Competition Issues Related to Sports 1996 The OECD Competition Committee debated competition issues related to sports in October 1996. This document includes written submissions from Australia, Denmark, the European Commission, France, Germany, Ireland, Mexico, the Netherlands, Portugal, Spain, Switzerland, the United Kingdom and the United States, as well as an aide-memoire of the discussion. Satellite television with dedicated sports channels considerably increased the market for sports broadcasts. Sports bodies and event organisers perceive that they have market power to influence competition among TV channels and the market for sports equipment. Sports federations and leagues have significant powers to regulate the activities of sports professionals. The roundtable has shown the difficulty of reconciling aspects of sport operations that are inherently anti-competitive with competition policy. Four areas of concern were discussed: i) sale of exclusive broadcasting rights; ii) competition between different leagues; iii) sponsoring and exclusive supply arrangements between manufacturers of sports equipment and clubs, including the use of standards for equipment; and iv) retention and transfer systems used in players' contracts. OECD Guiding Principles for Regulatory Quality and Performance (2005) Intellectual Property Rights (2004) Regulating Market Activities by Public Sector (2004) Restructuring Public Utilities for Competition (2001) Regulation and Competition Issues in Broadcasting in the light of Convergence (1998) General Distribution OCDE/GD(97)128 COMPETITION ISSUES RELATED TO SPORTS ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Paris 54655 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format Copyright OECD, 1997 Applications for permission to reproduce or translate all or part of this material should be made to: Head of Publications Service, OECD, 2 rue André-Pascal, 75775 Paris Cedex 16, France. Copyright OCDE, 1997 Les demandes de reproduction ou de traduction totales ou partielles doivent être adressées à : M. le Chef du Services des Publications, OCDE, 2 rue André-Pascal, 75775 Paris Cedex 16, France. 2 FOREWORD This document comprises proceedings in the original languages of a Roundtable on Competition Issues related to Sports which was held by the Committee on Competition Law and Policy in October 1996. It is published as a general distribution document under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This compilation is one of several published in a series named “Competition Policy Roundtables”. PRÉFACE Ce document rassemble la documentation dans la langue d’origine dans laquelle elle a été soumise, relative à une table ronde sur les questions de concurrence dans le domaine des sports, qui s’est tenue en octobre 1996 dans le cadre du Comité du droit et de la politique de la concurrence. Il est mis en diffusion générale sous la responsabilité du Secrétaire général de l’OCDE afin de porter à la connaissance d’un large public, les éléments d’information qui ont été réunis à cette occasion. Cette compilation fait partie de la série de l’OCDE intitulée “Les tables rondes sur la politique de la concurrence”. 3 4 TABLE OF CONTENTS NATIONAL CONTRIBUTIONS: Australia ..............................................................................................................................7 Denmark ............................................................................................................................25 France................................................................................................................................27 Germany ............................................................................................................................33 Ireland................................................................................................................................39 Mexico...............................................................................................................................43 The Netherlands.................................................................................................................55 Portugal .............................................................................................................................57 Spain..................................................................................................................................61 Suisse ................................................................................................................................69 The United Kingdom .........................................................................................................75 The United States...............................................................................................................79 Commission of the European Union.................................................................................115 AIDE-MEMOIRE OF THE DISCUSSION................................................................................121 AIDE-MÉMOIRE DE LA DISCUSSION..................................................................................129 OTHER TITLES IN THE SERIES ROUNDTABLES ON COMPETITION POLICY...............138 5 6 AUSTRALIA* Introduction Competition law issues are raised frequently and in a variety of ways when sport is the subject of litigation in Australia. This paper, however, will largely limit itself to a discussion on the implications for competition law of restrictive rules of sporting bodies and restrictions imposed on players. This is done for two reasons: first, this is an area where there has developed a significant body of Australian case law; second, tracing the legal developments in this area will set the background for a detailed discussion of Australia’s most recent, and arguably most notable case where questions of sport and competition intersect, News Limited v Australian Rugby League Limited, otherwise known as “the Superleague case”1. When restrictions of some form or another are imposed by sporting bodies on players, competition issues often arise because “the history of professional sport, both in Australia and overseas, reveals a tendency to regulation in ways which interfere with the freedom of players to contract”2. This is particularly so given the assertion that there is a need for some balance between the aim of sporting bodies to make competition more even and the desire of players to be free to seek the greatest reward for their skills and services. The common law doctrine of restraint of trade3 has been invoked, in addition to provisions of the Trade Practices Act 1974, in numerous cases where players have been dissatisfied with the drafting and transfer rules of their particular sport4. The common law doctrine, although not sufficient to discourage nor limit restrictive trade practices in Australia5, was preserved by s. 4M of the Trade Practices Act in so far as that law is capable of operating concurrently with the Act. Since the 1970s there have been numerous attempts to regulate many Australian sports, particularly rugby league and Australian rules football, which are Australia’s two major professional football codes, with the aim (or stated aim) of making the competition more even. At the same time, a line of cases, beginning with Buckley v Tutty6, has resulted in professional employment codes being revised from “archaic codes of eligibility and employment”7 to more acceptable and competitively-driven regulatory schemes. While recognising that sport is an important social institution and that it is a legitimate objective of sporting bodies to ensure teams fielded in competitions are as strong and well- matched as possible, there is nevertheless a need to reconcile the unique aspects of sport with competition policy. As in the United States, Australian sporting bodies are being compelled to restructure their player allocation systems due to pressure exerted on the system by competition law8. However, it should be said that it may be reasonable to impose some element of restraint upon professional players, whether it be by laying down some qualifications for club membership, or by imposing some restrictions on player transfers or on the extent to which a club may entice players away from another club9. * This note is prepared by Professor Alan Fels, Chairman of the Australian Competition and Consumer Commission. 7 Player drafting and transfers Restraint of Trade Like other jurisdictions, Australia has seen case law develop on the drafting and transfer of players in particular sporting competitions. In Buckley v Tutty10, a transfer system, under which New South Wales11 Rugby League players were effectively tied to their clubs (even if the players were not contracted to play with the club or their contracts had expired) and could not play for any other without the consent of their club, was declared invalid by the High Court of Australia. Under this system, if a player was placed on a transfer list, any club could attain his services by paying a transfer fee which was entirely at the discretion of the club with which the player was previously registered, and under which the player received only a small percentage. The Court held that the doctrine of restraint of trade applied: the transfer rules went further than necessary to protect the reasonable interests of the