DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

COMPETITION LAW AND SPORTS: A CROSS-JURISDICTIONAL ANALYSIS

SUBJECT

COMPETITION LAW

NAME OF THE FACULTY:

VARSITHA MAAM

NAME OF THE CANDIDATE:

BALU D

ROLL NO:

2017025

SEMESTER:

8TH SEMESTER

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TABLE OF CONTENTS

 Abstract …………………………………………………………..…......…..2
 Introduction………………………………………………………….…………3
 Economic Conflicts....................................................................................5
 Analysis Of Other Countries Using Competition Laws…………………….….7
 Competition Amd Sports………………………………………..………….……8
 Bcci & Ipl Conundrum.................................................................................9
 Case Analysis...............................................................................................12
 Conclusion....................................................................................................14

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ABSTRACT

The Competiton law here under isnt about the competition on the field of sports, but rather off
the field off sports. The fun activity which we play and see has a multicrore business behind it
making the India’s BCCI the richest association and when such a huge economic value is
involved, there would a competition in market for such, to regulate this kind of market in sports
and make sure no illegal activities happen the ambit of competition law and sports exist and is
important to be governed. The researcher in the present paper have made a clear analysis of
competition law and sports, also comparing it with other countries methods and how such sports
is being commercialised and concluding with the most renowned cases of the competition law
and sports.

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INTRODUCTION

The domain of sports can said to be one of the largest industries among the other industries that
prevail. The sports diaspora has brought along with it not only the gaming activities but served
other purposes such as recreational, political, cultural and business purposes as well. The
sporting industry has always received encouragement from all the directions. However, with a
proliferation in globalization and other developments, the sports industry is emerging to be one
of the most commercialized industries. The economic aspects in this industry have received a
major boom over the course of time. The essence of sports which used to revolve around gaming
at some point of time has majorly transformed today into a money-making business. On the other
hand, commercialization is coupled with the competition. Wherever commercialization comes
into the picture, competition law also comes into picture.

One argument regarding the commercialized nature of the sports industry is that the industry
being a unique one deserves a differential treatment and should, therefore, be kept out of the
clutches of competition law in the country. The sports industry follows a pattern in the structure
of the pyramid in which at the apex lies the sole international federation who shelters the
National sports bodies. For instance, in the game of cricket, the apex body constitutes
International Cricket Council (ICC) and the national sports body in India which represents this
apex federation is the Board for Control of Cricket in India (BCCI).

The pyramidical pattern of working is followed in the sports sector. The contemporary legal
framework which administers sports in India is “National Sports Development Code of India
2011” but the matters of concern which fall within the territory of competition law are absent in
this legal framework. A trend of monopoly has always been prevalent in the field of sports owing
to the existing pyramidical structure, in order to preserve the elements of integrity and uniformity
associated with the field. The competition law in the jurisdiction of USA and EU grants certain
immunity to this sector from the applicability of competition law framework, taking into
consideration certain distinctive features that the industry posseses.1 However the more the sports
industry is turning to be commercially viable, the purview of the immunity is becoming

1
Saksham Malik, “role of Competition law in sports”, Rajiv Gandhi National Law University, Volume 8
treaty of Rome has two provisos -

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narrower. In recent times the activities of various sports organizations have been under the radar
of the competition law.

The major goal of the Competition Act in India is to protect the market from anti-competitive
practices. In recent times certain renowned sports organizations have turned monopolistic in
nature and they are alleged to have taken undue advantage of their monopoly in the relevant
industry. The underlying problem in such a situation is that there exists no express body to watch
over the practices of these sports organizations and this gives them the leeway to act in an
arbitrary manner. These organizations have been alleged to impose different forms of economic
restraints like revenue-sharing, spending caps, drafts, non-tampering clauses etc.

A few esteemed names in the sports federation which involves Board for Control of Cricket in
India (BCCI), All India Chess Federation (AICF) and Athletics Federation of India (AFI) etc
have been dragged into the latest controversies relating to their engagement in anti-competitive
practices, capitalization of intellectual property rights, abuse of their dominant position, media
rights etc. Section 3 and section 4 of the Competition Act which pertain to the prohibition of
anti-competitive behaviour and misusing the dominance held by them respectively are more
often questioned in cases of sports commercialization.

