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INTERPLAY BETWEEN COMPETITION LAW AND INDIAN SPORTS SECTOR

INTERPLAY BETWEEN COMPETITION LAW AND INDIAN SPORTS SECTOR
  • Abstract

“Sport is part of every man and woman’s heritage and its absence can never be compensated for.”  – Pierre de Coubertin

Sports have never been the same since ancient times. The sport began as a recreational activity in ancient times, evolved into a part of a country’s culture, and has evolved into a business in the modern era. Esports is an emerging industry that gained prominence recently but is already experiencing significant commercial success. Today, sports are one of the most lucrative sectors, with large sums of money being invested. With sports having developed into an industry, it is necessary to bring them within the ambit of competition law. Due to the BCCI abusing its authority, it has invited the Competition Commission of India (CCI) to monitor the sports industry and ensure fair trade practices are followed. For decades, competition law has governed the world of sports, and the interface between the two has evolved greatly over time. This article will address the relationship between sports and competition law, as well as its evolution.

1. INTRODUCTION

In India and around the world, organized sports have evolved in a strikingly unique fashion. On the one hand, historically popular sports such as cricket and football have endured and evolved in terms of money involved and societal contribution. On the other hand, professional sports have evolved into previously unimaginable types. Cricket has developed into a global industry, and in some countries, such as India, it’s become a religion. Competition laws prohibit unfair trading practices. Not only are unfair trading practices prohibited, but monopolistic trade activities, cartelization, and other anti-competitive deals are also prohibited. Anti-competitive agencies exist for these industries, intending to prevent their competitors from reaching their target markets by unfair means. Due to the competitive climate in the sports market, the application of Competition Act becomes important.[1]

2. INDIAN COMPETITION LAW AND ITS APPLICATION IN SPORTS SECTORS

The Indian competition law is comparatively new. The earlier Monopolies and Trade Practices Act, 1969[2] (MRTP Act) only dealt with the monopoly restriction, and other relative anti-competitive practices were not focused under the MRTP Act. Hence in 2002, the new law came into force, Competition Act, 2002 (Hereinafter Act) with the objective to prevent malpractices in the market such as anti-competitive agreement, bid rigging, abuse of dominance, etc.[3]

Even though the statutory provisions regarding the competition is comparatively new, CCI has decided upon some important cases when it comes to the anti-competitive practices in sports regime. The commission has made repeated attempts to ensure that the sports industry develops to prevent indiscriminate abuse of this power.[4]

Because of the numerous federations of sports that have been recognised internationally, sports generally follow the pyramid structure of the sport. The Helsinki report of the European Commission was concerned with the integrity, uniformity, and control over non-discriminatory rules applied to sports around the world and the encouragement of the immense growth of sports around the world.

There are specific laws in place by the International Federation of Sports (FIFA) to ban rival events. Many industrialists simply want to make easy money by taking advantage of the system in countries such as India, where sports is unique because it follows the pyramid structure of sports, which ensures monopoly to maintain the sty and integrity in sports, and where the pyramid structure of sports is followed. 

 3. COMPETITION ISSUES IN SPORTS SECTOR

Many companies tried to form a monopoly on a particular sport and hence considering this position of sports sector there are following competition issues in the sector: 

  1. Jurisdiction of CCI to deal with the sports issue 

Specifically, the Commission emphasised that the Act concentrates on the functional features of an entity rather than institutional aspects. To ensure that almost all entities are covered, ‘person’ and government agencies are included in the institutional definition. The government’s sovereign functions are the lone exception to the rule. Whether or whether an entity qualifies as an enterprise under the Act depends on the nature of its activities. “Organization” refers to actions that generate cash for sports federations, such as the sale of tickets and media rights. The activities of organising events are unquestionably economic activities, as the activities of sports federations have a financial component.[5]

  • Defining Relevant Market.[6]  

It is very difficult for the CCI to decide the relevant market, especially the sports sector. In the BCCI Case[7] CCI found that “Every sports event is unique in itself and commands its own fan following. Cricket also has its own characteristics that differentiate it from other sporting events or other entertainment events. It can also be argued that the intention of the ultimate viewer is entertainment and therefore, there is a case for broadening the definition and including other sports and entertainment forms. This argument however does not hold if we consider the demand substitutability of the various forms of entertainment.” Based on viewership data and the SNNIP test the Commission held the relevant market “Organization of Private Professional Cricket Leagues/Events in India”.

