ‘the interdependence between sporting activity and the economic activity that it generates, the principle of equal opportunities and the uncertainty of the results’, would demand a specialized outlook towards it.47 The Report, as examples, gives three categories of cases that might attract legal implications in sports sector: 1. Practices which do not come under the competition rules:48 These are the essential practices of the sport. There are certain rules that are so inherent to the sport that without them it cannot exist. These ‘rules of the game’ do not come under the purview of competition law because they do not intend to do so; instead aim at the organization of the sport in the first place.
2. Practices that are, in principle, prohibited by the competition rules:49These rules pertain to the economic aspect of the game. They run parallel to the ‘rules of the game’ and are necessary for commercial exploitation of the sport. These rules
43id at 6-7 44idat 4 45id at 6 46id at 8, ¶ 4.2.1 47 Ibid 48id at ¶ 4.2.1.1 49id at ¶ 4.2.2.2
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may be in relation to sale of entry tickets or import of sport merchandise. Such rules may distort, restrict or prevent competition in the market. For example, a sponsorship agreement may result in foreclosure of the market or an unreasonable system of transfer may restrict inter-state movement of players, or a unilateral condition may be imposed on purchase of entry tickets to the stadium. Any rule adopted by the sporting organization in its regulatory capacity, that does not have an objective justification has to be tested at the touchstone of community competition law.
3. Practices likely to be exempted from the competition rules:50The agreements /conduct that is likely to achieve (a) ‘preserves a degree of equality of opportunity and the uncertainty of the result’, and (b) ‘encourages the recruitment and training of young players’ is likely to be exempted from competition rules. In case of transfer and standard contracts, payments, if objectively calculated on the basis of cost and investment would also be exempted. Further, according exclusive economic rights would also be excused, if justified in terms of duration, scope and freedom of movement of players and any short term sponsorship would be justified through clear and non-discriminatory selection criteria, such as tender. Any joint sale, apart from evading foreclosure of market, has to satisfy the following requirements: (a) benefits for consumers, (b) the proportional nature of the restriction on competition in relation to the legitimate objective pursued, (c) financial solidarity between professional and amateur sport, (d) objectives of the training of young sportsmen and women, (d) promotion of sporting activity.
In its conclusion, the Report suggested that a new outlook was required to reunite the apparently conflicting interest of sports as a social phenomenon and as an economic event. It was suggested that the integrity and autonomy must be preserved along with its ethics and principles while balancing its lucrative-commercial characteristic.
50id at ¶ 4.2.2.3
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In Piau vs Commission,51 the status of FIFA as an undertaking for the purpose of competition law was determined by the Court of First Instance. FIFA is an association consisting of national associations, which are groupings of football clubs classified as amateur or professionals. The purposes of FIFA are ‘to promote football, to foster friendly relations among national associations, confederations, clubs and players, and to draw up and monitor regulations and methods concerning the laws of the game and the practice of football.’52It was urged that the new Players' Agents Regulations were restrictive of competition in EU and were a result of FIFA’s dominance in the relevant market.53It was argued by FIFA that Article 82 (now Article 102) EC would fail to find application in the present case because FIFA was neither an undertaking nor an association of undertakings because it did not participate in economic activities.54 The regulations were a result of administrative procedure and FIFA was a regulatory body that watches over the actions of other economic actors in the market.55 FIFA further submitted that it did not represent the clubs or players in their relation with agents; hence there was no give and take of services and goods.56The Court rejected this claim and stated that the member associations of FIFA are undertakings for the purpose of Article 82 EC and hence, FIFA was an association of undertakings.57Further, the classification of national associations into ‘amateur’ clubs and professional clubs did not preclude the possibility of them indulging in economic activities.58The national associations shared the revenue with FIFA, generated through broadcasting and transmission rights for each sporting event. This was tantamount to carrying out an economic activity.59Since the national associations constituted as undertakings, FIFA which was an association of these national associations, was held to be an association of undertakings for the purpose of community competition law, so far as the activities of these national associations are ‘calculated to produce the result to which it refers’.60 Also, the Regulations, prescribed ‘a
51 Case T-193/02, (2006) ECR I-37 52id at ¶ 2 53id at ¶ 10 & 21 54id at ¶ 67 55id at ¶ 67 56id at ¶ 67 57id at ¶ 69 58id at ¶ 70; see Deliège [2000] ECR I-2549, ¶ 46). 59id at ¶ 71; see Case T-46/92 Scottish Football v Commission [1994] ECR II-1039 60id at ¶ 72
23 | P a g e fee, on a regular basis [to introduce] a player to a club with a view to employment or [to introduce] two clubs to one another with a view to concluding a transfer contract’; this was did not amount to ‘in the specific nature of sport’ and were equivalent to an economic activity.61
2.2.2 DAVID MECA-MEDINA & IGOR MAJCEN VS COMMISSION In David Meca-Medina & Igor Majcen vs Commission62marked a significant shift in the interface between sports and competition law. The applicants had challenged certain ‘anti-doping regulations’ adopted by the International Olympic Committee (IOC) and implemented byInternational Swimming Federation(FINA), amongst other things, as being anti-competitive in nature.63It was argued that these regulations restricted athletes’ economic freedom guaranteed under (then) Article 81 and Article 82 EC.64The Commission decreed that IOC was not an undertaking for the purpose of community competition law and hence, these regulations cannot amount to restriction under Article 81 or Article 82.65The Court of First Instance upheld the decision and further added that the regulations were ‘purely sporting’ in character and had nothing to do with economic activity.66 The rules relating to ‘anti-doping’ had purely sporting interest, with no discriminatory intent and hence would be outside the purview of Article 81 & Article 82.67 Before the ECJ, the appellants argued that ‘purely sporting rule’ did not guarantee an absolute exemption from competition law obligations and it is ‘confined solely to rule relating to composition and formation of national teams.’68The appellants further argued that ‘the division of economic and non-economic aspect of the same sporting activity is entirely artificial.’69 The ECJ reaffirmed its earlier stand in Walrave70 that ‘sport is subject to Community law only in so far as it constitutes an economic activity within the
61id at ¶ 73 62 C-519/04P, (2006) ECR I-6991 63id at ¶ 3 (16) 64id at ¶ 3 (17) 65id at ¶ 4 66id at ¶ 7-8 67id at ¶ 9-10 68id at ¶ 18 69id at ¶ 19 70 supra 32
24 | P a g e meaning of Article 2 EC’.71 However, it further elucidated the intersection of sporting activity, economic activity and competition law by stating the following, ‘…it is apparent that the mere fact that a rule is purely sporting in nature does not have the effect of removing from the scope of the Treaty the person engaging in the activity governed by that rule or the body which has laid it down. If the sporting activity in question falls within the scope of the Treaty, the condition for engaging in it are then subject to all the obligations which result from the various provisions of the Treaty. It follows that the rules which govern that activity must satisfy the requirements of those provisions, which, in particular, seek to ensure freedom of movement for workers, freedom of establishment, freedom to provide services, or competition.’72
The ECJ further asserted that, ‘Therefore, even if those rules do not constitute restrictions on freedom of movement because they concern questions of purely sporting interest and, as such, have nothing to do with economic, that fact means neither that the sporting activity in question necessarily falls outside the scope of Articles 81 EC and 82 EC nor that the rules do not satisfy the specific requirements of those articles.’73
Ultimately, ECJ arrived at the same decision as CFI and Commission that the anti-doping rules did not violate Article 81 or 82. However, the course of analysis and reasoning done by ECJ finds favour. The ECJ concluded that penal nature of anti-doping rules could hamper competition but it was justified due to its legitimate object of safeguarding equal chances for athletes, their health, the integrity and objectivity of competitive sport and its ethical value.74 Nonetheless, ECJ introduced the principle of proportionality to weigh the penalty against the proposed legitimate object because unjustified severity of penalty would result in distortion of competition.75
71 supra 69 at ¶ 37 72id at ¶ 27-28 73id at ¶ 31 74id at ¶ 43, 47 75id at ¶ 49-55
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Meca-Medina has changed the landscape of competition law with respect to sports. The situation prior to Meca-Medina had a safe-harbor for all the rules that did not have any economic aspect attached to it. In other words, any conduct of the sport authority or any agreement or decision or rule that belonged categorically to the realm of sporting and did not have any commercial value attached to it was exempted from the clutches of community competition law. Meca-Medina has breached this safe haven. it is important to note that Meca-Media has not abolished the ‘purely sporting rule.’ It has mandated three additional conditions that have to be met in order to avail exemption from Article 101 and Article 102 of TFEU. These three conditions are: Pursuance of a legitimate object, The alleged restrictions are inherent to the pursuit of this legitimate object, and The restrictions are proportionate to the objective sought.
What would amount to legitimate object must naturally pertain to the sustenance and organization of the sport. It must further the values on which sport rests such as fair play, equality, uncertainty of results, health and training of athletes, protection of spectators etc. The conditions for organization of sport, such as uniformity of rules and financial autonomy of clubs also qualify as legitimate object. The decision, therefore, has helped tighten the hold of competition law over the conduct of sport clubs. Their acts which may have found an escape route prior to Meca-Medina are now liable for scrutiny.
Meca-Medina has been widely criticized by the scholars. It is argued that it has abrogated the well-established principle of ‘purely sporting exception’ of Walrave. The exemption guaranteed autonomy to federations to conduct and organize sports and this removal of protection, in its practical effect, would threaten the freedom enjoyed by the Federations in organization of sports.76Further, this case-by-case approach would lead to an increase in burden of litigation as it has enhanced the scope of application of Treaty provisions.77 Also, most sport organizations have the ‘pyramid structure’ i.e. one federation is a ‘de facto’ monopoly in the governance of sport. This case would lead to
76 S. Weatherill, Anti-doping Revisited: The Demise of the Rule of ‘Purely Sporting Interest’? ECL Rev. (2006) 645–657 77 E. Szyszczak, Competition and Sport 32(1) EL Rev (2007) 105
26 | P a g e opening of a Pandora box of internal grievances before the Commission.78The introduction of proportionality principle and fairness in cases of penalty in disciplinary actions would promote many to challenge the proceeding before the Commission. Another scholar remarked that it was inconceivable why Walrave as well as the Helsinki Reporton Sport was not relied upon by the Commission while deciding Meca-Medina.79
Some scholars, on the other hand regard Meca-Medina as a ‘welcome clarification’. It is argued that the case has cleared the mist surrounding application of competition rules to sports. In the present scenario, it is highly unlikely that any ‘purely sporting rules’ can be demarcated from rules having economic significance.80 In such a case, the sporting federations may manipulate such ‘purely sporting rules’ to gain more economic profits.81 For example, doping rules not only work in the interest of clean sports but also reap financial gain to the organizers by creating a perception of ‘clean sport result.’82 And, as a matter of fact, the ‘purely sporting rule’ exemption has not been done away with after Meca-Medina. The only new and additional condition, now, is that the contested restriction should be ‘inherent in the pursuit of the objective sought’ and it should be proportionate to the objective.83 The substitution of a ‘rule of reason’ approach in the place of ‘per se’ should be welcomed.84
78id at 107 79 P.I. Colomo, The Application Of EC Treaty Rules To Sport: The Approach Of European Court Of First Instance In Meca Medina And Piau Cases, 3 ESLJ 1 (2005) at para 23 80 I. Blackshaw, EU Competition Law and Sport, 8 Bus. L. Int'l 107 (2007) 81 E. KEALY, It's Just Not Cricket: EU Competition Law And Its Application To Sporting Rules, 2 King's Student L. Rev. 87, 100 (2010) 82Ibid 83id at 103 84id at 115
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2.3 THE WHITE PAPER ON SPORT Post Meca-Media, the Commission released a White Paper on Sport85 to provide a ‘strategic orientation’ of the EU Treaty law on Sport. The White Paper predominantly dealt with the role and importance of sport in European Union. The Paper acknowledges the contribution of sport in achieving solidarity and promotion of peace amongst nations. However, sport has not been felt untouched by commercialization, exploitation, money- laundering, racism etc. Therefore, the White Paper aimed to: To encourage debate on specific problems, To enhance the visibility of sport in EUpolicy-making, To raise public awareness of the needs and specificities of the sector, To illustrate important issues such as the application of EU law to sport, and To set out further sports-related action at EU level.86
The White Paper invokes the Nice Declaration of 2000which called upon the sporting organizations who have the primary responsibility to conduct sporting affairs to do so ‘with due regard to the national and Community legislation’ while respecting its code of ethics and social role.87The Paper has recognized the macro-economic importance of sport and its unavoidable linkage to GDP, labour force, copyright, commercial communications, trademarks, and image and mediarights.88
Application of Community Competition law is dealt in detail in the accompanying Staff Working Document ‘The EUand Sport: Background and Context’89and particularlyin Annex I of that document, specifically dedicated to ‘Sport and EU Competition Rules’. The annex has discussed in detail the application of Article 81 (now Article 101 TFEU) and Article 82 (now Article 102 TFEU). At the onset, it is accepted that sport sector, even in its economic aspect, is different from other economic activities. These distinguishing features are:
85White Paper on Sport, European Commission, COM(2007)391 (final) 86id at 2 87id at 2-3 88id at 10-11 89Staff Working Document on ‘The EU and Sport: Background and Context’, European Commission, SEC(2007) 935
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Although, the very essence of sport lies in competition between two contesting teams, the certain degree of interdependence between these competing parties cannot be done away with. This interdependence is with respect to equality between teams or competitive balance. This in turn guarantees the uncertainty of result, which is most desirable by the spectators. Under normal market conditions, the competitors aim atousting the rival from the market which is least desirable in sport.90 Again, that sport has educational, public health, social, cultural and recreational functions. The principle of solidarity, further, encourages professional sport to financially support new or amateur sport.91 The structure of sport organizations in Europe is de facto a monopolistic pyramid. This means that each sport is regulated by a single federation at the helm, having national associations as its members.92
The Commission, in the Annex, has made an attempt to clear the air about application of Community Competition law post Meca-Medina.93 It reiterated that ‘purely sporting rule’ is no more exempted from scrutiny under competition law. There is no uncertainty with respect to the principle that the a priori protection given to ‘purely sporting rules’ no longer exists in EU Community law, particularly with respect to application of Article 101 and Article 102.
