SPORTS

AND
COMPETITION LAW
Internship Report
Competition Commission of India
August’2013

Submitted To: Submitted By:

Dr Sanjay Kumar Pandey Isha Bhalla
Joint Director (Law) Campus Law Centre
Competition Commission of India Faculty of Law
University of Delhi

Acknowledgement
1
On completion of my report I would like to extend my sincere gratitude to The
Competition Commission of India for granting me the opportunity of this
internship.

I would like to thank my Guide, Dr Sanjay Kumar Pandey, Joint Director (law)
for his invaluable suggestions and constructive criticism, which benefited me a
lot while developing this project. Through this column, it would be my utmost
pleasure to express my sincere thanks to him for his encouragement and
cooperation.

I also express my gratitude to library staff for their help and cooperation in
providing access to all the resourceful material and the related data.

Last but not the least, I would like to thank all the staff members for the
cooperation they have extended to me, which in my option will go in a long
way in crafting my future in the legal field.

Isha Bhalla
Campus Law Centre
University of Delhi

Disclaimer
2
This project report/dissertation has been prepared by the author as an
intern under the Internship Programme of the Competition
Commission of India for academic purposes only. The views
expressed in the report are personal to the intern and do not reflect
the view of the Commission or any of its staff or personnel and do
not bind the Commission in any manner. This report is the
intellectual property of the Competition Commission of India and the
same or any part thereof may not be used in any manner whatsoever,
without express permission of the Competition Commission of India
in writing.

3
 Table of Contents

1. Introduction ………………………………………............................. 06
2. Indian perspective ……………………………………………………. 07
3. International perspective……………………………………………… 08
4. Competition Law and sports on India ………………………………. 10
5. Competition Issues in sports ………………………………………… 11
6. Restriction of competition and abuse of dominance ………………. 11
7. Bid Rigging and competition issues …………………………………. 13
8. Grant of Exclusive Broadcasting Rights……………………………... 15
9. Exclusivity issues: Foreclosure……………………………………….. 17
A. Mobile Application Rights …………………………………….. 17
B. Official Website Rights ……………………………………….... 17
C. Ticket Sale Arrangement ………………………………………. 18
D. Player Restraint and Competition Issues ……………………… 19
10.Sponsorship Agreement and Competition Issues ……………………. 21
11.Grant of Franchisee Rights and Competition Issues…………………... 23
12.Sports Merchandising and Competition Issues ………………………. 24
13.Remedies: How Competition Issues can be resolved in practice……... 27
14.Conclusion……………………………………………………………… 29

4
 List of Abbreviations

1. BCCI Board of Cricket Control of India

2. CCI Competition Commission of India
3. EU European Union
4. IPL Indian Premium League
5. EEC European Economic Commission
6. TFEU Treaty on the Functioning of the European
Union
7. ICL India Cricket League
8. DTF Danish Tennis Federation
9. OFT Office of Fair Trading
10. WSH World Hockey Series
11. FIH Indian Hockey Federation

Introduction
5
The main focus of this research paper is to reconcile aspects of sport operations
that are anti-competitive with the Competition Act; 2002(hereinafter ‘the act’).
This paper provides an overview of the relevant provisions of the Indian
Competition Law as well as International perspective on Anti- Competitive
practices prevailing in sports. This research paper further analyse the
competition issues likely in sports and remedies are suggested in the light of
International rulings on the same.

In India, sports like cricket, hockey, football, tennis and badminton etc. are
being played on International level. Players are internationally recognised and
appreciated. With the Indian population standing today over a billion, of whom
the majority are ardent supporters of sports, it makes for a lucrative business
proposition to be involved with the multi-million dollar industry. Sports have
been considered as premium content. Exclusive rights are owned by
broadcaster or pay TV retailer. These exclusive rights are concentrated in the
hands of one few players in the market. In sports broadcasting live sports
events are preferred over recordings and hence sports pose challenges and will
attract competition scrutiny as exclusive rights tend to be in the hands of
incumbent operators.

Even mobile application rights, official website rights and ticketing

arrangements can be under the scanner of competition law as they might lead
to exclusivity issues. Due to technological advancements cable
communication, subscription channels and pay per view. It has changed the
ways in which consumer access broadcasting content as it is increasingly
available over internet and on wireless portable devices. Hence technological
innovation has increased competition concerns worldwide but to different
degrees. As there is a huge viewership of sports event as FIFA, World Cup,
IPL, Olympics Games, Commonwealth and recently Formula one racing there
is increased opportunity for competition.

Even denial of stadiums, player restraint and sports merchandising can raise
competition issues. Similarly bid rigging and collusion among bidders like
formation of cartels can come under the scanner of competition law as creation
of barrier for new entrant, driving out existing competitors, long term
foreclosure is specific violation of competition act.

6
 Indian perspective

The law aims to promote healthy competition. It bans anticompetitive

agreements between firms such as agreements to fix prices or to carve up
markets, and it makes it illegal for businesses to abuse a dominant market
position.

