Comparative Analysis of the Bcci Case and the Hockey India Case
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ISSN 2455-4782 APPLICATION OF COMPETITION LAW IN SPORTS: COMPARATIVE ANALYSIS OF THE BCCI CASE AND THE HOCKEY INDIA CASE Authored by: Urshila Pandit* * 3rd Year BA LLB Student, School of Law, Christ University Bangalore ABSTRACT- Lord Acton once stated: “power corrupts and absolute power corrupts absolutely”. This statement almost undoubtedly reflects the status of national sports regulating bodies such as the BCCI, Hockey India and All India Chess Federation. The pyramidal structure of sports governance has rendered such regulatory authorities monopolies as well as monopsony buyers. With the drastic increase in revenue and profits that was generated from sporting events it was soon realised that these regulatory bodies were bound to abuse their power. Realization dawned that these authorities also had inherent commercial interests in the sport and often acted in furtherance of this thereby undermining competition. However in India, it is only recently that Courts that specifically adjudicate on anti-trust matters have started scrutinizing and penalizing sporting authorities for their anti-competitive behavior especially an abuse of dominance by regulatory bodies. Being a nascent subject it is only natural that conflicts and contradictions exist in the judgements of Courts thus giving rise to ambiguity in this sphere. The BCCI case and the Hockey India case are proof of this. Despite the fact that the facts and issues of both of these cases were almost identical the Competition Commission of India arrived at conflicting decisions. In light of the above case laws the paper seeks to comparatively analyse the decision of the CCI in the two cases. This paper will mainly focus on examining and comparing the reasoning of the CCI in both the cases. In addition to this it will also deal with the shortcomings of the decision in the Hockey India case. Key-words: Competition law, BCCI, Hockey India, abuse of dominance, anti-competitive agreements. 263 | P a g e JOURNAL ON CONTEMPORARY ISSUES OF LAW [JCIL] VOLUME 4 ISSUE 9 ISSN 2455-4782 INTRODUCTION There seems to be consensus around the world that most professional sports run on monopolistic lines1 and this is necessary. If so, then it is essential that they must comply with antitrust laws. There seems to be no dispute with regard to this. However certain distinct features of sports that render international as well as national governing bodies of the particular sport dominant in that sphere, caste a burden upon Courts to strike a fine balance between the autonomy of such regulatory bodies in framing rules and regulations and ensuring competition in the market. ANALYSIS OF THE BCCI CASE In the case of Surinder Singh Barmi v. BCCI2 the Board of Cricket Control in India was alleged of abusing its dominant position3 in relation to grant of commercial rights and media rights with respect to the IPL. The clause in the Media Rights agreement stated in express and clear terms that the BCCI “shall not organize, sanction, recognize, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league for a period of 10 years4” The fundamental issue before the Competition Commission of India5 was whether BCCI was violating Section 4 (2) (c) of the Competition Act 20026. The judgement of the CCI can be divided into three main parts: (i) Defining the relevant market (ii) determining whether BCCI is in a dominant position (iii) if so is the BCCI abusing its dominant position. (i) Defining relevant market Most anti-trust cases that deal with allegations of an abuse of dominant position and anti- competitive behavior require Courts to define relevant market in order to assess whether the defendant is in such a position that it has the ability to distort or significantly reduce competition7. 1Jay H. Topkis , Monopoly in Professional Sports, 58 YALE L.J. 691-712, 695 (1949). 2 2013CompLR297(CCI). 3 Competition Act, No 12 of 2003, §4 (2) (c). 4 Supra note 2, at Para 2. 5 Henceforth referred to as CCI. 6 Henceforth referred to as the Act. 7 See Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 (1965). 