The Annex provides for a detailed methodology for determining whether any act or omission by the sporting federations or associations etc. falls foul of Community competition rules in the Treaty. These steps are:
STEP 1 Can the sports association or federation or organization whose act or omission is under scrutiny, be regarded as an ‘undertaking’ or an ‘association of undertakings’?
90 P. Kienapfel& A. Stein, The Application Of Articles 81 And 82 EC In The Sport Sector, (May 12, 2017, 9.20 am), http://ec.europa.eu/competition/publications/cpn/2007_3_6.pdf. 91Ibid 92Ibid 93 supra 89 at ¶ 2.1
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It is no revelation that a sports association is an undertaking to the extent it carries out an ‘economic activity’ itself (e.g., the selling of broadcasting rights). The sports association is an ‘association of undertakings’ if its members carry out an economic activity. In the absence of ‘economic activity’, the entity fails to qualify as an undertaking or association of undertakings, and Articles 81 and 82 EC do not apply.94
An illustrative list of undertakings and association of undertakings has been provided in the Annex, which is based on previously decided case-laws. These are: Individual athletes: As decided in the case of ChristelleDeliège v. Ligue,95a high- level judoka was held to an undertaking as she was exercising an economic activity. Although, no remunerated was recieved by the organizer, the fact that the participation in the event generates economic activity was enough for her to be regarded as an undertaking.96 Sport clubs/teams: It is settled case law that sport clubs/teams are undertakings within the meaning of Article 81 and 82 EC to the extent they carry out economic activities97 National sports associations98 International sports associations99
STEP 2 Does the rule in question restrict competition within the meaning of Article 81 (now 101(1)) EC or constitute an abuse of a dominant position under Article 28 (Article 102) EC? It is to be analyzed whether the sporting rules adopted by the entity i.e. the undertaking (national or international sports associationsetc ) would qualify as an agreement or decisions by undertakings or associations of undertakings within the meaning of Article 81(1) EC [now Article 101(1) TFEU]. As per the requirement of the
94id at ¶2.1.2 95 ECR 2000 I-2549 at ¶ 56 and 57 96 supra 94 at ¶ 2.1.3 97 supra 51 98Ibid 99Ibid
30 | P a g e said Article, of such sporting rules shall beprohibited if they have as their object or effect the restriction or distortion of competition within the common market and affect trade between Member States.100
Article 82 EC (now Article 102 TFEU) prohibits any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it in so far as it may affect trade between Member States. Since sports associations usually have a monopolistic pyramid structure, they automatically satisfy the characteristics of a monopoly or collective dominance in their relevant market. Even where a sporting association is not active on a given market, it may be considered to hold a dominant position if it operates on that market through its members (e.g., sport clubs/teams).101
The Annex relies on the Wouters ruling and lays down three factors that would assist in the determination of this question. These are: a) The overall context in which the rule was adopted or produces its effects and its objectives; b) Whether the restrictions caused by the rule are inherent in the pursuit of the objectives; c) Whether the rule is proportionate in light of the objective pursued.102
STEP 3 Is trade between Member States affected? At the heart of EU competition law, is unification of its internal market. EU is essentially a political and economic union that envisions free flow of: people, goods, services, and capital.
100supra 96 at ¶ 2.1.4 101Ibid 102id at Para 2.1.2
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Competition law is a matter of community law only if it obstructs the movement of these four from one country to another. If there is no inter-state discrepancy, it is a matter of national competition law and not community competition law. Same analysis is to be made with respect to cases involving sport law dimension.
STEP 4 Does the rule fulfill the conditions of Article 81(3) (now 101(3)) EC or the objective justification under Article 82 (now 102)? Where a restriction under Article 101(1) TFEU is found, such restriction may be justified under Article 101(3), if it satisfies two positives: i. contribute to improving the production or distribution of goods or to promoting technical or economic progress, ii. while allowing consumers a fair share of the resulting benefits,
along with preventing the two negatives: i. do not impose restrictions which are not indispensable to the attainment of these objectives and ii. do not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products concerned.
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2.4 ECONOMIC FUNCTIONS: MEDIA RIGHT In the time period of late 1990s and 2002, the European Commission had received as many as 80 complaints regarding contravention of Community competition law rules in sports sector.103 Prior to the wave of market liberalization that hit Europe in late 1980s, the European broadcasting market was a natural monopoly; hence, there was practically no competition in the market and the price for broadcasting rights was low.104 The cost of obtaining broadcasting rights increased many fold post liberalization due to: a. Technological developments such as emergence of digital media and other new media services, and b. Unprecedented demand for premium sport content.105
The fact that the increase in the number of sporting event was not at par with the increase in demand, supplemented the increase in price boom. Certain other reasons also gave an impetus to the expansion of media rights market. These are: a) Sports programs are viewed by a very predictable and targeted audience. This audience is definite and homogeneous with above average buyer power. These generally include young men who have an inclination towards a fixed buying pattern. Additionally, this group spends less time watching non-sport content. These factors give strategic advantage to advertisers who want to advertize their goods and services to this target audience. This results in an increase in revenue from selling advertising slots during air-time.106 b) Sale of media rights helps in developing a brand for the channel by airing exclusive premium sport content, such as FIFA. Further, it fosters brand loyalty towards the channel. These combined, results in increased viewership of other non-premium and non-exclusive sport content on the channel.107
103 B. Van Rompuy, Economic Efficiency: The Sole Concern of Modern Antitrust Policy? Non efficiency Considerations within Article 101 TFEU, Volume 51 at 283 (Kluwer Law International; 2012) 104id at Page 285 105Ibid 106 Ibid 107Ibid at 286
33 | P a g e c) The rise in demand for pay-TV for popular sport like football in Europe also intensified the battle for gaining media rights. Other sports like tennis, golf, motor sports etc. also gained significant popularity.108 d) The revenue generated from sale of media rights forms one of the main sources of income of sport organizations/leagues.109 For example, IOC earned 50% of its revenue from sale of media rights in 2004, which was five times of what it earned two decades earlier through the same medium.110In less popular leagues also, media sale acts as an indirect attracter of other revenue streams by increasing sport’s profile, value of sponsorship, stadium attendance etc.111 e) Division of downstream media market into various forms of exploitation, such as highlights, pay-per-view, satellite, cable, terrestrial, live, recorded etc has opened more markets for revenue generation.
Therefore, sale of sport media rights became ‘big business’not only for the content acquirers but also the media content providers and sport organizations/leagues.112The sale of sport media concerns two markets, first upstream market concerned with the sale of these rights and secondly, the downstream market where these rights are bought. Competition alarms have been raised in both these markets with respect to joint selling and joint acquisition of these rights. The law with respect to exploitation of media rights was settled in UEFA Champions League case.
108id at 287 109id at 288 110Ibid 111Ibid 112id at 285
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2.4.1 UEFA CHAMPIONS LEAGUE CASE This case was the defining moment in regulating the sale of broadcasting rights along with other economic rights by sport associations. In UEFA Champions League113 case, the rules and regulations by UEFA and its member associations with respect to joint selling agreement regarding sale of commercial rights were at stake.Union des Associations Européennes de Football (UEFA) is an association of national football associations in Europe, having 51 members at the time of the decision.114 The main purpose of UEFA is regulation of football in Europe and it enjoys the sole jurisdiction ‘to organize or abolishinternational competitions in Europe in which memberassociations and/or their football clubs participate’.115UEFA Champions League is the most prestigious club competition organized by UEFA in Europe.116The Champions League consists of two qualifying phases followed by group matches and a final knock-out round of quarters, semis and final, with a total of 125 matches.117 UEFA performs administrative functions such as appointment of referees, match delegates etc for the matches as well as managing the commercial aspect of the League.118 It also arranges for production of full audio-visual match coverage for each match.119The participating clubs on the other hand, provide team of players and stadium as per the guidelines set forth by UEFA.120
In 1999, UEFA notified the rules, regulations and implementing decisions regarding its joint selling agreement to the Commission, which included standard agreements for conclusion of television broadcasting, sponsorship and other supplies.121After the said notification was objected upon by the Commission for failing to the test of Article 101 TFEU, UEFA came up with a new amended outline for joint
113 Joint selling of the commercial rights of the UEFA Champions League COMP/C.2-37.398 (2003/778/EC) 114id at ¶ 2 115id at ¶ 3 116id at ¶ 5 117id at ¶ 6 118id at ¶ 13 -14 119id at ¶ 15 120id at ¶ 17 121id at ¶ 18
35 | P a g e selling agreement in 2002.122These new guidelines were under consideration in the present case, in the light of Article 101 TFEU. In brief, these guidelines were: Television broadcasting rights The joint selling agreement did not apply to initial qualifying rounds and the clubs had the freedom to sell the broadcasting rights for those 160 matches individually. Therefore, the joint selling agreement covered only the League matches and the subsequent knock-out stage consisting of total 125 matches.123 Contract from broadcasting could be granted only on the basis of tendering by ‘all qualified broadcasters having equal opportunity to bid in the full knowledge of the key terms and conditions.’124 Further, the broadcasting package would not be sold as a whole but ‘in smaller packages on a market-by-market basis depending on the structure of TV market in the Member State’.125UEFA enjoyed the exclusive right to sell two main live rights package, i.e. free-TV and pay-TV for the initial stage as well as the later final stageof the League.126In the latter case, if UEFA failed to sell the rights within one week after the draw, UEFA lost the exclusive to sell.127 It further enjoyed the exclusive right to sell a highlight package.128In its essence, UEFA aimed at bifurcating UEFA Champions branded service (broadcast) from an individual Club’s service by prohibiting live and simultaneous exploitation of the commercials of a match but allowing, in a limited way, for a deferred and more Club centric exploitation of the same.129
Internet rights The right to provide video content on internet was shared by both UEFA and the football club participating in the match, only one and a half hour after the completion of the match.130 The Clubs were obliged to maintain strict and clear
122id at ¶ 21 123id at ¶ 26 124id at ¶ 27-31 125id at ¶32 126id at ¶ 33-34 127id at ¶ 34-35 128id at ¶ 36 129id at ¶ 38 130id at ¶ 40
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differentiation from UEFA branded product and only offer ‘club specific’ content.131 The Clubs, in order to make the broadcast over the internet could acquire raw feed from UEFA, and the proceeds from such service gained by UEFA were to be redistributed on the principle of financial solidarity.132
Wireless 3G/UMTS rights Both UEFA and Clubs (in respect of the match they play) shared this rights package on the condition that technical transformation delay is respected, as it is based on raw feed produced from television.133 The clubs were again obliged to maintain a product that was different from the UEFA branded product. UEFA could offer the rights to an operator with an UMTS license on an exclusive or non- exclusive basis, for a period of four years and then for three years.134This rights package was also based on principle of financialsolidarity amongst UEFA and its members.135
Physical Media Rights This right to exploit the physical media rights of DVD, VHS, CD-ROM and other archive material was also held by both UEFA and the respective Club, with an embargo of 48 hours after the final.136
Audio Rights Both UEFA and respective Clubs had the non-exclusive right to sell license to live radio broadcasters.137
The other commercial rights, such as sponsorship rights, licensing rights and other intellectual property rights etc. were held to be irrelevant for the purpose of examination under Article 101 TFEU.