Introduction of the Competition Act, 2002 (As amended in 2007) is of great

significance to almost all sectors of industry within the country. “The act
seeks, inter alia, to prevent practices having adverse effect on competition,
promote and sustain competition in markets, protect the interests of consumers
and to ensure freedom of trade carried on by other participants in markets, in
India, and for matters connected therewith”. 1

The corollary can be established between Section 3 of the Competition Act and
the European law relating to Antitrust, viz. Articles 81 and 82 of the Treaty of
Rome (Now art 101 and 102 of the TFEU).
Section 3 of the Competition Act prohibits agreements, practices and decisions
that are anti-competitive. Section 3(1) being a general prohibition of an
agreement in the supply of goods or services that causes or is likely to cause an
appreciable adverse effect on competition within India. Section 3(2) declares
such agreements to be void while Section 3(3) deals with specific anti-
competitive agreements. 2
The term agreement, in Section 2(b), has been given a wide ambit, it requires
two parties independent of each other, which even if not intending to the
arrangement between them, are bound by legal proceeding.3 Also any
agreement entered into, in contravention of Section 3(1) is void.
In addition and as referred to above, an enterprise for the purposes of the
Competition Act has been defined by Section 2(h) 4, which expressly includes a
department of the government carrying on an economic activity in the supply
of goods and services.

International Perspective
1
Preamble of The Competition Act, 2002.
2
Sec 3 of The Competition Act, 2002.
3
Sub Section (b) of Section 2.
4
Sub Section (h) of Section 2.

7
The law on the subject is almost settled in countries having a developed
jurisprudence on competition issues in sport. The economic importance of
sports has witnessed tremendous growth. As a result the Commission has dealt
with increasing number of cases in the area of antitrust in relation to sports. It
is clear in the Bosnan Ruling of CJEU the economic aspect of sports can be
governed under EU Law.

United Kingdom
Material provisions of EC treaty are
• Art 45 on the treaty on the functioning of the European Union (TFEU),
The EU rules on the free movement of workers
• Art 101 TFEU, prohibiting anti-competitive agreement and decision of
an “association of undertakings” (which includes sporting bodies such
as UEFA); and
• Article 102 TFEU, prohibiting anti-competitive abuse of a dominant
market position by a sporting organisation controlling a major sport.
In addition to EU law, UK law could also apply to sporting rules – in
particular:
• the Chapter I and II prohibitions of the Competition Act 1998, the
domestic equivalent to Articles 101 and 102 TFEU;
• the common law doctrine of restraint of trade, which makes restrictive
provisions of an agreement unenforceable unless they can be justified as
reasonable both between the parties and as a matter of public policy; and
• Public law requirements requiring UK bodies to follow fair procedures.
The Court of justice in the Meca Medina case that the compatibility of
sporting rules with competition law should be examined on a case to case
basis. The Court of Justice provided further clarification concerning the
application of EU competition law to sporting rules in MOTOE case. In this
judgement the court confirmed that the commercial exploitation of sporting
event is covered by EU Competition rules. For instance, In the EU, EC
competition law is now applicable to economic activities generated by sport,
particularly after the Mecca-Medina case (2004)5.
United States of America

7. Case C-519/04 P Meca-Medina [2006] ECR I-6991.

8.United States v. Addyston Pipe & Steel Co. and Standard Oil Co. v. United States 175 U.S. 211 (1899)

8
The literal wording of section 1 of the Sherman Act condemns every
Agreement in restraint of trade. However, landmark decisions in United
States v. Addyston Pipe & Steel Co. and Standard Oil Co. v. United States 6
established a non-literal reading of section 1 as barring only "unreasonable"
restraints.
Addyston Pipe holds that restraints among competitors are
reasonable only when "ancillary to the main and lawful purpose of the contract
and necessary [to protect] the covenantee in the [enjoyment of the legitimate
fruits of the contract.]" Applying these principles to sports, the Supreme
Court held in National Collegiate Athletic Ass'n v. Board of Regents 7 that the
organization of a sports league is a "lawful" contract, but a restraint is
unreasonable if it is shown that, as a result of the restraint, prices are higher,
output is lower, or output is unresponsive to consumer demand compared to
what "would otherwise be." Courts have held that player restraints that
affect stars and ordinary players alike are overbroad.
In the US, broadcasting issues in popular sport are governed by the Sports
Broadcasting Rights Act, 1961 8. Competition issues relating to professional
sport have arisen primarily under section 1 of the Sherman Act.

Denmark
The purpose of the Danish Competition Act is to promote competition and thus
strengthen the efficiency of production and distribution of goods and services
through the greatest possible transparency of competitive conditions and
through measures against restraints of the freedom of trade and other harmful
effects of anti-competitive practices.
Decisions and agreements which may result in a dominant influence being
exerted on the market concerned are subject to notification to the Competition
Council (Section 5 of the Danish Competition act). Action can be taken against
such decisions if they entail or may entail harmful effects on competition and
therefore on the efficiency of production and revenue (Section 11 & 12). 9

Competition Law and Sports in India

9. National Collegiate Athletic Ass'n v. Board of Regents 468 U.S. 85 (1984)

8
OECD Roundtable discussion on Competition Issues Related to Sports 1996. OCDE/GD(97)128
9
Competition Issues Related to Sports, An OECD Report (1997) available at
http://www.oecd.org/dataoecd/34/49/1920279.pdf

9
In India, sports like cricket, hockey, football and tennis are being played on
International level. With the ever-increasing commercialization of sports, big
sports today have gone a far from merely being a form of exercise and amateur
sports to an industry. Players are internationally recognised and appreciated.
The sporting federations in order to acquire players, and pay for their ever-
increasing salaries spend a huge amount of money. The advent of satellite
television with dedicated sports channels has considerably increased the
market for sports broadcasts. Even for the companies associated with major
events in the form of franchisees, sponsors, broadcasting agencies or sports
merchandising etc. it makes for a lucrative business proposition to be involved
with high profile sports events (world cup, IPL and Commonwealth games,
Olympic games, important cricket and football matches, Formula One motor
racing etc.)