ECONOMIC CONFLICTS

Competition Act is not applicable to the rules of play in the sports. The provisions of the Act
shall be attracted only where economic interests are involved in the play. The concern of the
commission is to keep an eye on the economic practices indulged into the play game. The
Competition Act bears intolerance towards activities such as-

 Obtaining an undue advantage of the dominance

 Secretly conspiring business activities
 Cartelization in business practices as well as in the process of bidding

In India, two cases are majorly responsible to bring sports commercialization within the realm of
competition law as these cases formed the starting point in making the provisions of the
Competition Act potentially applicable to the practices of the sports authorities which seemed
anti-competitive in nature. The case which needs a primary mention in this research is the Indian

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Premier League (IPL) and the Indian Cricket League (ICL) controversy and the second mention
is of the complaint against Hockey India (HI)

In Ms. Shravan and ors v Volleyball Federation of India2

The main agreement was to provide to Baseline to organise volleyball tournaments for the net 10
years. With VFI ensuring that all its players men and women, would participate in competitions
organised by Baseline.

An abuse of dominant position and anti-competitive agreement was argued upon for having
violated Section 3 and 4 of the Act. VFI is the sole regulatory body the organises and regulated
the sport. The CCI took the case examples of BCCI, Athletics and chess case to decide on it.
Taking the Chess case, CCI ensured that the enterprise status of VFI remains under Section 2(h).
VFI has the power to abuse its dominant posisiton independently of competitive forces with its
agreement with Baseline.

The clause of expressing that Baseline will be the sole enterprise to organise volleyball events
for an discriminatory 10 years of time, barring other organisations to host any such events was
clearly an abuse of Section 4(2) (c). The CCI mentioned that due to this huge time period
allowed to Baseline there is also an issue of players not being able to compete in outside events
reduce the quality and their nature of compatibility making it an exclusive private affair.

There is also a clause that would prevent the players in competing in international events like -
Asian games and olympics. This was a violation of Section 4(2)(b)(i). This precedent was taken
from BCCI,3 where it held that BCCI will not sanction, organise, recognise, or support during the
rights period another professional Indian T20 competition that is competitive of the league.4

COMPETITION LAW AND SPORTS

Sports is seen as an economic activity hence it is included in the competition act. When seeking
so we ought to differentiate characteristics of sports are are considered ‘pure sports’ and those

2
CAse No. 01/ 2019 (CCI)
3
Case No. 91 (2013)
4
Vidushpat Singhania , “League Sports Applicability of competition law”, Lakshmi SriSri, Last seen 11 Dec 2020,
3:30pm, https://www.lakshmisri.com/newsroom/archives/League-sports-Applicability-of-competition-law#

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that involve economic activity. This is when ‘specificity of sports evolve. We find this evolution
again in the European Union.

The case for this is Walrave and Koch 5, The European court of justice had considered what is a
pure sports activity and what is an economic activity. They said that those that are not related to
economic activity should not be attached to the EU competition law. In Mecca Medina case, we
find the theory of specificity was limited - as regards the compatibility of the rules at issue with
the rules on competition, the penal nature of the rule at issue and the magnitude of the penalties
applicable if they are breached are capable of producing adverse effects on competition”.6

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 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 . You can find the
similarity between section 3 of the competion act and article 81 and 82 of the European law on
antitrust that regards with the treaty of Rome7. “Section 3 of the competition act agreements,
practices and decisions that are anti-competitive.”

Section 3(1) is a general prohibition of an agreement in the supply of good or services that are
likely to be appreciable to the adverse effects of the competition within India. The section that
has clause (2) enunciates that these agreements are void. Clause 3 of this section mentions that
such deals are anti-competitive. The definition of the term- agreement, is mentioned in section 2
(b) of the legislation. It has a wide ambit and is not exhaustive. And any two parties that involved
any sort of agreement between them are bound to the appropriate legal proceedings. Any
contravention of section 3(2) are void in nature.” In addition and as referred to above, an
enterprise for the purposes of the Competition Act has been defined by Section 2(h), which
expressly includes a department of the government carrying on an economic activity in the

5
Walrave and LJN Koch v. Association Union Cycliste Internationale, ECJ Case No. C-36/74 [1974] ECR 1405
6
Saksham Malik, “role of Competition law in sports”, Rajiv Gandhi National Law University, Volume 8
7
treaty of Rome has two provisos - 102 and 101

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supply of goods and services. 8 What would be the issue connecting sports and competition law?
Can this definition too include sports? Can sports agreement be included in competition act?