131id at ¶ 41 132id at ¶ 43 133id at ¶ 44 134id at ¶ 45 135id at ¶ 46 136id at ¶ 47 137id at ¶ 48
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DETERMINATION OF RELEVANT MARKETS RELEVANT PRODUCT MARKET The Commission identified the following four markets in the present case for the assessment of impact of joint selling agreement: I. The upstream market for the acquisition of TV broadcasting rights of football events played regularly throughout every year and the downstream markets on which TV broadcasters compete for advertising revenue depending on audience rates, and for pay-TV/pay-per-view subscribers. The commission observes that the content acquisition policy of any broadcaster is determined by the characteristics of the program and the targeted viewers because it attracts advertisers which are fully or partially responsible for revenue generation.138 Therefore, substitutability rests of the extent to which other ‘content’ can attract the same purpose of high number of specific audience and provide a competitive restraint to the right holder’s ability to determine the price of TV broadcasting rights.139Therefore, the Commission considered relevant product market to be defined as the market for the acquisition of TV broadcastingrights of football events played regularly throughout every year.140This was so because no other type of programming could achieve the same brand image for the channel, attract a particular audience, drive similar sale subscriptions etc.141Football held a ‘distinct high profile’ amongst desirable viewers which develops not only a brand image for the channel but maintains loyal audience as well for the broadcaster.142This is extremely important for revenue generation from advertising.143 The audience for football is loyal, has flexible spending pattern due to age and cannot be targeted through any other mode, thereby making football a lucrative broadcast for advertisers.144The significance of acquiring football content can be gauged from the fact that highest expenditure by sport channels is incurred
138id at ¶ 57-58 139id at ¶ 58 140id at ¶ 63 141id at ¶ 63 142id at ¶ 64-65, 67-69 143id at ¶66 144id at ¶71-74
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to acquire football content in Europe, which is much more than price for Formula One etc.145
II. The upstream and downstream markets for the acquisition of media rights for new media (wireless 3G/UMTS and Internet) of football. It forms a distinct market because of its narrowly targeted audience than other forms of media delivery modes, hence resulting is a separate narrow downstream market in the form of advertisers and subscribers.146
RELEVANT GROGRAPHIC MARKET The Geographic Scope of the affected market for both upstream as well as downstream market was determined as respective national territories due to cultural factors, audience preferences, regulatory regimes, language barriers etc.147
APPLICATION OF ARTICLE 101 TFEU The Commission reiterated that ‘Sport is subject toCommunity law to the extent it constitutes an economicactivity within the meaning of Article 2 of the Treaty.’148 It held that UEFA is ‘both an association of associations of undertakings as well as an association of undertakings.’149 UEFA, additionally, is ‘an undertaking in its own right as it also engages directly in economic activities.’150 All Football clubs as well as the national associations perform economic activities, and hence, they qualify as undertakings within the meaning of Article 81(1) (now Article 101 TFEU) ofthe Treaty and so far as they engage in economic activities (55). Themembers of UEFA are the national football associations.151 Therefore, the present regulations under consideration
145id at ¶ 70 146id at ¶ 83-84 147id at ¶ 87-90 148id at ¶a 105 149id at ¶ 106 150id at ¶ 106 151id at ¶ 106
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for governing the commercial rights of UEFA constitute as ‘decision by an association of associations of undertakings.’152
The Commission observed that the joint selling agreement to exploit the commercials of the UEFA Champions League results in restriction of competition in the relevant market in the following manner: “…[it] prevents the individual football clubs from individually marketing such rights. This prevents competition between the football clubs and also between UEFA and the football clubs in supplying in parallel media rights to the UEFA Champions League to interested buyers in the upstream markets. This means that third parties only have one single source of supply. Third-party commercial operators are therefore forced to purchase the relevant rights under the conditions jointly determined in the context of the invitation to bid, which is issued by the joint selling body. This means that the joint selling body restricts competition in the sense that it determines prices and all other trading conditions on behalf of all individual football clubs producing the UEFA Champions League content. In the absence of the joint selling agreement the football clubs would set such prices and conditions independently of one another and in competition with one another. The reduction in competition caused by the joint selling arrangement therefore leads to uniform prices compared to a situation with individual selling.”153
Further, the joint selling agreements restrict the rights of Football Clubs to exploit those commercial rights in the following manner: i. By restricting them to individually sell live rights only to pay TV/pay-per-view and not to free TV broadcasters; ii. By putting restrictions on exploitation of deferred media rights, etc.154 The Commission remarked thatif the joint selling agreements were not in place, UEFA and Football club would be competitors for selling commercial rights.155 The
152id at ¶ 109-110 153id at ¶ 114 154id at ¶ 115 155id at ¶ 128
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Commission accepted that given the peculiarity of sport, a certain degree of cooperation amongst stakeholders is essential; however, this interdependence did not extend to all the aspects because the clubs did compete with one another for sale of merchandized goods and sponsorship etc.156 Further, the object of the joint selling agreements is not organization of the sport that it is so essential to the very existence and organization of the event and hence cannot be achieved in any other way.157
Once it was proved that the joint selling agreements restricted competition under Article 81(1), the Commission proceeded to the exemption under Article 81 (3)158.
Therefore, the question before the Commission was: ‘whether the benefits generated by the notified joint selling arrangement outweigh the negative effects that it deploys, namely: (a) the grant by the football clubs to UEFA of the exclusive right to sell certain of the commercial rights relating to the UEFA Champions League; (b) the restrictions agreed to by the football clubs in selling their commercial rights individually.’159
Improvement in production or distribution and/or promoting technical or economic progress i. Single point of sale of a league product: Joint selling of media rights reduces the transaction cost that a broadcaster may have to incur if he buys the rights to eachindividual match, has lesser efficiency as a joint selling agreement.160Also, this allows operators with certainty of content even in its UEFA Champions League in its knock out stage, irrespective of the club because the media content is not bought
156id at ¶ 129 157id at ¶ 129-131 158 Where a restriction under Article 81(1) TFEU is found, such restriction may be justified under Article 8(3), if it satisfies two positives: i. contribute to improving the production or distribution of goods or to promoting technical or economic progress, ii. While allowing consumers a fair share of the resulting benefits, Along with preventing the two negatives: i. do not impose restrictions which are not indispensable to the attainment of these objectives and ii. do not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products concerned. 159 supra 157 at ¶ 137 160id at ¶ 143-144
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individually but for the whole tournament.161 It should also be noted that viewers are interested in UEFA Champions League as a tournament, and not as a particular club match in particular.162 It reduces the financial risk and burdenof the acquirer and the financial burden of the Football clubs to maintain separate departments for sale of the rights, while allowing the viewer a free choice to between various broadcasts.163 ii. Branding: Joint selling guarantees a uniform and homogeneous high quality TV coverage and maintenance of the brand ‘UEFA Champions League’ which increases the attractiveness for the viewers.164This will optimize the global presence of UEFA as a unique independent quality labeled football media distinguished from other football content.165 iii. Football clubs’ individual have the right to sell live TV rights that are left unsoldto the pay-TV/pay-per-view market on a non exclusive basis after the deadline has been crossed and UEFA fails to sell it to a broadcaster through a joint selling agreement.166 iv. Solidarity amongst clubs and UEFA.167
Fair share of the benefit to consumers Joint selling agreements shares a genuine benefit with the consumers by providing easier and better quality access to content because it allows the operator to invest in new improved production and transmission technology, presentation etc.168
Restrictions that are indispensable The joint selling of media rights appears indispensible because it results in emergence of UEFA Champions League as an objective and independent event with wider appeal to audience, increases the revenue generation in totoand achieves the
161id at ¶ 145 162id at ¶ 147 163id at ¶ 150-153 164id at ¶ 154-157 165id at ¶ 163 166id at ¶ 158-159 167id at ¶ 164-167 168id at ¶ 170-171
42 | P a g e aforementioned efficiencies.169The football clubs are free to develop and cater to their own fans through deferred live telecast or other platforms by developing and telecasting their own club specific content, distinct from the UEFA Champions League brand.170
No elimination of competition UEFA Champions League is one of the many football tournaments help annually and there a various chances for the media operator to acquire football content regularly throughout the year.171 Further, media content for Champions League is split up in several packages which are sold through competitive bidding and are sold on both exclusive as well as non-exclusive basis.172
The joint selling agreements were therefore, deemed as being exempted from being void under Article 81(1) [now Article 101 (1)]. However, the Commission ruled that such exemption can only be grated on the condition that the Football Clubs shall be allowed to sell their rights to free-TV broadcaster if there are no offers from Pay-TV broadcaster, and for a period of two contract cycles, i.e. six years.173
The EU competition law in sport has matured over decades. Post Meca- Medinaall activities whether economic or ‘purely-sporting’ must satisfy the provisions of community competition law under Article 101 and Article 102 of TFEU.
169id at ¶ 174-178 170id at ¶ 191 171id at ¶ 193 172id at ¶194-195 173id at ¶ 199-200
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UNITED STATES OF AMERICA
Sports fall under the ambit of anti-trust laws in the United States. However, courts in the United States have followed a different approach to cases involving sports and anti-trust overlap. While efficiency arguments and ‘specificity of sport’ remained the predominant theme before the Courts in EU, the following have shaped the sport and anti-trust contour in US: Sports Broadcasting Act, 1961 Defense of Leagues being single economic entities Special case of baseball
3.1 SPORTS BROADCASTING ACT OF 1961 The federal laws on anti-trust do not apply to many sectors in United States because they have been granted statutory exemption. Some of these areas are agriculture, labour, fishing etc.1Professional Sport in United States enjoy immunity from anti-trust laws with respect to joint selling of its media rights, which forms part of a larger immunity enjoyed by media in the States. 2The statutory exemption to collective sale of television rights is granted by the Sports Broadcasting Act of 1961 (SBA).
The SBA came into existence after the two National Football League (NFL) cases. Before SBA, all the clubs of NFL sold the television rights of their home games individually to media operators and kept the revenues to themselves. Further, as per Article X of the NFL bye-laws, the clubs were prevented from permitting the game to be telecasted into the territory of another club’s home territory without that club’s consent when that other club is either playing a game in its home city or otherwise and is broadcasting the same, given that the other club was within seventy-five mile radius. The impact was that if the consent was not given, the locals from one NFL home ground could not watch the match of their neighbor NFL’s game on television. This was
1 M. E. Stucke& A. P. Grunes, Why More Antitrust Immunity for the Media Is a Bad Idea, 105 NW. U. L. REV. COLLOQUY 115 (2010) 2Ibid
44 | P a g e challenged the Department of Justice in 1953, in United States vs. National Football League3 (NFL I). It was argued by the Department that this practice was contrary to Section 1 of the Sherman Act because it was an unreasonable restraint on trade in the television market from sport broadcast. The federal district court opined that the bye-laws amounted to an agreement under Section 1 of the Sherman Act then made further analysis with respect to the alleged violation.4 The Court delved into the question of legality of Article X which prevented the broadcast of ‘outside’ game into the territory of other teams on the days on which this other team is playing. The Court opined that this constituted as a case of market allocation which was strictly prohibited under anti-trust laws because its purpose and effect is to restrict outside competition. 5 However, the Court proclaimed the ‘realities that must dominate the judgement’ and not formalistic interpretations. It relied upon Chicago Board of Trade v. United States6and quoted that: “The legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition….The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences.”