The major sport undergoing such a commercial revolution is cricket. Cricket is

very popular universally with some people even considering cricket at par with
their religion. With the Indian population standing today over a billion, of
whom the majority are ardent supporters of the Indian cricket team. Similarly,
such issues have arisen in hockey where players who had signed up to play in
various franchisees of the WSH – which is organised by the rival Indian
Hockey Federation (FIH) – were deliberately not selected for the Indian
national hockey team. Very recently, Indian Badminton league was organised
and Indian players are not paid adequately in comparison with international
players.

The world over, competition in sports is regulated like that in other sectors of
the economy. For instance, Simon Rottenberg, a well-known US economist, in
his paper The Baseball Players’ Labor Market states that the “economics of
professional sports leagues could be analysed using the same economic
framework as for any other industry’.

Since India now has a modern competition law, competition issues in sports
cannot be allowed to be overlooked. No enterprise in the country is now
permitted to indulge in any anti-competitive business practice prohibited by the
Competition Act. Thus there must be clear separation between sports
regulation and the commercialization of sport.

Competition Issues in Sports

10
1. Restriction of Competition or Abuse of Dominance

"It is not the power to regulate a given sporting activity as such which might
constitute an abuse but rather the way in which a given sporting
organisation exercises such power."10

The Competition Act, 2002 defines dominant position (dominance) in terms of

a position of strength enjoyed by an enterprise, in relevant market in India,
which enables it to:
• Operate independently of competitive forces prevailing in relevant
market; or
• Affect its competitors or consumers or relevant market in its favour.

It is the ability of an enterprise to behave/act independently of the market

forces that determines its dominant position. Dominance is not considered bad
per se but its abuse is. Abuse is stated to occur when an enterprise or group of
enterprises uses its dominant position in relevant market in exploitive manner.

Indian Perspective
In India, the recognition and influence BCCI commands have been judicially
acknowledged. Its strong institutional legacy along with its monetary reserves,
built by marketing the sport exclusively, is admittedly massive. Regulating the
sport almost exclusively leaves BCCI in an inherently advantageous position to
affect the competition in the various markets associated with marketing the
sport. BCCI is abusing its dominant position by denying market access to
potential competitor to ipl by "bidding itself" not to organize, sanction, or
recognize any private professional domestic league and limiting number of
franchisees in one private professional league.

CCI by way of order in made an observation:

10
‘Commission debates applications of competition rules to sport’, European Commission press release dated 24
February
1999, IP/99/133

11
"BCCI has gained tremendously from the IPL format of cricket in financial
terms. Virtually there is no other competitor in the market, nor anyone (ICL)
allowed to emerge, due to BCCI'S strategy of monopolizing the entire
market. The policy of BCCI to keep out other competitors and to use their
position as a de-facto regulatory body has prevented many players who could
have opted for the competitive league-ICL." 11

International Perspective
American Jurisprudence reads “a corporation does not violate the Sherman Act
by securing a dominant position as the result of the ability, ingenuity,
intelligence and industry of those who direct its activities, such as by offering a
better product and furnishing better customer service” 12

In US v. International Harvester13 US antitrust law refers to monopoly power

rather than dominance, and has been defined as the power of the concerned
entity to control prices or to restrict or exclude competition.

11
CCI Order in Surinder Singh Barmi v. BCCI. Available at
12
American Jurisprudence, Vol.54, 2nd Ed., p.691
13
274 US 693, (1927)

12
2. Bid Rigging and Competition Issues

In Bid rigging, a commercial contract is promised to one party even though for
the sake of appearance several other parties also present a bid. It is a form of
price fixing and market allocation.

Indian Perspective
The allegation of rigging of bids by IPL bosses as well as collusion among
bidders, like cartels, is the most serious crime in competition law. Under the
Competition Act, “Any agreement which directly or indirectly results in bid
rigging or collusive bidding shall be presumed to have an appreciable
adverse effect on competition.” 14

The nature of allegations against Lalit Modi is primarily of rigging of bids. It

was done by league bosses as well as collusion among bidders which falls
directly within the domain of the competition regulator. The allegations that
IPL bosses allegedly advised the Dhoots and Adanis to keep their bids
modestly above $300 million or that IPL administration also allegedly told the
promoters of Kochi consortium not to put more than $300 million on the table
are sufficient to provoke a complaint to CCI under Section 3 of the Act. 15

Also, Rendezvous Sports World Private Limited is a private limited company

and it has granted 70 crore worth equity to Sunanda pushkar claiming that she
has a professional expertise, expertise in event management and brand
management. This limited company has brought other investors together to
form a consortium for bidding for IPL Kochi Franchise. BCCI claims that there
is a clause in the bidding document that no information is to be revealed public
and they are claiming it as a “confidential clause” but it is a major competition
concern. 16