In the Hockey Case[8], The Commission’s opinion was that “the sports sector comprises a multitude of relationships. For example, a sports Federation may be a seller of various rights such as media rights, sponsorship rights, and franchise rights associated with each event, and correspondingly there would be a separate set of consumers for such rights. In this multitude of relationships, defining the relevant consumer, a priori would enable defining the relevant market”. Accordingly, the Commission defined relevant market from the perspective of foreclosure of the market for hockey events to rival leagues’ as “the market for organization of private, professional hockey leagues in India”. 

  • Sport Association as Enterprises

In the BCCI case, it was determined that the component of “organisation” includes operations that contribute to the earnings of the BCCI, such as the provision of media rights, the selling of tickets, and other similar activities. Due to the fact that BCCI’s organisational activities include generating revenue, the actions of “organising events” are categorically considered economical.

Based on international precedent and the Delhi High Court’s findings, “all sports associations should be viewed as businesses in terms of their entrepreneurial conduct and handled on par with other businesses.”

  • Abuse of Dominance 

It is always rightly said that absolute corruption occurs when there is absolute power. The Abuse of Dominance under competition Act, 2002 is defined considering the position of enterprise and the strength of the enterprise is one relevant Market. 

In the sports industry, the organisation that regulates and looks after promoting that sport is only one single authority. e.g. International Hockey Federation(FIH), International Cricket Council(ICC) etc. So it is a pyramid structure where only one authority is granted with the whole power and has its monopoly. Abuse of dominating position is punishable under Section 4(2)(c) of the Act. As a result, the BCCI’s policy of banning players from local events because they’ve joined competing leagues could prove the abuse of dominance.

According to section 4(2)(c) of the Competition Act, 2002, the BCCI can be held liable for abusing its dominant position if it refuses to allow its competitors to use critical facilities under its control.

  • Bid rigging 

The next key issue that must be addressed is bid rigging. When one party is promised a commercial contract, although other parties are present for the sake of appearances, it is considered to be a type of price-fixing.

Lalit Modi is accused of fixing bids, among other things. In addition, there was collusion among bidders, which falls under the jurisdiction of the Competition Commission. A CCT complaint under Section 3 of the Act is sufficient to argue that IPL officials urged the Shoots and Adani families to keep their bids mildly over $300 million, or that IPL officials recommended the Kochi consortium to keep their bids modestly below $300 million.[9]

4. WAY FORWARD 

A few recommendations are made by the researcher, however, to further aid in the creation of good market conditions in this particular field:

  • It is important to distinguish between economic operations and purely regulatory/organizational functions. As we’ve seen, governance entities make a lot of money from commercial ventures and other sources. These duties are often intertwined with their regulatory and organisational responsibilities. It will be easier for authorities to take necessary action if these activities are clearly defined.
  • A balance must be struck between government accountability and autonomy. As a result, a balance between the two is required.
  • Government support and investment in sports is minimal in developing countries like India. Future investments by the government will ensure that governing agencies do not heavily rely on commercial profits.

[1] Tejaswini and Uttakarsh Mattikop, Competition Law and Sports, Issue 2 volume 3, JURIMPERATOR, (March 2019), http://journal.jusimperator.org/wp-content/uploads/2019/03/TEJASWINI-UTTAKARSH-MATTIKOP.pdf (Last visited on 13 August, 2021).

[2] The Monopolies and Restrictive Trade Practices Act, 1969, Act no.54 of 1969.

[3] Section 3 and 4, Competition Act, 2002.

[4] Saksham Maik, “Role of Competition Law in Sports”, Volume 8, Pen Acclaim, (January 2020), http://www.penacclaims.com/wp-content/uploads/2020/02/Saksham-Malik.pdf (Last visited on 13 August, 2021)

[5] Isha Bhalla, Sports and Competitition Law, https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.398.6648&rep=rep1&type=pdf (Last visited  on 13 August, 2021).

[6] Singh, Vijay Kumar, A Primer on ‘Sports and Competition Law Interface’ in India (February 2014), SSRN  https://ssrn.com/abstract=2973042 (Last Accessed on 13 August, 2021).

[7] Case 61 of 2010, Competition Commission of India.

[8] Case no 73 of 2011, Competition Commission of India.

[9] Isha, Supra 5.

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