It was against this background that the Court decreed that “Football is a unique type of business.”7 The uniqueness of football lies in the fact that as much as competition is required in the field, it may not be most beneficial for the teams to do so off the field as
3 116 F. Supp. 319 (E.D. Pa. 1953). 4 id at 321 5 See: United States v. Addyston Pipe & Steel Co., 6 Cir., 85 F. 271 6246 U.S. 231, 38 S. Ct. 242, 244, 62 L. Ed. 683 7supra 4 at 323
45 | P a g e well, especially in case of business8. The reason being the financial unevenness amongst the teams; some are wealthy because of their winning streak and others are not. If competition amongst such teams is allowed like a pure market, it would lead to ouster of weaker teams from the market which would ultimately lead to destruction of the entire League.9
Furthermore, the prohibition under Article X was deemed to be a reasonable restriction because it fostered attendance at the stadium which was the largest source of revenue for the clubs back in the day.10However, the restriction on telecast during away games was deemed to be restrictive of trade because it had no pro-competitive justification to it.11
The business practice of individually selling television broadcasting rights changed in 1961 when NFL sold the exclusive right to telecast all the league matches for two years to Columbia Broadcasting System for $4,650,000 annual fee. This revenue was to be shared pro rata amongst the members. The NFL approached the court for the validation of this contract in the light of NFL I. Diverging from NFL I, in United States vs. National Football League, et al12 (NFL II), the Court opined that this practice has eliminated competition amongst the clubs itself for sale of television rights. In its succinct order, the court observed that: “Clearly this provision restricts the individual clubs from determining "the areas within which * * * telecasts of games * * * may be made * * *," since defendants have by their contract given to CBS the power to determine which games shall be telecast and where the games shall be televised. I am therefore obliged to construe the Final Judgment as prohibiting the execution and performance of the contract dated April 24, 1961, between the National Football League and the Columbia Broadcasting System.”13
8id at 323-324 9Ibid 10id at 325-326 11id at 326-327 12 196 F. Supp. 445 (1961) 13id at 447
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The contract between NFL and CBS stood invalidated thereby due to NFL II. This meant loss of revenue for smaller clubs from revenue sharing and taking away of the unique nature of football as recognized in NFL I.
In order to salvage the situation post NFL II, the Congress enacted Sports Broadcasting Act of 1961 which overruled NFL II and granted immunity from anti-trust challenge to not only professional football, but baseball, basketball and hockey as well, with respect to collective sale or transfer of television rights, wholly or partially. The Congress felt the need to enact SBA because of the League’s indispensible need to ensure quality of competition amongst the teams which can only be guaranteed when the weaker clubs are guaranteed continuous and definite financial support for hiring better players, better training and technical facilities.14 The major source of income for clubs was sale of television broadcasting rights. However, the profitability from these rights was dependent of the performance of the club. Hence, there was huge disparity amongst the revenue earned by the top clubs and smaller clubs. The impact was directly reflected upon the quality of players and the game of these smaller, poorer clubs. The Congressional Anti- trust Committee of SBA concluded that it was in the best interest of the viewers and the game that professional league sports must be given some leeway from anti-trust principles.15 The pooling of television rights and the revenue generated thereof, guaranteed equality amongst all the clubs, rich or poor, which contributed towards each club’s financial stability and maintaining competitive balance. 16 The Act applies only to collective sale of sponsored television rights i.e. free television network and local over- the-air broadcasts, and not cable network or satellite distributors.17This does not imply a prohibition upon collective sale of broadcasting rights to cable network or satellite TV. The SBA is consistent with the finding of the Court with respect to application of Article X of the NFL bye-laws.
14 M. J. Mitten & A. Hernandez , The Sports Broadcasting Act of 1961: A Comparative Analysis of its Effects on Competitive Balance in the NFL and NCAA Division I FBS Football, Ohio Northern University L. Rev., vol 39 , 745, 750 (2013) 15id at 751 16Ibid 17 Chicago Prof ‘l Sports Ltd. Partnership v. NBA (Bulls III), 808 F. Supp. 646, 650 (N.D. Ill. 1992)
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3.2 SINGLE ECONOMIC ENTITY The application of single economic entity can be best understood in the light of American Needle, Inc. V. National Football League ET AL.18 Thirty-two privately owned professional football teams formed an association in the name of National Football League (NFL). Subsequently, National Football League Properties (NFLP) was formed by them. One of the purposes of NFLP was handling the commercials of the intellectual property rights held by each team. In simple terms, NFLP facilitated buying and selling of each team’s separate merchandize through licensing or otherwise. Prior to 2000, this activity was carried on by granting non-exclusive licenses to several entities. However, anti-trust alarm was raised when NFL and NFLP entered into an agreement to sell the right to exclusively produce and sell trademarked headgear of all thirty-two teams to Reebok International. American Needle Inc. was one of the entities whose license for the same was not renewed due to this exclusive grant. It approached the District Court alleging that the agreement between NFLP and NFL to sell exclusive licenses violated Section 1 of the Sherman Act.19The teams and NFLP argued that they constituted a single economic entity for the purpose of the conduct in question and were hence, outside the ambit of Section1 of the Sherman Act. The District Court as well as the Seventh Circuit Court accepted the argument and held that the said conduct was outside the scope of Sherman Act. The District Court opined that: “…that in that facet of their operations they have so integrated their operations that they should be deemed a single entity rather than joint ventures cooperating for a common purpose.”20
The Court of Appeals for Seventh Circuit further validated the decision of the District Court. The Court, however, agreed that in certain contexts, the League
18560 U.S. 183 (2010) 19 Section 1 of the Sherman Act reads as, ‘Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.’ 20American Needle, Inc. v. New Orleans La. Saints, 496 F. Supp. 2d 941, 943 (2007)
48 | P a g e functionedas a joint venture; while under certain circumstances, it had the characteristics of a single economic entity having immunity from the application of Sherman Act.21 The Court acknowledged the significance of impact on potential competition while determining single economic entities,22 yet overlooked its application in the present case because of the premise that it was indispensiblefor achieving the objective of the League andorganizing football.23 And therefore, the provisions of Section1 did not apply.
The issue before the Supreme Court, therefore, was: “Whether the NFL respondents are capable of engaging in a contract, combination . . . , or conspiracy” as defined by Section 1 of the Sherman Act, or,.. Whether the alleged activity by the NFL respondents must be viewed as that of a single enterprise for purposes of Section 1 of the Sherman Act.”24
The answer to the issue was in affirmative. The decision of the lower courts were reversed and it was held that: “The alleged conduct related to licensing of intellectual property constitutes concerted action that is not categorically beyond §1’s coverage.”
The court made the following key observations: The Courts relied upon Copperweld Corp. v. In-dependence Tube Corp25.,The terms contract, combination and conspiracy in Section 1 of the Sherman Act suggest concerted practice by the parties which is treated ‘more strictly than unilateral behavior’.26 The harm with concerted practices lies in the fact that they are inherently anti-competitive as they seek to deprive the market of independent decision-making which in turn reduces competitive forces in the
21 538 F. 3d, 736, 741 (2008) 22id at 742 23id at 743 24 American Needle, Inc., Petitioner V.National Football League Et Al., Opinion Of The Court, 560 U.S. 183 (2010) at 7 25 467 U. S. 752, 767. 26id at 768
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market.27Therefore, for any agreement to qualify under Section1 of Sherman Act, it must have the attributes of a concerted practice.28 One cannot enter into an agreement with oneself. Basically, the two entities entering into an agreement must do so under capacities independent of one another which are distinct.29 This independence must not be assessed in a formalistic manner but must be viewed through a functional perspective.30 This advocates that an analysis must be made of how the entities function rather than their legal or formal titles of incorporation. Two separately incorporated entities may be controlled by a single force for the purpose of a concerted practice and any shallow, dogmatic analysis would declare them as distinct entities based on prescription, thereby leaving loopholes for perpetual violations. The enquiry must be of the form, and not of the substance. It must be analyzed whether the agreement under question pertains to “separate economic actors pursuing separate economic interest”.31The concerted practice through agreement must concern potential or actual competitors having diverse interests.
Based on these premises, it was deciphered that each Team is independent entity, owned and managed separately. They have different ‘objectives’, ‘separate corporate consciousnesses’ that were not common.32 Furthermore, the teams were competitors not only on the field but in the market for sale of their merchandize goods, fans, gate receipts, playing personnels etc. The teams, hence, acted in pursuance of their own economic goals and corporate well-being. Their association as NFL was not equivalent to a merger into a single economic entity in functional sense, irrespective of their common goal of licensing their trademark and promotion of NFL as a brand.33It was not denied that through NFL the teams in some sense act as a single entity that “owns several pieces of intellectual property and licenses them jointly, but they are not similar
27id at 768-769 28 supra 18, Slip Opinion at 4-6 29467 U.S. 752 (1984) 30 United States vs Sealy Inc. 388 U.S. 350, 352-356 31supra 29 at 768 32 supra 28 at 2 33id at 3
50 | P a g e in the relevant functional sense.”34 The court further opined the actions of NFLP were also subject to Section 1 of the Sherman Act with respect to the marketing of the intellectual property owned by the teams. NFLP was a separate corporation from NFL and the revenue generated by it was equally dived amongst the thirty-two teams. Here, the teams were not acting as a single firm that sought to maximize that firm’s profit. Rather, each team remained separately controlled, pursuing its own economic interests by competing with each other in the market. There were, of course, instances when there was an overlap between the individual team’s interest and NFLP’s interest. However, this, along with profit sharing, did not make them eligible for qualification as a single economic entity because by this logic, every cartel would also become a single economic unit, hence immune from Section 1 of the Sherman Act.35
Therefore, the doctrine of single economic entity could not be applied and the agreement to license fell under the ambit of Section 1 of the Sherman for being a concerted practice. However, since a certain amount of cooperation is necessary in order to promote NFL, the Rule of Reason should apply generally in these circumstances.36
34 supra 18, Opinion of Court at 16 35id at 20 36id at 21-22
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3.3 EXEMPTION TO BASEBALL Private professional sports in United States are played, majorly, by four Leagues in different sports. These are Major League Baseball, National Football League, National Hockey League and National Basketball Association. Out of these four, Baseball enjoys judicial exemption from the application of anti-trust laws.
3.3.1 FEDERAL BASEBALL CLUB OF BALTIMORE VS. NATIONAL LEAGUE For the first time, the question of application of anti-trust to baseball came before the Supreme Court of the United States of America in Federal Baseball Club of Baltimore.37Federal Baseball Club of Baltimore was one of the eight members of the Federal League of Professional Baseball Players and wanted to compete with the two defendants National League of Professional Baseball Clubs and American League of Professional Baseball Clubs. It was alleged that the defendants had monopolized the market and had purposely created situation that the Federal League was destroyed.38 The District Court held that the defendants had indulged in anti-competitive practice but the Court of Appeal reversed the judgement. The decision of the Court of Appeal was founded on the nature of the business of baseball.
The Leagues had clubs of different cities that were located in different states. These clubs used to compete against each other in ‘public exhibitions for money’ in the home ground of one of the clubs playing. This meant that the clubs had to cross the state borders frequently for the same. Finally, the winners of these leagues would compete with each other for the ultimate Championship. The Supreme Court affirmed the decision of the Court of Appeals and held that the business of exhibiting game of baseball did not amount to ‘trade and commerce’ and was a purely state activity. 39 The Supreme Court clarified that the organization of matches between clubs in different cities (states), movement of players across the state-borders and the commercials spent thereof did not
37 259 U.S. 200 (1922) 38id at 208 39id at 209
52 | P a g e change the character of the business. These requirements were necessary either for gaining popularity or merely incidental. As explained: “…the exhibition, although made for money, would not be called trade of commerce in the commonly accepted use of those words. As it is put by defendant, personal effort not related to production is not a subject of commerce. That which in its consummation is not commerce does not become commerce among the states because the transportation that we have mentioned takes place.”40
Since, baseball failed to qualify as trade and commerce for the purpose of application of anti-trust laws, the Supreme Court found itself devoid of the jurisdiction to go into the issues with respect to anti-competitive practices of the defendants.