14
Section 3 of The Competition Act,2002
15
Article available on http://www.vaishlaw.com
16
Article available at www.legalservicesindia.com

13
INTERNATIONAL PERSPECTIVE

The Competition Commission of South Africa began its investigation of

collusion and bid-rigging amid an outcry over the escalating costs of stadiums
used for the 2010 FIFA World Cup hosted by South Africa where 15
companies agreed to pay a total of $147 million in fines in a fast track
settlement to avoid prosecution for "rigged" projects in South Africa between
2006 and 2011, which include World Cup work.17

According to the South African Commission, the fast-track process revealed

various ways that firms colluded to rig project bids, including submitting sham
tenders to enable a fellow conspirator to win a bid and agreeing that whoever
won a bid would pay the losing bidders a “loser’s fee” to cover their costs of
bidding. Subcontracting was also used to compensate losing bidders.

Hence, bidding process should be transparent and fair. Repetitive purchases

may increase the chance of collusion. Expanding the list of bidders will make
it more difficult for bidders to collude. Collusion is more likely to arise where
there are few competitors.

3. Grant of Exclusive Broadcasting Rights

17
Article available on http://www.neurope.eu

14
“Sports is …particularly attractive to… commercial operators whether as a
part of a general entertainment channel or specialist channels. Audience
ratings can be very high for certain events, and are also popular with
commercial sponsors.”

Competition relating to the sale and acquisition of sports media rights has three
important features.

• Rapid revolution of media sector including new technological

developments.
• Few powerful players which are competing for scarce and valuable
sporting rights. In Upstream Markets, the initial rights owner (sports
associations and clubs) sell rights of sports events to sports right
intermediaries or directly to retailers. The Downstream Transmission
Markets constitute the final stage of value chain, covering provisions of
sports media services to consumers by retail operators like broadcasting
companies’ internet service providers, mobile operators.
• Sports media rights are most attractive when broadcast live as the value
of the right declines once the decision is known to viewers.

Indian Perspective
As the sole agency to control the organisation of cricket in the country, the
BCCI is undoubtedly a monopolist provider of cricket-viewing services for the
people of India and, hence, an enterprise in a ‘dominant position’ under the
Competition Act. The BCCI has been ‘selling’ broadcasting rights to its
‘exclusive partners’ for a long time.
Firstly, how these ‘exclusive partners’ were selected is shrouded in mystery.
The compliance with the Competition Act is now mandatory for selection of
any exclusive ‘agent’ or partner for any business purpose, i.e., it has to be done
by competitive bidding process in a fair and transparent manner.
Secondly, even if one overlooks this selection process of the BCCI, the
concentration of rights in a few agents seriously hampers the prospects of fair
play and serious competition issues arise.
The board sold five-year contracts to ESPN STAR Sports (1995-99) and Prasar

15
Bharati (1999-2004). Thereafter, it sold the rights on a territorial basis and
Nimbus Communications bought the rights for India for five years (2006-10),
ESPN STAR Sports for overseas matches for four years (2005-08) and Zee
Television for matches in neutral venues for five years (2006-11). The
broadcast rights for IPL were sold exclusively to WSG-Sony Entertainment
combine for 10 years reportedly for $1.03 billion. Although grant of exclusive
broadcasting and telecasting rights is a common commercial practice in the
sport industry, it is important to consider the impact of such long-term
agreements on competition in this market. 18

The BCCI’s grant of exclusive rights can lead to anti-competitive

consequences such as:

• Creation of barriers for new entrants,

• Driving out existing competitors, and
• Foreclosure of competition by hindering entry into the market. All
these are specific violations of the Competition Act.

International Perspective
On joint sale of media rights the Commission has set forth the main principles
in UEFA Champions League19, the FA Premium League and Bundesliga20
decisions. The Commission accepted the joint selling of sports media rights by
football associations on behalf of football clubs(as opposed to the sale of these
rights by the individual clubs themselves), provided certain condition were
fulfilled. These include the sale of sport media rights through open and
transparent tender procedures, a limitation of the rights duration (usually not
exceeding three years) and the breaking down of the rights into different
packages to allow several competition to acquire rights.

4. Exclusivity Issues: Foreclosure

18
Article available at www.vaishlaw.com.
19
European Commission, 23 July 2003, Case 37.398, Joint selling of the commercial rights of the UEFA Champions League,
OJ 2003 L 291/25.
20
Joint selling of Bundesliga media rights — first Commission decision pursuant to Article 9 of Regulation 1/2003. Article
available on http://ec.europa.eu/competition/publications/cpn/2005_2_44.pdf

16
The grant of exclusivity for such long durations will lead to foreclosure at the
time of renegotiation at the end of the contract; the broadcaster with the
exclusive rights will be at an advantage in comparison to the other players due
to the massive revenues it would have amassed during that long time.
Therefore, it does not allow for a real allocation of rights at the end of
exclusivity. Yet, exclusive contracts for a single sport event or for one season
in a given championship would not normally pose any competition problem.
However, exclusivity of longer duration, of over three years, as granted by the
BCCI and that too for a wider range of rights can definitely restrict
competition. This is particularly the case if the broadcaster too is in a dominant
position. Thus, if Sony can be proved to be having a large market share of
viewership in telecast of cricket matches in India, besides BCCI, it will also
face the charge of abuse of its dominant position from other competing TV
channels such STAR Sports, ESPN or TEN Sports,etc.