“Relevant market” means “the market which may be determined by the Commission with

reference to the relevant product market or the relevant geographic market or with reference to
both the markets”;

“Relevant geographic market” means a “market comprising the area in which the conditions of

competition for supply of goods or provision of services or demand of goods or services are
distinctly homogenous and can be distinguished from the conditions prevailing in the

neighboring areas;”

ANALYSIS OF OTHER COUNTRIES USING COMPETITION LAWS

United Kingdom

WE have earlier seen that the UK follows a non-interventionist approach in sports law. But it too
to some extent as being a part of the EU until 2020, followed the EU mechanism to control
excess abuse of dominant position- Article 82.

The Treaty of Rome, 1957, are also followed, while utilising the provisions of Article 81 and
83(e) of the EC law. Article 82 also mentions that the should not be abuse of any dominant
positions within “common market” or “substantial part of marker”. - Directly or indirectly which
may limit production, impose unfair selling prices, applying dssimilar conditions to similar
trading parties, and also making of conclusion contracts that may make the parties to agree for
supplementary obligations upon the nature of commercial usage that have no connection to the
subject matter of the contracts.

Article 82(2) has not been interpreted as an exhaustive enumeration, but as a list of examples.
This emerges from the wording ‘in particular’ of Article 82(2) as well as case law, Article 82
does not distinguish between exploitative and exclusionary abuse. Yet, it is a generally accepted
distinction, although some abuses can be both.

8
ay H. Topkis , Monopoly in Professional Sports, 58 YALE L.J. 691-712, 695 (1949). 2 2013CompLR297(CCI).

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EU

The meaning of the concepts of dominance and abuse emerge from the case law and practice of
the Commission and the Community Courts, as Article 82 is a framework provision and the
central terms ‘dominance’ and ‘abuse’ are inherently vague. Neither the concept of abuse nor
that of dominance is defined in the EC Treaty. The Commission has not sought to publish
general secondary legislation or substantive guidance, although it did publish enforcement
priorities in December 2008. The Travaux préparatoires to the Treaty were deliberately never
published, although they can be accessed in the Florence archives. In any event, the Community
Courts rarely focus on the intent of the drafters of the EC Treaty.

The concept of abuse is not explicitly defined in the EC Treaty. Such a definition could have had
a limiting effect on its interpretation, because every decision or judgment would have to fit
within the definition. Instead, the interpretation of Article 82 has been developed through case
law, which has allowed the concept of abuse to develop to fit the contours of a particular
decision and new learning to be integrated into the case law in an ever changing economy. This
allows the analysis of the provision to be updated, as interpretations that seemed adequate years
ago may no longer be suitable. However, the lack of substantive guidance as to what does and
does not constitute an abuse has led to an ad hoc process, swayed by the specific facts that come
before the authorities or the courts. It is hard to see a single unifying theory underpinning the
interpretation of Article 82. The law of Article 82 is the result of the cases brought before the
Community Courts.

This has led to some legal uncertainty resulting from the way in which the provision is being
applied in practice and the way in which the legal framework is written. This uncertainty,
especially with regard to the ‘specialty responsibility’ of dominant undertakings, may result in
dominant firms competing less aggressively. However, formalistic rules, as to what does and
does not constitute an abuse in the market, are not helpful or desirable either. It may not be
appropriate to rely on case law decided decades ago in today’s markets which are oft en
characterized by very rapid technological changes, creation and exploitation of intellectual
property rights and high degree of technical complexity. In general, concepts like dominance and
abuse cannot be