3.3.2 TOOLSON VS. NEW YORK YANKEES The baseball exemption granted by Federal Baseball Club of Baltimore was upheld in Toolson vs New York Yankees41 by the Supreme Court of the United States. The Court exercised self-restraint and held that the question of exemption granted to baseball was under consideration by the Congress and it had decided not to legislate to overrule the decision of the Court. It had been thirty years since the judgement in Baltimore and if the legislation had intended to reverse the impact of the decision, it would have done so.42
The dissenting opinion, however, laid stress on the change in circumstances under which baseball was being played. It was observed that the increased capital investments for organizing the games, travelling, sponsorships and profits from interstate advertising, radio and television broadcasting, increased attendance at the stadium hinted at the change in status of baseball from a local, intra-state activity to a commercial activity.43The dissenting opinion acknowledged that baseball held a special place in the hearts of the American citizens and the Congress had not enacted any law to overrule the
40Ibid 41 346 U.S. 356 (1953) 42id at 357 43id at 358
53 | P a g e exemption. Nonetheless, the increasing popularity and economic value of the game made it more reasonable to expand the application of Sherman Act on professional baseball.44
3.3.3 FLOOD VS. KUHN The uncertainty regarding exemption granted to baseball was finally put to rest in Flood vs. Kuhn45 when the Supreme Court of United States upheld the exemption granted to baseball by a 5-3 majority. In the present case, the Petitioner, Curtis Charles Flood alleged violation of anti-trust rules when he was traded by St. Louis Cardinal to another baseball club, Philadelphia Phillies, without any consultation.46
The preliminary injunction against the transfer was denied by the District Court on the ground of baseball having a unique place in the America culture. Baseball was declared as ‘the national pastime for over a hundred years’ and that it was ‘everybody’s business’ in America. On these grounds, the application for early trial was granted. Post trial, the exemption was upheld by both district and Court of Appeal. The Supreme Court examined the legal history surrounding anti-trust granted to baseball, through a series of decisions from Baltimore to International Boxing Club47 case.48 The Court clarified that the Supreme Court in Toolsan neither upheld Baltimore nor overruled it on merits. It was merely an application of the doctrine of stare decisis. The Court acknowledged the absence of ‘acquiesce’ from the Congress with respect to the status of baseball and thereby, the resultant authority of Baltimore and Toolsan on the issue.49In its decision, the Court deemed baseball to be a business and amounting to interstate commerce and still upheld the exemption. The Court itself called it an ‘anomaly’ and observed that:
44id at 365 45 407 U.S. 258 (1972) 46id at 266 47 United States v. International Boxing Club, 348 U. S. 236 (1955). The case involved determination of applicability of anti-trust rules to professional boxing. The defendants took reliance on Baltimore and Toolsan to plead exemption for professional boxing. The plea was rejected and the Supreme Court reaffirmed the exclusive exemption granted to baseball in Baltimore due to the level of intrastate activity and that no other professional sport could plead for exemtption on the ground on stare-decisis. 48 supra 46 at 270-282 49id at 280
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“… Even though others might regard this as ‘unrealistic, inconsistent, or illogical’,50 the aberration is an established one, and one that has been recognized not only in Federal Baseball(Baltimore) and Toolson, but in Shubert51, International Boxing, and Radovich, as well, a total of five consecutive cases in this Court. It is an aberration that has been with us now for half a century, one heretofore deemed fully entitled to the benefit of stare decisis, and one that has survived the Court's expanding concept of interstate commerce. It rests on recognition and an acceptance of baseball's unique characteristics and needs.”52
The Court, therefore, reckoned that the inaction of the Congress with respect to legislative action to overrule Baltimore was more than passivity but an expression to maintain the status quo. Any changes, if necessary to the status of baseball, could only be warranted by a legislative action.53 Nonetheless, the Court, unequivocally, declared that the exemption did not extend to any other sport in United State operating interstate, such as boxing, basketball and hockey.54
In the dissenting opinion, Justice Douglas viewed the reliance on the Congress to amend the miscalculation done by the Court was called out for being ‘romantic’.55He drew attention to the growth of baseball from merely a game to an entertainment-business having the attributes of trade or commerce, over the last fifty years due to increased viewership, sponsorship, broadcasting revenue and other ancillary businesses.56He stated that: “Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free enterprise system as the Bill of Rights is to the protection of our fundamental
50 see Radovich, 352 U.S. at 352 U. S. 452 51 United States v. Shubert, 348 U. S. 222 (1955). It was held that theatre groups travelling interstate for the purpose of exhibition cannot be granted exemption like Federal Baseball or Toolson. Federal Baseball pertains only to baseball and does not grant blanket protection to enterprises travelling interstate for the purpose of businesses. 52 supra 49 at 283 53id at 285 54id at 283 55id at 287 56id at 288
55 | P a g e personal freedoms. . . . Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy.”57
In this light, the Court declared that anti-trust laws were for the benefit of all, including professional players. Any refusal or prevention or prohibition in the form of a contract against one’s right ‘to practice one’s calling’, such as the transfer of Flood to another club without any consultation, amounted to unreasonable restraint of trade.58
In Application of anti-trust rules in the U.S has taken a path that was different from that of EU; the reason being the difference in culture of organization of sports. While statutory and non-statutory exemptions are present, majorly, all sporting leagues in the U.S are covered under anti-trust laws because they qualify as trade and commerce.
57id at 292 58id at 288
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INDIA
India’s venture into competition law is fairly new as compared to EU and the USA. The Competition Act, 2002 came into existence as a replacement to the Monopolistic and Restrictive Trade Practices Act, 1969. The Act came as a response to the liberalization of the market and constantly increasing globalization. MRTP was too dogmatic and pragmatic in its approach to keep pace with the evolving jurisprudence and practice at the international level. Upon the submission of the Report by the High Level Committee on Competition Law and Policy, the Parliament enacted Competition Law, 2002. The Act seeks to achieve the following objectives, while keeping in mind the economic development of India, Prevents practices having adverse effects on competition in India, Promotes competition in the market, Protects the interests of consumers, Ensures freedom of trade to market players against one another.
In order to achieve these objectives, the Act has adopted three approaches. These are: 1. Prohibition of Anti-Competitive Agreements Section 3 of the Act has declared any agreement between persons or enterprises regarding production, supply, distribution, storage, acquisition or control of goods or provision of services, void if its causes or is likely to cause an appreciable adverse effect on competition in India. These Agreements could be horizontal i.e. between entities at the same level of production or supply, or vertical i.e. between entities at different level of production or supply chain. Practices like cartels, market allocation, bid rigging, refusal deal, resale price maintenance etc. fall foul of this Section. Similar to Article 101 of TFEU, this Section provides for exemption if the agreement satisfies the objective analysis under Section 19(3), thereby proving that there was no appreciable adverse impact on competition.
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2. Prohibition of Abuse of Dominant Position Section 4 of the Act prohibits abuse of dominant position by an enterprise or group. Dominance refers to a position of economic strength that allows an enterprise to act independently of its competitors, customers and consumers.1The Act has provided a non-exhaustive list of instances that may amount to abuse of dominant position, such as leveraging dominance from one market into another, limits or restricts production of goods or services or the market itself, adopting predatory pricing, imposition of discriminatory conditions of trade etc.
3. Merger Control Section 5 and Section 6 mandates an ex-ante inquiry into any combination that in the market if the combination exceeds the threshold limit prescribed in the Act. The current threshold is:2
FOR ENTERPRISES In India: Assets: more than 2000 INR crore. Turnover: more than 6000 INR crore.`
Outside India: Assets: USD 1 billion with at least more than 1000 INR crore in India. Turnover: USD 3 billion with at least more than 3000 INR crore in India.
FOR GROUPS: In India: Assets: more than 8000 INR crore. Turnover: more than 24000 INR crore
Outside India: Assets: USD 4 billion with at least more than 1000 INR crore in India. Turnover: USD 12 billion with at least more than 3000 INR crore in India.
1Belaire Owners’ Association vs. DLF Limited Case No. 19/2010¶ 12.45 2Notification S.O. 675(E), Ministry of Corporate Affairs, (4th March, 2016), http://www.cci.gov.in/sites/default/files/whats_newdocument/Revised%20thresholds.pdf?download=1
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This was brief overview of Competition Law in India. The Act is hardly a couple of decades old with the Competition Commission of India acting as the relevant authority. Till date a few complaints have reached the doorstep of the Competition Authority with respect to violation of competition law in private league sport in India. However, only two have been adjudicated till date. The following sections provide an account of these two cases.
4.1 SURINDER SINGH BARMI VS BOARD OF CRICKET CONTROL IN INDIA In 2010, the Competition Commission of India received a complaint from Surinder Singh Barni, an ardent cricket fan, that the BCCI’s Indian Premier League was organizing T-20 cricket in blatant contravention of the Competition Act, 2002.3 The allegations made by the informant were as follows: The League and potential team- franchise owners were indulging in bid-rigging as they communicated the amount of bid a particular teams to each other.The League administration (specifically the Chief) adopted practices that favoured‘near and dear ones’ during such bidding process; The bidding process for television rights, websites, sponsorship, catering services, transportation, event management etc. was conducted without following ‘any norms of fair tendering’; Since, there is no competitor to IPL in its relevant market, it was a dominant player and acted in complete disregard to competitive forces and foreclosed the market for any other competitor.4
The informant submitted that IPL’s presence in the economic sphere cannot be ignored and put outside the application of Competition law. The Director-General submitted its report upon investigation and made the following observations:
3Surinder Singh Barmi vs. Board for Control of Cricket in India MANU/CO/0006/2013; [2013]113CLA579(CCI) 4id at ¶ 1.7
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The alleged practices were of economic nature and ancillary to the organization of T-29 cricket tournament. and hence, fell under the ambit of Competition Law for being an enterprise.5 Further, the relevant market was determined as T-20 cricket tournament because it cannot be substituted with other formats of crickets i.e. Test cricket and ODIs or any other game. The geographic market was India. Therefore, BCCI-IPL was held to be in a monopoly dominant position within the meaning of the provisions of Section 4 of the Act.6 BCCI also precluded its players from playing for the rival ICL and also denied recognition to the same.7 The team franchise agreements were perpetual in nature, allowed no other team or franchise to bid for the same location. Also, the lowest bid for the team was kept as 50 million dollar. These amounted as creation of entry barriers and foreclosure of market. Further, the terms of such contract were unilaterally imposed upon the interested franchisees, having unfair and discriminatory terms. These franchisees had no other occasion for similar buying of teams as well, because IPL was the only tournament of its kind. This resulted in appreciable effect on competition within the meaning of Section 4(2) of the Act.8 MSM and WSG were granted media rights for an unreasonably long period of 10 years. The initial contract for media rights was within one year terminated without a plausible cause and again re-entered without allowing for subsequent bidding for the same. This amounted to abusive practices under Section 4(2).9 The process of granting associate sponsorship rights, web portalrights, transport, event management, umpiring etc. was not throughtendering. It was opaque andunfair in character. This again amounted to abuse of dominant position by imposing unfair or discriminatory conditions and not opening the market for eligible vendors.10
5id at ¶ 2.7-2.11 6id at ¶ 2.14-2.15 7id at ¶ 2.18 8id at ¶ 3.1-3.8 9id at ¶ 4.1-4.8 10id at ¶ 5
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The grant of exclusive rights for long period of time or without any time limit, such as media rights created entry barriers, foreclosed the market and denial of market access.11
The Commission concerned itself with the determination of the following questions in its order: 1. Whether BCCI is an enterprise for the purposes of the Competition Act? 2. Whether the actions of the BCCI associated with the organization ofIPL contravene any of the provisions of the Act? This can further be divided into: i. Defining the relevant market ii. Assessment of dominance of BCCI in the relevant market as defined iii. Analysis of conduct of BCCI for contravention of Section 4 of the Act.