A. Mobile application rights: DCI Mobile Studios, a division of Dot Com

Infoway, in conjunction with Sigma Ventures of Singapore, has
reportedly jointly acquired the rights to be the exclusive mobile
application partner and rights holder for the IPL cricket matches
worldwide for the long period of the next eight years (including the 2017
season). Recently, they released the IPL T20 mobile applications for the
iPhone, Nokia smartphones and Blackberry devices. Soon, these will be
made available across all other major mobile platforms including the
Android, Windows Mobile, Palm and others. This is also likely to raise
similar exclusivity issues.
B. Official website rights: The IPL has reportedly negotiated a contract
with a Canadian company, Live Current Media Inc, to run and operate
its portals and the minimum guarantee has been negotiated at $50
million over the long extended period of the next 10 years. The official
website of the tournament is www.iplt20.com . This is also likely to
raise similar exclusivity issues as market foreclosure for new entrants is
almost imminent.
C. Ticket sales arrangements:
Exclusivity arrangements between the organisers and the sponsors of
sports events whereby consumers could pay for tickets by using the

17
 sponsor’s credit card (credit card exclusivity). The tickets for sports
events are often sold by or through single entity like the organising
committee of the respective events. Discriminatory ticketing practice
such as imposing territorial restrictions and restriction in payment
methods can raise exclusivity issues. For example, during the 2004
Athens Olympic Games VISA exclusivity for tickets sale via internet
and MasterCard exclusivity for direct sale of tickets for FIFA Football
World Cup 2006 21 has raised exclusivity issues.

5. Player Restraint and Competition Issues

21
European Commission White paper on sports. Annex 1Sports and EU competition rules.Available at
ec.europa.eu

18
In most professional leagues around the world, participating clubs compete
amongst them to sign players, subject to rules imposed by the league or agreed
to among themselves. Rules imposed by leagues often significantly restrain
competition for players. These can include a reserve list, whereby clubs will
not bid for reserved players at the expiration of a contract; the player must
either re-sign with his prior employer or seek employment elsewhere. Common
among North American and Australian leagues is a player draft, whereby
amateurs or veterans not under contract can only negotiate with the team that
selects them;
Teams usually select in reverse order or finish from the prior season. In recent
years, several leagues have employed club salary caps, which prevent a club
from competing for players when its total payroll for players exceeds a
specified amount, or a more modest version of this restraint, a luxury tax on
payrolls that exceed a certain amount, thereby making it more expensive for
high-payroll teams to compete for the services of players. Some leagues also
employ individual player salary caps that limit the amount a player can
receive based on years of service within the league or his previous salary.

The most obvious and immediate effect of the imposition of player restraints
by clubs is lower salaries for players. Of course, this restraint represents a
significant transfer of wealth from players to clubs. If the salary restraint is too
severe, it may affect player’s investment in training, and thus hurt the quality
of the sport. Greatest concern to competition laws designed to promote
efficiency and protect consumers, however, is that these rules can often result
in the inefficient allocation of players among teams. To protect competitive
balance, in general, the optimal allocation of players among teams in a league
will be to allow the market to place the players with the teams that value them
the most.

Labour restraints imposed by leagues with monopsony power can severely

exploit players by limiting competitive bids to amounts significantly below
what the market would bear. Moreover, as noted above, player restraints can
result in an inefficient allocation of players among clubs, harming consumers
by producing a result unresponsive to consumer demand.
Three justifications are often asserted for player restraints:
• enhancing competitive balance;
• recovering club investment in player development; and
• achieving "cost certainty" for clubs.
Most labour restraints are unnecessary to the first two goals, and the third is
not a legitimate one. 22

22
Stephen F. Ross, Player Restraints and Competition Law throughout the World, 15 Marq. Sports L. Rev. 49 (2004)
Available at: http://scholarship.law.marquette.edu/sportslaw/vol15/iss1/7

19
Competition law, which bars unnecessary restraints, can be employed more
vigorously to protect consumers and players against unnecessary labour
restraints.

International Perspective
The top Italian soccer league seriously considered imposing a salary cap, it was
not implemented. Such a plan would have been unfeasible because it was clear
that the top players would simply leave Serie A and play for clubs in other
European soccer leagues. However, soccer is the only league sport where
serious inter-league competition exists for the world's best players. The
revenue disparities between American baseball, basketball, and hockey leagues
and those in other countries where these sports are played are so great that the
option to play elsewhere is not a viable substitute. American and Australian
Rules football are only played in those countries. While rugby has major
league professional clubs, most rugby federations require that players seeking
the income and prestige from participating in international rugby must play for
a domestic club, thus creating a huge disincentive for players to play
elsewhere. Thus, most clubs in league sports around the world are able to
exercise monopsony power over their players. 23