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USA

Soccer in USA including baseball are the prominent and rigorous games played in the Country.
They are also known to be internationally acclaimed to be one of the globally strong competitors
in a variety of games. The OECD Report9 mentions that about $16 Billions is earned by the USA
in sole sports sector. The Shermans Act is its competition law. Section 1 of the act prohibits
prevents competitors to unreasonably restrain trade to others. SOme major leagues in the USA
are - National Football League (NFL), National Basketball association (NBA), National Hockey
League (NHL), Major League Baseball (MBL). Section 1 of the SA 10 does not apply to
subsidiaries of a firm or its agreements that happen among members who constitute a single
economic entity. It is the concept of singularity bonded with plurality. The much relevant case is
American Needles case,11 Single exclusive license to grants apparel to all team logos and TMs, a
decision by NFL. THe manufacturer denied this order. The District court denied the case. The
appeal court, followed the principle of “one facet of a league at a time” and said that NFL was a
single economic entity. But the Supreme Court, reversed the order and said the decisions acted as
an instrumentality of the teams and were not a single economic entity.

THE CONCEPT OF COMMERCIALIZATION IN SPORTS

The commercial trends that are occurring in sport are far too important and wide ranging to be
accepted unquestioningly and it is here that there is a role for the sport sociologist; to challenge
some of these practices. While the organizational and managerial changes we have seen take
place as sport has increasingly become a form of commercial activity can be enabling and
beneficial for sport and sports people, they can also be constraining and, as such, should be the
subject of more critical analysis than occurs at present.

The focus is specifically on these organizations not because they are exemplars of marketing
practice, but because as governments in many countries have reduced funding for amateur sport,
marketing has been presented as the solution to financial problems. Approaches do little to
challenge the virtue of commercialization and the managerial actions that have portrayed this
process as a socially desirable and unproblematic practice. Also, they do little to demonstrate the

9
OECD, 2010, http://www.oecd.org/daf/competition/competition-and-sports-2010.pdf
10
Chicago Professional Sports Ltd. v. NBA, 95 F.3d 593, 596 (7th Cir. 1996).
11
24 May 2010

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negative side of this drive towards rationality, or to present new and challenging ways of
thinking about the business side of sport. Rather, such uncritical views are actually concerned
with the preservation of established privileges and priorities such as maintaining hierarchical
control and generating profit.

The marketing of a sport to increase participation is an intuitively appealing and logical function
for a voluntary sport organization. It is also consistent with the directives of mainstream
management gurus who see marketing as concerned with serving the interests of potential and
actual consumers by satisfying their needs.

The basic tenet, whether it being selling chocolate bars or sport, is that an increase in
consumption leads to an increase in satisfaction. The basis of this premise is that an ‘exchange
relationship’ takes place where, in our situation, the voluntary sport organization provides the
opportunity for an individual to participate in the sport and then he or she, in turn, provides
loyalty to the organization through competing for them, paying membership fees, being involved
in social activities and so forth.

The concept of an exchange relationship implies that each individual is free to select the option
they want in a free and open marketplace. It does not take account of the fact that structures such
as socioeconomic status, gender, race, and geographical location can constrain an individual’s
ability to respond to the marketing initiative.

BCCI & IPL CONUNDRUM

In the segment of the game of cricket, BCCI holds a supreme position in the administration of
the game since 1929. Though BCCI carries the status of a private body as decided in the Zee
Telefilms case[4], a recognition has been granted to it that the functions carried out by the body
falls under public duties. In 2008 BCCI introduced a novel T20 cricket tournament, namely
Indian Premier League (IPL). The league started off with a total of eight teams which consisted a
mix of players having different nationalities and the number of teams could increase to a
maximum of ten over the course of time. The selection process of the Board of Directors (BOD)
of IPL is effectuated by the BCCI. BOD is entrusted with several tasks such as framing
regulations pertaining to the concerned T20 league.

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With the entry of IPL in the world of cricket which went on to become extremely popular, BCCI
has benefited in a humongous way raking in thousands of crores every year. The source of these
benefits lies in the very commercial nature of the game. There lies an agreement between BCCI
and IPL according to which a certain percentage of income earned in the course of the league
must be shared by the BCCI, IPL and franchisees in a fixed specific number. The incomes of the
league flow from television rights, sponsorship rights, broadcast rights, gate receipts etc.
Therefore the more the tournament is popular and successful, the more is BCCI in a profitable
position. And therefore constant efforts are taken on the part of BCCI to make the game better
and better.