The Commission acknowledged that major sports, worldwide, are part of a pyramid structure, i.e. ‘a single sport single national sport association per sport and Member State, which operates underthe umbrella of a single continental/ national federation and a single worldwide federation’.12This pyramid structure is considered a prerequisite for regulation o the sport, setting up rules, code of conduct, maintaining the integrity of the game etc.13Cricket is also governed through this pyramid structure with International Cricket Control at the helm and BCCI being a full time member. BCCI is thus recognized as a ‘custodian of cricket’ in India and is responsible for framing rules, organizing events, selection of team etc.14Additionally, the object clause of the Memorandum of Association of BCCI revealed that its purpose was to regulate cricket in India as it read: ‘Clause 2(a): To control the game of cricket in India and give its decision on all matters including women's cricket which may be referred to it by any member association in India.
11Ibid 12id at ¶ 7.1 13id at ¶ 7.2 14id at ¶ 7.1
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Clause 2(d): To arrange, control, regulate and finance visits of an Indian Cricket Team to tour countries that are Members of ICC or elsewhere in conjunction with the bodies governing cricket in the countries to be visited. Clause 2(s): To select teams to represent India in Test Matches, One Day Internationals and Twenty/20 matches played in India or abroad, and to select such other teams as the Board may decide from time to time. Clause 2(v): To appoint India's representative or representatives on the ICC and other Conferences, Seminars, connected with the game of cricket.15
Furthermore, being a full time member of ICC, BCCI had the power to permit or deny organization of cricketing event in India by virtue of Section 32 of the ICC Regulations. These factors granted the status of ‘de-facto regulator’ to BCCI. This inference of the Commission was supported by the affidavit filed by the Government of India stating that BCCI was granted de-facto recognition as the apex body of cricket control in India.16However, the role of BCCI was not merely limited to the sporting aspect of the game. The Commission rightly identified that BCCI also performed revenue generating functions, such as grant of media rights and sale of tickets. The commission relied upon the MOTOE decision of the ECJ and declared that: ‘Thus, it is conclusive that all Sports Associations are to be regarded as an enterprise in so far as their entrepreneurial conduct is concerned and treated at par with other business establishments.’17
While indentifying relevant product market, the Commission relied upon the DG’s analysis and deemed Private professional league T-20 cricket as relevant product market. The commission differentiated it from First class/ International cricket on the ground that: First class/ international cricket is played by teams of the Indian states / Nations respectively, whereas IPL is a private league consisting of private clubs;
15id at ¶ 7.14 16id at ¶ 7.23 17id at ¶ 7.28
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Secondly, revenue generation is incidental to First class/ international cricket whereas revenue generation is the prime motive of Private Professional Leagues.18
Private Professional Leagues commercialize cricketing by mixing the ingredients of entertainment and media exposure which is essentially different from International cricket.19
The Commission was of the opinion that the source of dominance of BCCI stemmed from its status of being a de-facto monopolistic regulator which was extended even to the newly formed market of private league cricket in India, i.e. the relevant market. It was observed that apart from undertaking roles that were essential for the organization of sport, BCCI was also performing other economic functions which attracted the anti-trust rules. In the words of the Commissions: ‘..There are concerns that the sports federations may go beyond what is required for the proper organization of sport. With a phenomenal increase in commercial dimensions of the sport, there is a great incentive for Sports Federations to use their regulatory powers for protecting their own commercial interests. The situation where the regulator is also the economic beneficiary leading to role overlap is definitely a competition concern.’20
The Indian Premier League had the prime objective of generation of revenue apart from working towards development of cricket. Any other such league had to seek approval of BCCI as per ICC regulations.21 Therefore, BCCI had the power to disapprove any such leagues that came up in competition against IPL. The commission notes one such instance where a rival league, ie. Indian Cricket League (ICL) failed miserably due to lack of infrastructure support, denial of approval by ICC and BCCI etc.22 Hence, ‘owing to regulatory role, monopoly status, control over infrastructure, control overplayers, ability to control entry of other leagues’, BCCI was undoubtedly enjoying dominant
18id at ¶ 7.4, 7.38 19id at ¶ 7.5, 7.38 20id at ¶ 7.40 21id at ¶ 7.43 22id at ¶ 7.50
63 | P a g e status.23Further, one of the terms of the contract with WSG for media rights warranted that the BCCI shall not organize, approve, sanction or recognize any other league of the same nature during the rights period granted to WSG.24
For these reasons, BCCI was held as abusing its dominant behavior. It had enormous economic strength and foreclosed the market by declaring that it would deny approval to potential competitors. It undermined its authority as custodian of cricket and was fined a whooping sum of Rs. 52.24 crores.25
Interestingly, in appeal before the Competition Appellate Tribunal, the order was set aside and the case was remitted back to the Commission.26 The Tribunal found the findings of the Commission ‘legally unsustainable’ ‘because the information downloaded from the net and similar other material do not have any evidentiary value and, in any case, the same could not have been relied upon by the Commission without giving an effective opportunity to the appellant to controvert the same.’27
23id at ¶ 7.51 24id at ¶ 7.55 25id at ¶ 7.59 26 BCCI vs CCI Appeal No.17 of 2013 With I.A. No.26 of 2013 27 BCCI vs CCI Appeal No.17 of 2013 With I.A. No.26 of 2013at ¶ 37
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4.2 DHANRAJ PILLY & OTHERS VS M/S HOCKEY INDIA Hockey India is affiliated to Indian Olympic Association (IOA), Asian Hockey Federation (AHF) and International Hockey Federation (FIH), and is the National Sports Federation for hockey in India. The other National Sports Federation for hockey in India is Indian Hockey Federation (IHF) which is affiliated to IOA but not FIH. In 2010, IHF along with Nimbus Sports founded World Series Hockey (WSH). This League was supposed to have eight city based teams with both national and foreign players. While this was still in the pipeline, HI adopted regulations with respect to sanctioned and unsanctioned events and modified its Code of Conduct Agreement (CoC) with players. These new regulations and CoC provided for penalty such as disqualification from national hockey team if players participated in any unsanctioned event. it was further announced by HI and FIH that they would also launch their won League, similar to WSH. Against this background, in 2011, Dhanraj Pillay along with other eminent hockey players approached the Commission alleging Hockey India of putting unreasonable restrictions on hockey players in India to participate in ‘unsanctioned’ private professional leagues.28
It was alleged that: HI denied market access to competitors in contravention of Section 4(2)(c)29 of the Competition Act by promoting its own league and preventing the players from playing for the rival league; HI violated Section 4(2)(e)30 by leveraging its dominance in market for conducting international events in India to conducting of domestic league; The CoC Agreement amounted to an exclusive supply agreement that imposed restrictive conditions on competition in the market, hence void under Section 3(1) read with Section 3(4) of the Act.31
28 MANU/CO/0033/2013 29 Section 4(2)(c) reads as, “There shall be an abuse of dominant position under sub-section (1), if an enterprise,—…. (c) indulges in practice or practices resulting in denial of market access..” 30 Section 4(2)(e) reads as, “There shall be an abuse of dominant position under sub-section (1), if an enterprise,—…. uses its dominant position in one relevant market to enter into, or protect, other relevant market. 31 Supra 28 at Para 3.5.1
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The Commission raised caution over duality of roles enjoyed by designated sports associations. When generation of revenue assumes becomes a practical reality and necessity in spite of being a secondary objective, the possibility of anti-competitive practices is enhanced because the ‘power to sanction’ a (rival) event rests with the entity responsible for organization itself.32 By acknowledging the ‘specificities of sport’, the Commission examined the potential competition concern with the structure of sport organization. Hockey, like other sports, also has the pyramid structure with IOC at the top, followed by FIH then AHF and then HI i.e. the National Association.33 This structure is indispensible to organization of sports across the globe because it ensures uniformity of rules, international cooperation and maintaining qualities that are essential to organization of sport, thereby enhancing efficiency; however, it may cause potential competition concerns.34 The essence of sport associations lies in autonomy of governance and organized solidarity amongst stake-holders which makes it differentiated from other commercial activities. However, this must not be in isolation from competition rules. The Commission evoked the inherent-proportionality test35 and observed: ‘..The Commission affirms the right of self-regulation of sports bodies with regard to issues, which are purely sporting, such as selection of teams, formulation of rules of the sport etc. or, even the issues which have economic aspects such as grant of various rights related to sports events or organization of leagues etc. However, given the inherent overlap of regulation and economic gains, outright grant of immunity to the rules and method of application of the rules by the federations is not possible.’36
There could be no blanket immunity to ‘pure sporting rules’ and each case had to be judged on its own merit and proportionality principles.37The Commission further relied upon international jurisprudence and BCCI to undertake a functional analysis of HI to determine its jurisdiction over it. The Commission observed that neither the non-profit
32 id at ¶ 9-9.1 33id at ¶ 9.4.2 34id at ¶ 9.4.2-9.4.3 35id at ¶ 9.5.5 36id at ¶ 9.5.3 37id at ¶9.5..5
66 | P a g e character nor sports-administrative capacity of HI can shield it from application of competition laws due to the economic nature of functions performed by it.38
DETERMINATION OF RELEVANT MARKET& ABUSE OF DOMINANT POSITION The Commission made two important observations for determination of relevant markets in sports case. These are: Governing activities are never considered to be a part of market definition. They are, however, source of dominance. While determining national or international event, reliance must be placed upon the relevant definitions and bye-laws of the organization.39 Identification of consumer and subsequent substitutability from this consumer’s perspective on the parameters of characteristics, price and intended use should form the basis of determination of relevant market.40
The present case related to two distinct issues, hence the Commission deemed it necessary to determine relevant market for the issues separately and then analyze if there had been any abuse.
1. Foreclosure of market for hockey events to rival leagues One of the essential attribute of sport is its loyal fan following and generally, it is not substitutable by any other form of entertainment. Furthermore, under ordinary circumstances, from the point of view of the consumer in this case i.e. the viewer/spectator, a hockey match cannot be substitutable by any other sport as well. A further distinction can be made amongst international hockey matches, regional hockey matches and private league matches41In the light of these factors, the Commission
38id at ¶ 9.7.1-9.7.6 39id at ¶ 9.8.1 40id at ¶ 9.8.6 41id at ¶ 9.8.10-9.8.13
67 | P a g e deemed relevant geographic market to be ‘the market for organization of private professional hockey leagues’ and the relevant geographic market was India.42
The commission made the observation that at time of the submissions, HI was not even a part of the relevant market to abuse its dominant position by foreclosing the market to rival leagues. The relevant market in this case, as mentioned earlier, is the market for organization of private professional hockey leagues in India. HI’s private hockey league was launched much later in 2013.43 However, irrespective, HI exercised a dominant position as against its rival due to its vast reservoir of regulatory powers. HI had the right to approve/sanction organization of hockey events in India. Hence, any private league was also under an obligation to seek approval to organize any private hockey league in India. This power to grant NOCs to organizers as well as players through CoC agreements gave immense power to HI in the relevant market.44Apart from the BCCI decision, the Commission relied heavily on MOTOE’s case and quoted the following relevant rationale behind its decision: ‘...a system of undistorted competition, such as that provided for by the treaty, can be guaranteed only if equality of opportunity is secured between the various economic operators. To entrust a legal person such as ELPA, the National Association for Motorcycling in Greece, which itself organizes and commercially exploits motorcycling events, the task of giving the competent administration its consent to applications for authorization to organize such events, is tantamount de facto to conferring upon it the power to designate the persons authorized to organize those events and to set the conditions in which those events are organized, thereby placing that entity at an obvious advantage over its competitors. Such a right may therefore lead the undertaking which possesses it to deny other operators access to the relevant market...’45
42id at ¶ 9.8.15-9.8.17 43id at ¶ 9.9.1 44id at ¶ 9.9.1-9.9.3 45id at ¶ 9.9.4
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2. Restrictions on players’ movement Hockey India in the capacity of an organizer, hires the services of players in exchange of monetary considerations such as match fees. It also sets terms of the contract and code of conduct for the parties.Therefore, for the determination of the issue with respect to restrictions of movement of players, the relevant market would be the market for hiring services of professional hockey players in India. HI is a monopoly buyer in this market. No other association for hockey or otherwise exercised any controlled any countervailing power against HI in the market for services of hockey players. Therefore, HI could act independently of the players but not vice versa. The Commission deemed HI dominant in this relevant market as well.