Indian Perspective
In Sh. Dhanraj Pillay and Others vs M/S Hockey India

Hockey India – India’s officially sanctioned hockey body was allegedly

discriminating against a few former players who had wanted to participate in
the World Series Hockey (WSH) tournament, run on the lines of the now
disbanded Indian Cricket League. The players, including former hockey
captain Dhanraj Pillay, had approached the CCI in 2011 alleging abuse of
dominance by Hockey India, which had warned players against participating in
the WSH, terming it an “unsanctioned” event. Allegedly, players who had
signed up to play in various franchisees of the WSH – which is organised by
the rival Indian Hockey Federation (FIH) – were deliberately not selected for
the Indian national hockey team. In its order, the CCI barred the two bodies
from placing any restriction on players to play in sanctioned or unsanctioned
events.24

23
Stephen F. Ross, Player Restraints and Competition Law throughout the World, 15 Marq. Sports L. Rev. 49 (2004)
Available at: http://scholarship.law.marquette.edu/sportslaw/vol15/iss1/7
24
Order of Competition Commission of India in “ Sh. Dhanraj Pillay and Others vs M/S Hockey India”. Available at

20
6. Sponsorship Agreements and Competition Issues

“The support for sports, sports event, sports organisation or competitor by

an outside body or person for mutual benefit for both parties.” 25

Traditionally, sports associations and federations have played an important role

in the choice of the providers of equipment to their members. Sponsoring can
give rise to concerns under Competition law when it results in the award of
exclusive rights for a manufacturer to supply the market with its products,
thereby excluding competitors.

Indian Perspective
Sponsor can be linked to the athlete, team or organization and have their logo
displayed on their sports kits, transport and advertisements. Companies can be
associated with successful sports personalities and teams, with the idea that the
success of the performer can be associated with success of the company and
success of the companies products. Consumer will be able to link the product
with the sports personalities name and hence exclusive rights to one
manufacturer and excluding competitors leads to competition concerns. The
sale of sponsorship rights to Sahara India and DLF brings BCCI within the
ambit of Competition Law. Sahara India has sponsorship rights of Indian
Cricket Team since 2001. Hence this might lead to exclusivity issues.

International Perspective
Also, Sponsorship arrangements have also been investigated Internationally
where sponsors are prepared to pay the organizers of sports events significant
sums to use the term “official” in competitions. The sponsors want more
control over the sports i.e. they may want to schedule events to coincide peak
television viewing time to get maximum publicity, or even the time of the year
events are held. The Danish Tennis Federation entered into agreement with
three tennis ball manufacturers which resulted in their making of ball being

25
The sports business, Neil Welson (Piatkus,1988).

21
labeled 'official'. Parallel importer complained to the commission of market
foreclosure. Further, the commission thought that the term official was
misleading for consumers who may assume the badge of quality rather than
indication of sponsorship. Negotiation was made between DTF and
commission and a more open tendering process is held every two years to
decide sponsorship. 26

Given the commercial importance of marketing in sports, the competition case

law is expected to expand. In protecting the rights of market competitors and
consumers, the commission needs to distinguish between commercial rules and
sporting rules.

7. Grant of Franchisee Rights

26
International Sports Law and Business, Volume 2 By Aaron N. Wise, Bruce S. Meyer. Page no. 1060

22
The Indian Premier League (IPL) Twenty20 professional cricket league
tournament conducted by the BCCI. The irregularities are in respect of:

• Grant of franchise rights for Team ownership.

• Grant of media rights for coverage of the league.
• Award of sponsorship rights and other local contracts related to
organisation of IPL.

Though there were a number of allegations levelled in the process of granting

franchise rights to the initial 8 teams and later on to the two teams of Pune and
Kochi. However, the one feature of the franchise agreement i.e. the franchise
agreement entered into between the BCCI and franchise winners are for
perpetuity. This has the effect of creating barriers to new entrants in the
market.

The exclusion of all other potential entrants is visible in agreements entered

into by the BCCI with its business partners, selected either through competitive
bidding or otherwise. Therefore, franchise agreements for perpetuity promote
exclusion and are in violation of Section 3(1) of Competition Act, 2002 and
cause appreciable adverse effect on competition.

Franchisee agreements have always been contentious issue. Indian Cricket

team title sponsorship rights for the period of 1st July 2010 to 31st December
2013 is bagged by Sahara India Financial Corporation and the bids are
generally very high and for a long duration due to which other market entrants
might suffer and such agreements that is likely to cause appreciable adverse
impact on competitiveness and thus void.

8. Sports Merchandising and Competition Issues

23
“ the process by which that pulling power ( that is commercial
pulling power or ‘goodwill’ is derived from ‘identity’, ‘profile’, or
reputation) may be used to deliver a commercial return through
harnessing of the identity in question and by its use to promote the
sale of products by association with it.” 27

Price fixing is a conspiracy between business competitors to set their prices to

buy or sell goods or services at a certain price point. It benefits all businesses
or individuals that are on the same side of the market and involved in
conspiracy, as prices are either set high, stabilized, discounted, or fixed.