264 | P a g e JOURNAL ON CONTEMPORARY ISSUES OF LAW [JCIL] VOLUME 4 ISSUE 9 ISSN 2455-4782 Section 2(r) of the Act defines relevant market to include relevant product market and geographical market. Relevant product market is defined from the perspective of the consumer as mandated by the Act8. All goods and services that are substitutable with another by virtue of their characteristics, price and intended use form a part of the relevant product market. In economic terms this is known as cross elasticity of demand. In light of the above Courts look at goods that are reasonably interchangeable in order to determine whether the products fall within a single market9. This is often much easier for Courts to do in cases concerning traditional industries as opposed to the sports arena where relevant markets are often determined in an ad hoc fashion. The CCI disagreed with definition of relevant market put forth by that of BCCI. The CCI found the relevant market to be “organization of professional domestic cricket leagues/events in India10”. The main contention of the BCCI was that relevant market must be the market for entertainment programmes as IPL competes for viewers with other entertainment programmes as well. This argument was disregarded by the CCI and rightly so. The Cellophane case11 provides an indispensable principle to all Courts attempting to define relevant market- the goods or services must be reasonably interchangeable in order to fall within the ambit of a single market. The question that now arises is how do Courts then determine what goods are substitutes? Must they look at the physical attributes of a good or rather the comparative cost of production of substitutes? The majority in the Cellophane case stated that in order to determine reasonably interchangeable goods or substitutes the Court must envisage a situation wherein the price of cellophane increases and in such a situation if consumers shift towards other packing material such as tin foil then the two goods form a part of the same market12. In view of the above test that was laid down it seems quite clear as to why the CCI rejected the argument of the BCCI. The argument of the BCCI seems to be fundamentally flawed as it would be highly unlikely that a consumer or a viewer in this case 8 Competition Act, No 12 of 2003, § 2(t). 9 Louis Kaplow, Why( Ever) Define Markets, 124 Harv. L. Rev. 438, 480 (2010), see also Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962). 10 Supra note 2, at Para 34. 11 United States v. E. I. du Pont de Nemours & Co., ii 8 F. Supp. 4I, I96 (D. Del. 1953). 12 Id. at para 400. In economic terms this is termed as cross elasticity of demand. According to the test laid down in the Cellophane case if the cross elasticity of demand is high those products compete with each other and therefore form a part of the same relevant market. 265 | P a g e JOURNAL ON CONTEMPORARY ISSUES OF LAW [JCIL] VOLUME 4 ISSUE 9 ISSN 2455-4782 would substitute a TV serial for an IPL match merely because the two of them are broadcasted on the same entertainment channel. (ii) Determining whether BCCI is in a dominant position The Competition Act defines dominant position in more or less the same terms13. If an enterprise can function independently of competitive forces and affect its competitors and consumers to its benefit, all of which is done in the relevant market it will be said to enjoy a dominant position in the relevant market. It is pertinent to consider the meaning of ‘dominant position’ as well as ‘monopoly’ as it would incorrect to use these terms interchangeably. A monopoly can be defined as an enterprise that has the power to exclude competitors entirely or to a substantial extent14. An enterprise does not essentially have to be a monopoly in order to be in a dominant position in the relevant market. However if an enterprise is a monopoly it de facto is in a dominant position in the relevant market. In light of this it seems to be apparent that BCCI is in a dominant position in the market for organisation of professional domestic leagues in India. (iii) Is BCCI abusing its dominant position Competition laws do not per se prohibit firms from enjoying a monopoly position15. This view was expressly stated in the case of United States v. U.S. Steel Corp16. However any attempt to abuse this monopoly power in order to reduce competition in the relevant market is considered to be a transgression of competition laws. The BCCI was held to have abused its dominant position in violation of Section 4(2)(c) of the Act on two grounds: Firstly, the clause in the IPL Media Rights Agreement and secondly, Rules 28(b) and 28(d) of the BCCI Rules that prevented any private organisation from conducting cricket matches without the prior approval of the BCCI. The main argument of the BCCI to defend the clause was that it was to attract investors and secure their interests as IPL was a nascent event. Had the BCCI been able to establish that the clause in question in addition to the Rules that were in place, were for the furtherance of cricket rather than for the benefit of investors, the CCI may have held differently. There are two convincing 13 Competition Act, No 12 of 2003, Explanation to § 4(2).