Once it was established that HI was a dominant entity in both the relevant markets, the Commission analyzed the conduct of HI to determine whether it amounted to abuse.`
3. Regulations relating to sanctioned and unsanctioned events The commission noted that these regulations had an inherent purpose: To ensure primacy of national representative events or international events, To deter free riding on the investments by national associations, To maintain an organized and uncomplicated calendar, To preserve the integrity of the sport’.46
The Commission further analyzed the regulations in the light of the proportionality test. It was observed that the neither was HI the sanctioning authority to grant sanctioned status to it, nor was any application made by WSH organizers for the same.47 Further, the Commission took notice of the fact that the rules applied retrospectively, thereby making WSH out of it ambit.48 Most importantly, HI was able to justify that the non-selection of all forty-eight players in the national squad was on the ground that they did not attend the mandatory training camp, and not due to any other
46id at ¶ 9.11.1 47id at ¶ 9.11.4-9.11.5 48id at ¶ 9.11.6
69 | P a g e vindictive reason.49Due to these reasons the Commission found no validity in the allegation with respect to contravention of Section 4(2)(e).
4. Conditions contained in CoC Agreement The agreement between HI and the players are equivalent to a vertical agreement under Section 3(4) of the Competition Act of 2002 because they belonged to different levels of a production/supply chain. Hence, it would stand foul if the dominant entity had intended foreclosure, as alleged and had no possible efficiency justifications.50
The Commission studied the terms of CoC agreement in detail against the proportionality principle. The CoC did not mandate non-participation in any other event apart from unsanctioned events.51 This, however, did not amount to a blanket restrictive over any particular type of event but only over events that reduced the efficiency of the game as its effect.52 Furthermore, the CoC had legitimate clauses with respect to the attributes that are requisite to any sport, such as anti-doping rules, prohibition against verbal/physical abuse etc.53 The Commission opined that per se, these rules were not anti- competitive in any manner because they only imposed conditions inherent and proportionate to the objective of HI. However, an alarm could be raised if there was any disparity in its actual application. 54
Hence, HI was absolved of all the allegations.
49id at ¶ 9.11.7 50id at ¶ 9.12.3 51id at ¶ 9.12.5 52Ibid 53Ibid 54id at ¶ 9.12.6
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4.3 OTHER CASES A number of cases pertaining to violation of competition law in sports are sub- judice before the commission. The Delhi High Court, in Hemant Sharma &Ors. vs Union of India,55 directed the Commission to enquire into the allegations made by the Petitioner with respect to violation of Section 3 & Section 4 of the Competition Act. The Petitioner had approached the High Court under its writ jurisdiction to prevent All India Chess Federation from banning or threatening to ban chess players in India from associating themselves with a rival association, Chess Association of India.
The Commission has issued an order under Section 26(1) of the Act directing the Director-General to conduct an investigation in In re: Department of Sports & Athletics Federation of India.56A complaint was made against the Athletics Federation of India for indulging in anti-competitive practice under Section 4 by adopting the decision to “take action against the stateunits/ officials/ athletes and individuals who encourage theunauthorized marathons and become part of such marathons whereAFI permission was not taken and it was made mandatory to seek permission of AFI before organizing any road race/ marathon onnational and international level.”57 The Commission formed the prima facie opinion that AFI was an enterprise for the purpose of competition law58 and had imposed discriminatory conditions by adopting the said decision, which would prevent entry of new player in the market.59
55 W.P.(C) 5770/2011 56 Ref. Case No. 01 of 2015 57id at ¶ 3 58id at ¶ 6 59id at ¶ 11
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4.4 LEGAL TRANSPLANT As has been mentioned before, Indian Competition Act is a fairly new as compared to its counter-parts, EU and US. Due to historical reasons, a majority of Indian laws are inspired from England. Cases from United States have also found favour with the Indian Courts. A close reading of Indian Competition Act, 2002 would reveal the heavy reliance on EU community competition law provisions. Section 3 of the Competition Act is identical to Article 101 of TFEU. On the face reading of the provisions simultaneously would not reveal much similarity. However, in principle and practice both the provisions are much alike. While Article 101 declare agreements that have as their object or effect the prevention, restriction or distortion of competition within the internal market, Section 3 targets appreciable adverse effect on competition in India. Similar to Article 101(3), Section 19(3) of the Competition Act provides a leeway to the enterprises from application of Section 3. India has taken advantage of being a late- mover. It was provided for a list of six conditions that would determine the existence of ‘appreciable adverse effect of competition.’ Comparable to Article 101(3), the six conditions can be differentiated as being three pro-competitive effects and others being anti-competitive effects. Similarly, Section 4 of the Competition Act is synonymous to Article 102 of TFEU and prohibits abuse of dominant position. A bare reading of the two provisions would suggest that there can be no reservations about the reliance on Article 102 while drafting Section 4 of the Competition Act.
The US anti-trust law does not resonate so strongly with respect to the bare text of the Competition Act. However, in principle and practice, the three legal regimes are exceedingly similar. The Supreme Court had the opportunity to adjudicate upon the status and role of Competition Commission of India in Competition Commission of India vs SAIL&Anr.60The Supreme Court has observed that essentially there are certain objectives of competition law that are common to all jurisdictions in spite of constant evolution of the law. These objectives are the promotion of productive, allocative and dynamic efficiencies. The Court cited and discussed competition laws from United Kingdom, United States and Australia to elaborate upon the need and objective of competition law
60 (2010) 10 SCC 744
72 | P a g e in the economy. The Court itself has acknowledged that the Indian law is contemporary to these laws. However, the provisions of the Indian Acts are not pari- materia to the foreign laws. They are similar in enforcement and intent.
The Competition Commission of India has, time and again, relied upon decisions from EUor USA for determination of issues at hand. Some of the landmark cases decided by the CCI had also been analyzed at the touchstone of EU or US cases. This reliance is clear in case of application of competition law in private professional sports. EU case laws had a serious impact on the only two cases decided by the CCI in this arena, BCCI and HI. In the BCCI judgement, the Commission relied upon the MOTOE decision by ECJ to declare BCCI as an enterprise. The influence of Meca- Medina decision has apparent in HI when the Commission applied the proportionality test to the conduct of HI and thereby absolving it of all the allegations. American case laws have till date not found a place in determination of anti-competitive conduct in sports. The reason lies in the structure of sporting leagues in India and their stark difference from the ones in the United States. The structure of sport organizations in EU as well as India is that of a pyramid, as explained in earlier sections.Most sports league in India and EU function under this pyramid structure of authority that results in natural monopolies in the relevant market. The second implication of this pyramid structure is that the clubs are subordinate to the authority above it and function as per the agreed terms and conditions because the flow of power is from top to bottom, establishing a hierarchy. The organization of sporting leagues in USA lacks this structure of hierarchy. Sports Leagues in America comprise of ‘franchises’ having territorial identity. They share a close relationship with each other since they play in the name of the League which is a separate legal entity from these franchises. Further, there may be more than one league in a particular sport which allows for mergers and expansion of the league. For these reasons, the sporting organization in India is much more similar to EU than United States.
The Indian sporting culture and organization and its similarity with EU warrants the application of decision by the EU competition authorities to competition proceedings before the Indian competition authorities.
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CONCLUSION
Competition Law or anti-trust law or anti-monopoly law seeks to control market behavior of firms or players by prohibiting anti-competitive activities, thereby protecting consumer welfare. The neo-classical model of competition law claims that the goods and services in a free & competitive market are so distributed that maximizes the social welfare. This social welfare is protected by ensuring allocative, productive and dynamic efficiency while minimizing deadweight loss. Lex Julia de Annona of Rome, which imposed fine of anybody who restricted the movement of cargo ships in the seas, dates back to 50 B.C and is considered to be one of the oldest competition laws. The birth of modern competition law is said to have happened with the enactment of The Act for the Prevention and Suppression of Combinations formed in restraint of Trade, 1889 in Canada and The Sherman Act, 1890 is the United States of America. Since then, the Competition Law and Policy has come a long way and has attained a near global status. The relevance of competition law can be gauged from the theory of various scholars that a competitive market is the sine qua non to development. In the past 35 years, more than 110 legal systems have adopted some or the other form of competition law. More and more developing nations have been adopting competition law, such as India. The rise of competition law in the 20th century can be attributed to the increased international negotiations with respect to international trade. Both the regimes work towards establishment of a level playing field for all the players by promoting an open market, fair and equal business opportunities, promotion of efficiency and maximization of consumer welfare.1 However, competition law and policy developed as a separate institution due to the fact that international trade (WTO) was not sufficient to regulate and prevent private restraint of international trade. As was the observation in the Photographic Film2 case decided by the DisputeSettlement Body in 1998, “in the long run, therefore, the WTOsystem will not be complete without the inclusion of competition policywithin its framework in one form or another.” The Declaration adopted by the Ministerial Conference held in Doha,Qatar in November 2001 has further recognized “the
1 WTO, Working Group on the Interaction between Trade and Competition Policy, Report to the General Council, WT/WCTCP/1 (Nov. 28, 1997) 2 Japan—Measures Affecting Consumer Photographic Film and Paper, Report of the Panel, WT/DS44/R (Apr. 22, 1998)
74 | P a g e case for a multilateral framework to enhance thecontribution of competition policy to international trade anddevelopment and the needs of developing and least- developedcountries for enhanced support for technical assistance and capacitybuilding in this area.” Therefore, as international trade increased, so did the external pressure by supra national entities to adopt and enforce domestic competition law to deal with anti- competitive practices by private parties. While some of the developing nations have adopted competition law due to internal market needs, most developing countries eitheradopted competition rules in response to recommendations of international institutions orbecause of various obliging treaties they signed.3Competition law, at a basic level, pertains to the market as we understand traditionally. This means that market represents a platform where sellers and buyers interact for sale of goods or services. We live in complex times. The application of competition law has spread to arenas that do not fall in the simpler understanding of the term market, for example, media or sports. EU and USA had witnessed with encroachment by competition law more than forty years ago. The competition law in these ‘developed’ nations is older than fifty years on an average. Their institutions and society has reached the stage of maturity with respect to application of competition rules to both conventional as well as unconventional markets because these rules have been absorbed by them into their mainstream conduct.
Problems arise in case of developing or under-developed nations. The developing countries simply adopt the competition law and policy of another established legal system. This process undermines the local market conditions and the demands that are indigenous to that developing nation. The one-size-fits-all approach overlooks the domestic need by refusing to customize the law as per one’s own unique demand. Nicholson4 observed that the scope of competition law in Australia, Barbados, Belarus, Malawi, and the US was at the same level. Also, competition law in Indonesia, Mexico, Spain, Ukraine, UK, and Uzbekistan was essentially the same. Theoretically, this would mean that Belarus, Barbados and Malawi are at the same level of economic development,
3 D. I.Waked, Competition Law In The Developing World: The Why And How Of Adoption And Its Implications For International Competition Law; (May 28, 2017, 7.50 pm), http://www.icc.qmul.ac.uk/docs/gar2008/144726.pdf, 4 M Nicholson, & Michael W., Quantifying Antitrust Regimes, No. 267, TC Bureau of Economics Working Papers (2004), https://ssrn.com/abstract=531124
75 | P a g e sharing similar market distortions and equal capacity to address such distortions. In reality, the case is not so. However, this is not the case. The bifurcation between developed and developing countries lies in the fact that they are at different level of economic or market strength, Gross National Incomes and other indicators of development. It is a no-brainer that developing countries cannot be compared to developed ones in terms of infrastructure, literacy, legal awareness amongst masses and regulation of markets. Also, the developing countries lack the sophisticated institutions and enforcement agencies that are present at the disposal of authorities in developed economies.