Indian Perspective

The Competition Act prohibits price fixing and business collusion and also Sec
3(3) of the Competition Act, 2002 also prohibits agreements which directly or
indirectly determine price. Even the Consumer Act, 1986 prohibits unfair trade
practices.28
There are various sports goods manufacturing company like Reebok, Addidas
and Nike which are associated with Indian Cricket Team as well as with other
sports events. Also there are various internet retailers who sell official team
jerseys and other sports merchandise. Hence a number of sportswear retailers
enter into price fixing agreements to supply sportswear to various clubs or
consumers could lead to infringing various provisions of Competition Act.
Even the possibility of sporting federations asking various internet sites selling
official team jerseys and merchandise at the price fixed cannot be ruled out as
there is variation in the prices.

Also, the complex nature of sponsorship these days means that teams will
have a number of additional sponsors, with the names of these sponsors being
displayed throughout the team’s home ground and in any other place they may
get exposure to sports fans. For example it is universal practice for football
teams to have a match ball sponsor for each game, which will be displayed in
the programme and announced over the tannoy. Hence the possibility of
leading sports brands indulging into price fixing, abusing dominance or
collusion by restricting new entrants cannot be ruled out either.

International Perspective
27 st
Griffith Jones , David, Law and Business of Sports, 1 edition butterworths,1997 at page 239.
28
Section 2 of The Consumer Protection Act, 1986.

24
The Sherman Antitrust Act, 1890 makes monopolies illegal, also covers price
fixing; an illegal act committed by competitors who get together to set the price
of certain merchandise.

In 2007, the United States Supreme Court greatly eased the restrictions on
manufacturers setting of minimum retail prices. The ruled, “Vertical
agreements establishing minimum resale prices can have either procompetitive
or anticompetitive effects, depending upon the circumstances in which they are
formed.” Pricing practices are now to be judged by the “rule of reason.” A jury
can weigh all of the circumstances of a case in determining whether or not a
particular pricing practice imposes a restraint on competition.

Recently Australian Competition and Consumer Commission launched action

against Skins Compression Garment and found the company guilty of resale
price maintenance. Penalty of $120,000 has been imposed. 29

Internationally, The Office of Fair Trading has decided that a number of

sportswear retailers, Manchester United plc. the Football Association Ltd and
Umbro Holding Ltd have entered into price fixing agreements in relation to
replica football kit infringing the prohibition contained in Sec 2 of the
Competition Act, 1998. Allsports Ltd, Blacks Leisure Group plc. JJB sports
plc., Manchester United plc. Sports Soccer Ltd, Umbro Holdings Ltd were
involved in various agreements or concerted practices which fixed the prices of
the top selling adult and junior short sleeved replica football shirts . 30

A class action suit claiming antitrust and price-fixing violations against

NASCAR, three public companies and numerous vendors, "could be a
watershed event for all major-league sports,” The suit, alleges that since '91,
fans "have been overcharged for merchandise" at Winston Cup races. Other
parties named include International Speedway Corp. and Penske Motorsports.
Estimates of the size of the class range "as high as 5 million fans, portending
actual damages of $100 million to $500 million," which could be trebled under
the Clayton Antitrust Act. The suit's implications can be "wide- ranging," as
"virtually any race track which leases space upon a percent-of-gross-sales
basis" to vendors can be ordered into the suit.31

In 2002, The Football Association is under investigation by competition

watchdogs for asking its internet retailer to fix the price of England football

29
Article available on www.smartcompany.com.au.
30
Decision of the Office of fair trading No CA98/06/2003. Available on www.oft.gov.uk
31
Class action alleges price-fixing of winston cup merchandise Article available on msportsbusinessdaily.com.

25
shirts, the website England Direct, which is operated by the firm Sports Etail,
sold the shirts for £39.99 under the FA's instructions. The price matches that
charged by Wigan-based JJB Sports, which is the official high-street stockist
of Three Lions merchandise for the England football team. But as there is no
recommended retail price for the shirts, other outlets sometimes sell them for
up to £10 less.
The Office of Fair Trading (OFT) uncovered the potential breach of
competition law at the end of last year as part of a general investigation into
price-fixing of football merchandise. The FA is not entitled to set the retail
price of Sports Etail as the two are technically separate organisations. 32

Hence, price fixing and unfair trade practices adopted in sports merchandise
can also raise competition concerns like price discrimination, predatory
pricing, eliminating existing or new entrants in the market.

Approach to handle competition issues in sports:

32
Article available on www.telegraph.uk.

26
 • Unbundling

One of the common themes relating to the collective selling of broadcasting

rights is the concern that rights should be unbundled into several packages in
order to give a fair opportunity to broadcasters to compete for them (as
opposed to allowing a structure which tends to result in a single broadcaster
acquiring all of the rights).

• Non- Discriminatory and Transparent Tendering

Another common issue arising is whether collective sellers must organise

a competitive bidding process and offer rights on non-discriminatory and
transparent terms, or whether they may simply choose their commercial
partners without going through such processes.

A case in Poland suggested that such a process was mandatory to ensure that
all potential buyers have an equal opportunity to compete for rights. In that
case the Polish Football Association 33 had agreed to inform Canal+ of the
terms of its competitors' offers under an "English clause", or "most privileged
treatment clause" to allow them to try to match competing bids. The Polish
Supreme Court upheld the judgment of the Office of Competition and
Consumer Protection that this was an anticompetitive mechanism because it
offered Canal+ information which it would not be able to obtain in the normal
course.

• The limited period of Exclusive Rights

To reducing the risk of long-term market foreclosure is to impose a limit on the
duration of the grant of broadcasting rights on an exclusive basis.