THE BCCI CASE12

ICL was introduction by Zee televisions. It soon became a rival of BCCI which hosts IPL. In
order to protect its reputation, BCCI imposed severe restrictions. It disallowed players to play
against ICL. This sort of gate keeping would prevent the players journey in any international and
national events. ICL was denied of stadiums and facilities that are mainly controlled by the
BCCI.

ZEE group placed a complaint against BCCI for having used a dominant position to gain for its
needs. The CCI held that BCCI had acted to utilise it dominant position under Section 4(2)(c). It
held - “BCCI represents and warrants that it shall not organize, sanction, recognize, or support
during the Rights period another professional domestic Indian T20 competition that is
competitive to the league” BCCI was penalised for Rs. 52.64 crores.

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 India”.
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 case was cited as a
principle. Where the courts defined what constitutes a relevant market. Which now poses the
main question. What is interchangeability and substitute and what constitutes them. The case in
the majority, said that the price of cellophane makes the consumers to shift towards a packing
12
Case no. 61 (2010)

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material that is of low price, which for example can be a tin foil. This situation can bring a tin
foil to the same market as that of a cellophane.

The above example made CCI to deny BCCI argument which maintained that a player or
consumer would not substitute a TV serial for an IPL match as they are broadcasted together in
the same channel of entertainment.

Ministry of Youth Affairs & Sports v. Athletics Federation of India (AIF)13

The MYAS claimed that AIF was a creation of MYAS and it cannot discriminatorily without
permit organise marathons, without permission as it would be anti-competitive and as its the
decision of allowing unpermitted marathons as per the officials/state units or athletes. The CCI
viewed the relevant market and held that there was a prima facie violation of Section 4 of the CA
act and it should immediately look for investigation. 14 The case is certainly a new one and has
not yet been concluded. There are certain matters to look into as to whether AIF is actually
holding the dominant position or was it MYAS. Even if the autonomy is given to AIF, the issue
of taking permits from MYAS for every conduction of events would not make it the absolute
supreme authority in the market. 15

THE HOCKEY INDIA CASE 16

Hockey is a remarkable sport that had been played in India for centuries. There are several types
of hockey. The one that is most popularly practised in india is field hockey. Besides that, Canada
and UK are famous for ice hockey and rink hockey.

Field hockey is usually played on grass, artificial turf, or watered turf. Hockey stick is the item
that is use to manoeuvre a ball around in the field. Each team has about ten players and a
goalkeeper, who try to score points by manoeuvring the ball against the net of each players field.
It was to one extent accepted as India’s national sport, when it was prospering as an international
game during 1920-1950s.

13
CAse No. 01 (2015)
14
Press Trust India, “CCO orders probe against athletics federation of India”, Economic Times, Last seen 11 Dec
2020, 3:54pm, https://economictimes.indiatimes.com/news/politics-and-nation/cci-orders-probe-against-athletics-
federation-of-india/articleshow/51443981.cms
15
Case no 1 (2015)
16
Case no. 73 (2011)

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Though originally it was played in England, it became quite popular in India with it being
included as an olympics game, and several other tournaments that involve the World Cup,
Champions trophy and also the Junior world cup. Penalty corner and penalty strokes are the two
types of penalty followed in Hockey. The Federation of International hockey recognises -
Dangerous play and raised balls as mischievous tactics legible for punishments. An evasive
action, or the velocity of the ball is increased beyond reasonable control, or if the ball is lifted
above the height of the knee, they fall under the above mentioned category liable for penalty.

In India when we talk about Hockey and its laws, we remember the famous case

Conclusion

The forums in competition law come to the rescue of individuals who stand aggrieved by the
decisions granted by the SGBs.

The conclusions arrived at by the Competition Commission of India (CCI) in the discussed cases
implied that the self-regulation of the sports authorities to a permissible extent can go hand-in-
hand with the competition laws in the country. CCI while respecting this right of self-regulation
in the words “the sports bodies have the right of self-regulation 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” also made it clear that the commercialization in sports industry can
very well fit in the competition regulations. The remarks made by the CCI in the above
mentioned cases reflects the opinion of the CCI on the impugned intersection that “certain
sporting activities are excluded from the purview of competition and the other being the
activities generating commercial gain will be within the ambit and the scope of the competition
statute”.

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