Prof. Michal Gal has referred to these issues in her writing on ‘ecology of anti- trust’.5 She developed her theory on the analogy that like ecology determines the ability of a flower to bloom, certain conditions pre determine the success of competition law in a nation. A flower needs soil, sun, water and pesticides to bloom to its full potential. Similarly, competition law adoption and enforcement needs its own ecology. Here, soil is the ‘competition culture’ in a particular society. If the society is hostile to the adoption of pro-competitive rules and prohibition of anti-competitive practices, no authority can effectively enforce these imported rules. This places an additional responsibility on the government to nurture public faith in competitive law regime. Secondly, in the form of pesticides, political motives and gains must be ceased. No person must be allowed to tamper with the functioning of competition regulatory framework. Thirdly, and most importantly, institutional and organizational conditions act as sun and water. They ensure the credibility and accuracy of competition law regime. This can only be achieved through increased financial autonomy and capacity building. It further requires support from not only the government but also market players.
The case with India does not seem so different. The Act is not even a decade old because Section 3 and Section 4 were notified only in 2009. The markets are unaware of its existence and implications of any violation as there is no competition advocacy. The
5 M. S Gal, The Ecology Of Antitrust: Preconditions For Competition Law Enforcement In Developing Countries. Competition, Competitiveness And Development, 20-38, (2004) , https://ssrn.com/abstract=665181
76 | P a g e application of competition law into private professional leagues or sports is a much more complex development and given the state of competition-literacy in India, any awareness amongst stake-holders with regards can only be deemed far-fetched. BCCI case is the poster-child of how India still lacks this ecology of anti-trust. As discussed previously, the Director General leveled a wide range of allegations against BCCI while it was organizing IPL. The allegations ranged from bid-rigging to foreclosure of market due to sale of media rights for ten years, as well as abuse of dominant position. The Commission did not specifically address all the allegations made by the Director-General (D-G)and confined itself, vaguely, to abuse of dominant position by BCCI. The lack of institutional support and resources was exposed when the case went for appeal under Competition Appellate Tribunal. The case was remanded back to the Commission because the data on which the D-G as well as the Commission had relied upon to reach the conclusion did not have any credibility. The data which was used to prove dominance of BCCI was randomly available on the internet and picked up from there. The truth of the matter is that India does not have the culture of market research. There was no official and authentic data that could be cited. Furthermore, the case depicts the absence of competition law concerns while organizing an event as big as IPL. The contracts for media rights were grated for a period of ten years which is an unreasonably long time as per UEFA decision. To add to it, the contract has an express clause that BCCI would not start any rival league to IPL during the term of the contract.
Legal transplant from EU or US in the interface between sports and competition law in India is theoretically probable. The regimes function on similar principles and objectives. However, practically, India needs to first work on establishing the groundwork for successful transplant. Imposition of a new law on unaware and unsuspecting entities only leads to chaos and more uncertainty, especially when one does not have the institutions as well as resources that justify its application.
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BIBLIOGRAPHY
TREATIES &STATUTES 1. Competition Act, 2002 (India) 2. Sherman Act, 1890 (United States of America) 3. Sports Broadcasting Act, 1961 (United States of America) 4. Treaty on the Functioning of European Union, 2007
CASES 1. American Football League v. National Football League 323 F.2d 124 (4th Cir. 1963) 2. American Needle, Inc. v. New Orleans La. Saints, 496 F. Supp. 2d 941, 943 (2007) 3. American Needle, Inc. V. National Football League ET AL 560 U.S. 183 (2010) 4. BCCI vs CCI Appeal No.17 of 2013 With I.A. No.26 of 2013 5. Belaire Owners’ Association vs. DLF Limited Case No. 19/2010 6. Chicago Board of Trade v. United State246 U.S. 231, 38 S. Ct. 242, 244, 62 L. Ed. 683 7. Chicago Prof ‘l Sports Ltd. Partnership v. NBA (Bulls III), 808 F. Supp. 646, 650 (N.D. Ill. 1992) 8. ChristelleDeliège v. Ligue ECR 2000 I-2549 9. Copperweld Corp. v. In-dependence Tube Corp 467 U.S. 752 (1984) 10. David Meca-Medina & Igor Majcen vs Commission C-519/04P, (2006) ECR I- 6991 11. DhanrajPilly& Others Vs M/S Hockey India 2013CompLR543(CCI) 12. Distribution of package tours during the 1990 World Cup OJ [1992] L 326/31, [1994] 5 CMLR 253 13. Donà vs. Mantero CASE 13/76, (1976) ECR 1333 14. Federal Baseball Club Of Baltimore Vs. National League 259 U.S. 200 (1922) 15. Flood vs. Kuhn 407 U.S. 258 (1972)
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16. Hemant Sharma &Ors. vs Union of India W.P.(C) 5770/2011 17. Höfner and Elser v Macrotron GmbH Case C- 41/90, [1991] ECR I- 1979 18. In re: Department of Sports & Athletics Federation of India Ref. Case No. 01 of 2015 19. Italy v Sacchi [1974] ECR 409 20. Japan—Measures Affecting Consumer Photographic Film and Paper, Report of the Panel, WT/DS44/R (Apr. 22, 1998) 21. Joint selling of the commercial rights of the UEFA Champions League COMP/C.2-37.398 (2003/778/EC) 22. Law v. NCAA 134 F.3d 1010 (10th Cir. 1998) 23. Ministerodell'Economia e delleFinanze v Cassa di Risparmio di Firenze SpA, Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San MiniatoSpA, C-222/04 [2006] ECR I-289 24. MotosykletistikiOmospondiaEllados NPID (MOTOE) v. EllinikoDimosio Case C-49/07, [2008]ECR I-4863 25. Pavel Pavlov and Others v StichtingPensioenfondsMedischeSpecialisten Cases C- 180/98, [2000] ECR I- 6451 26. Piau vs Commission Case T-193/02, (2006) ECR I-37 27. Scottish Football v Commission Case T-46/92, [1994] ECR II-1039 28. SELEX SistemiIntegratiSpA v Commission Case T- 155/04 [2006] ECR II- 4797, [2007] 4 CMLR 372 29. Surinder Singh Barmi Vs Board Of Cricket Control In India [2013]113CLA579(CCI) 30. Toolson vs New York Yankees 346 U.S. 356 (1953) 31. Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman Case C-415/93 [1995] ECR I-4921 32. United States v. International Boxing Club, 348 U. S. 236 (1955) 33. United States vs Sealy Inc. 388 U.S. 350, 352-356 34. United States vs. National Football League, et al 196 F. Supp. 445 (1961) 35. United States vs. National Football League116 F. Supp. 319 (E.D. Pa. 1953) 36. Van Landewyck v Commission [1980] ECR 3125
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37. Walrave vs Union CyclisteInternationale Case 36/74, [1974] ECR 1417 38. Wood v. National Basketball Association 809 F.2d. 954 (2d. Cir. 1987) 39. Wouters v AlgemeneRaad van de NederlandscheOrde van Advocaten Case C- 309/99 [2002] ECR I- 1577, [2002] 4 CMLR 913
BOOKS 1. M. Dabbah, EC & UK Competition Law: Cases & Commentaries at 577 (1st ed. 2004) 2. R. Whish & D. Bailey, Competition Law at 84-85 (7th ed. 2012) 3. B. Van Rompuy, Economic Efficiency: The Sole Concern of Modern Antitrust Policy? Non efficiency Considerations within Article 101 TFEU, Volume 51 at 283 (Kluwer Law International; 2012)
ARTICLES& WORKING PAPERS 1. Blackshaw, EU Competition Law and Sport, 8 Bus. L. Int'l 107 (2007) 2. D. I.Waked, Competition Law In The Developing World: The Why And How Of Adoption And Its Implications For International Competition Law 3. E. KEALY, It's Just Not Cricket: EU Competition Law And Its Application To Sporting Rules, 2 King's Student L. Rev. 87 (2010) 4. E. Szyszczak, Competition and Sport 32(1) EL Rev (2007) 105 5. J. Frey & D.S. Eitzen, Sport and Society, Vol. 17 ARS, 503 (1991) 6. Luschen, Sociology of Sport: Development, Present State, and Prospects, Vol. 6 , ARS, 315 (1980) 7. M Nicholson, & Michael W., Quantifying Antitrust Regimes, No. 267, TC Bureau of Economics Working Papers (2004) 8. M. E. Stucke& A. P. Grunes, Why More Antitrust Immunity for the Media Is a Bad Idea, 105 NW. U. L. Rev. Colloquy 115 (2010) 9. M. J. Mitten & A. Hernandez , The Sports Broadcasting Act of 1961: A Comparative Analysis ofits Effects on Competitive Balance in the NFL and NCAA Division I FBS Football, Ohio Northern University L. Rev., vol 39 , 745 (2013)
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10. M. S Gal, The Ecology Of Antitrust: Preconditions For Competition Law Enforcement In Developing Countries. Competition, Competitiveness And Development (2004) 11. M.T Francis, The Sports Broadcasting Act: Is an Update Needed?, Paper 273, Law School Student Scholarship, (2013). 12. Oliver Budzinski, The Institutional Framework for Doing Sports Business:Principles of EU Competition Policy in Sports Markets, Working Paper Series, Paper No. 11-03, North American Association of Sport Economists (2011) 13. P.I. Colomo, The Application Of EC Treaty Rules To Sport: The Approach Of European Court Of First Instance In Meca Medina And Piau Cases, 3 ESLJ 1 (2005) 14. Roundtable On Competition And Sports, Directorate For Financial And Enterprise Affairs, Competition Committee, DAF/COMP/WD(2010)70 15. S. A. Riess, The New Sport History, Vol. 18, No. 3, R.A.H., 311 (1990) 16. S. Weatherill, Anti-doping Revisited: The Demise of the Rule of ‘Purely Sporting Interest’? ECL Rev. (2006) 645–657
INTERNET SOURCES- NEWSPAPER, MAGZINES 1. Annual Review of Football Finance 2016, Deloitte https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual- review-of-football-finance.html 2. Bhattacharyya, Premier Badminton League: Revenue set to soar 75% to Rs 35 cr, Financial Express http://www.financialexpress.com/india-news/premier-badminton-league-revenue- expected-to-go-up-75-to-r35-crore/507556/ 3. D.Heitner, Sports Industry To Reach $73.5 Billion By 2019, Forbes https://www.forbes.com/sites/darrenheitner/2015/10/19/sports-industry-to-reach- 73-5-billion-by-2019/#7b1eb5c1b4b9 4. Early History of Leisure and Recreation, Jones & Bartlett Learning http://www.jblearning.com/samples/0763749591/49591_ch03_mclean.pdf 5. IPL 2015 contributed Rs. 11.5 bn to GDP: BCCI, The Hindu
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http://www.thehindu.com/sport/cricket/2015-indian-premier-league-ipl- contributed-rs115-billion-182-million-to-indias-gross-domestic-product-gdp-says- bcci/article7823334.ece 6. Laghate, IPL is a money-spinner as it amasses Rs 2,500 crore in its ninth season, The Economic Times http://economictimes.indiatimes.com/industry/media/entertainment/media/ipl-is- a-money-spinner-as-it-amasses-rs-2500-crore-in-its-ninth- season/articleshow/52720049.cms 7. T. Dutt, Hockey India rings in the riches, The Times of India http://timesofindia.indiatimes.com/sports/hockey/top-stories/Hockey-India-rings- in-the-riches/articleshow/46941479.cms 8. The World’s Highest Paid Athletes, Forbes https://www.forbes.com/athletes/#70cbc29755ae 9. U. Malvania, IPL ad revenue to touch Rs 1,100 crore in 2016, Business Standard http://www.business-standard.com/article/companies/ipl-ad-revenue-to-touch-rs- 1-100-crore-in-2016-116030901029_1.html
OFFICIAL PUBLICATIONS 1. Helsinki Report on Sport: the Commission favours a new approach, IP/99/918, European Commission 2. P.Kienapfel& A. Stein, The Application Of Articles 81 And 82 EC In The Sport Sector, European Commission.http://ec.europa.eu/competition/publications/cpn/2007_3_6.pdf. 3. Staff Working Document on ‘The EU and Sport: Background and Context’, European Commission, SEC(2007) 4. The Helsinki Report on Sport, (10 December 1999) , COM(1999) 644 5. White Paper on Sport, European Commission, COM(2007)391 (final) 6. WTO, Working Group on the Interaction between Trade and Competition Policy, Report to the General Council, WT/WCTCP/1 (Nov. 28, 1997)
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