For instance, the French competition authority considered that the rights that
were awarded to the French marketing agency Sportfive by the French
33
Polish Supreme Court, 7 January 2009, Case n III SK 16/08, Canal+/Polski.

27
Football Federation (FFF) 34 for periods of four to six years were excessive. In
addition, the investigation found that the market was foreclosed due to the
ability of parties to renew their agreements before the term of the contract.
Consequently, the French Competition Authority imposed a fine of €6.9
million.
Hence, long term agreements should be avoided as it might lead to exclusivity
issues and duration of such agreements should be three years.

• Pooling agreements for the Joint Exploitation of

Broadcasting Rights

Pooling agreements by which broadcasters jointly exploit rights have been

found to constitute horizontal agreements which can hinder competition. The
cooperation agreement actually prevented the elimination of competition on
the market.

• Prohibition of Territorial Restrictions

The Football Association Premier League (FAPL) 35 granted broadcasters,
under a competitive tender procedure, an exclusive live broadcasting right for
Premier League matches on a territorial basis. Broadcasts are made by way of
encrypted satellite signals and customers gain access through satellite decoder
cards. The licence agreement between the FAPL and broadcasters included a
requirement that broadcasters put in place the necessary contractual
mechanisms to ensure that the relevant signal is transmitted only to subscribers
within the licensed territory.
The result is that, under competition and free movement rules, purchasers
cannot be prevented from acquiring satellite decoder equipment from m other
Member States and viewing content made available on those platforms,
including Premier League matches.
Hence, such territorial exclusivity agreements relating to transmission of live
matches or territorial restraint on players as well broadcasters should be
avoided as it leads to trade restraints and discrimination.

34
Sandrine Behague, The French Competition Authority fines a football association and a rights for sports management
agency 6.9 M for anticompetitive agreements in the market for audiovisual rights (FFF-Sportfive), 30 September 2009, e-
Competitions, n 31741 .
35
Collette Rawnsley, The ECJ Advocate General Kokott considers that territorial exclusivity agreements relating to the
transmission of live football matches are contrary to European Union law (Football Association Premier League), 3
February 2011, e-Competitions, n36119.

28
 Conclusion

Most competition regimes aim to avoid anti- competitive agreements and

prevent firms from abusing their dominance in any particular market. The
issues of broadcasting rights and telecast rights are some of the activities which
dominate the role of competition policy today. The application of European
competition policy to commercial aspects of sport is now well-established.

By way of conclusion, one might say that all’s fair in sport and competition,
provided it is proportionate, or, as Weatherill states forcefully, sporting bodies
enjoy a “conditional autonomy” when setting the rules of the game. 36

The aim of the game is not to eliminate the weaker competitors. There is
interdependence between competing adversaries and a need to maintain a
balance between them to preserve uncertainty as to results and a degree of
equality in order to maintain the spectators’ interest. It is this unique feature of
sporting competitions that Competition authorities must bear in mind, for
professional sport teams would be free to cooperate in the ways necessary to
maintain competitive balance and to achieve other efficiencies that make their
brand of sport popular with fans. The sports federations should not be allowed
to dominate the commercial aspect of sports in order to eliminate present or
restrict new entrants in the market.

Sports federations should ensure that the fair and transparent procedures are
followed in both commercial as well as recreational aspect of sports. Anti-
competitive policies such as imposing restraint on players, denial of stadiums,
price fixing in sports merchandise and granting of exclusive broadcasting
rights should not be resorted to by the sports federations as it worst hits the
sports lovers and consumers. Thus, like any other sector, competition issues
due to commercialization of sports should not be overlooked and sports should
be regulated like any other sector.

The Competition Commission may issue guidelines to various stakeholders as

the growth of sports sector is contemplated in near future. It may also publish
advocacy booklets regarding various competition concerns in sports which
should be catered. It may carryout sector study to decipher issues relating to
competition in sports.

36
WEATHERILL S., “Is the Pyramid Compatible with EC Law?”, [2005] ISLJ, 3-4, p 3-7.

29
 Bibliography

1. Competition Law Bulletin, Vol. IV, No 5, January-March 2013

2. Policy Roundtable on Competition Issues related to sports,1996. OCDE/GD(97)128

3. Stephen F. Ross, Player Restraints and Competition Law throughout the World, 15 Marq.
Sports L. Rev. 49 (2004). Available at:
http://scholarship.law.marquette.edu/sportslaw/vol15/iss1/7

4. PRICE FIXING & BID RIGGING – IT CAN HAPPEN IN CONNECTICUT .What Are These
Violations and What to Look For AN ANTITRUST PRIMER FOR PROCUREMENT
PROFESSIONAL. October 2009

5. EUSA Tenth Biennial International Conference Panel on European Community law and
sport. Author An Vermeersch

6. Sports and competition law: An overview of EU and national case law. Ken Daly, Jessica
Walch, e-Competitions, N° 42447, www.concurrences.com

7. Changing the outlook of the game. December 2011. Available at

www.pwc.com/sportsoutlook

8. BCCI: Caught Behind. Available at www.vaishlaw.com

9. International Sports Law and Business, Volume 2 By Aaron N. Wise, Bruce S. Meyer

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