Jurisdiction - India
Reports and Analysis
India – Sports And Competition Law, The Indian Perspective.
12 August, 2013

 

Sports and competition law have had an uneasy relationship for years. The application of competition law to sporting activity (a mix of competition and collaboration) is largely at the level of sporting bodies. Organized sporting activity world over is regulated by bodies at national, regional and grassroots levels, which create and administer sporting rules, as well as determine the commercial aspects of these sports (e.g. exploitation of television broadcasting rights). With the gargantuan amounts of money associated with sporting events, the actions of such bodies have been the subject of scrutiny by competition regulators everywhere.

 

The conduct of Indian sporting associations has not gone unnoticed. In quick succession, CCI has examined the conduct of two sports associations, the Board of Control of Cricket in India (‘BCCI’) and HI. In Surinder Singh Barmi v. BCCI (Case No. 61/2010), BCCI, being the apex body for cricket in India, was held dominant in the market for organizing professional cricket events in India. CCI noted that BCCI, being a de facto regulator for cricket in India, had assumed the right to sanction/approve cricket events in India – approval that it withheld from the rival Indian Cricket League (‘ICL’). BCCI also contractually agreed not to sanction any leagues that might be rivals to the Indian Premier League (‘IPL’) for a period of 10 years. A major factor for ICL going out of business was BCCI’s refusal to allow players and infrastructure to be utilized by ICL. CCI concluded that BCCI’s actions had led to a denial of market access – being an abuse of dominant position under Section 4(2) of the Act. CCI’s order inter alia directed BCCI to ‘cease and desist’ from any practice that denied market access to potential competitors and from using its regulatory powers in matters relating to its commercial activities. BCCI also had to amend its agreement with IPL, wherein, it had originally agreed not to sanction any competitors. As a further deterrent, a penalty of INR 522.4 million (approx. US$ 9.5 million) was imposed on BCCI.

 

Interestingly, CCI also examined the by-laws of the International Cricket Council which empowered BCCI to approve rival leagues. CCI held that while there was some merit in insisting that rival leagues get approval from national sports federations (i.e. orderly development, consistency in application of sporting rules etc.), it would be an overreach to use this regulatory power to protect the market and create a monopoly.

 

More recently, in Dhanraj Pillai & Ors. v. Hockey India (Case No. 73 of 2011.), CCI once again adjudicated upon the conflict between a sporting body’s regulatory powers and its commercial arrangements. Hockey India, the de facto regulator of hockey events in India, was alleged to be abusing its dominant position by preventing hockey players from participating in the rival World Series Hockey league and threatening disciplinary action against those who did. HI was adjudged dominant in the ‘market for organization of private professional hockey leagues in India’, but there wasn’t enough evidence on record to prove an abuse of dominance. For instance, HI had not refused permission to WSH to organize rival league matches. In fact, WSH had not even applied for such permission. Further, the restrictive conditions put in place by HI were proportionate  to its objectives. However, CCI did advise HI to implement an internal mechanism to ensure that its regulatory powers were not misused in commercial matters.

 

In the European Union, competition law began its tussle with sporting activities in the 1970s. In Walrave (It is important to note here that as in BCCI, CCI attached due importance to the proportionality of sporting rules to achieve valid objectives. This is also in line with ECJ’s decision in Walrave ), the European Court of Justice (‘ECJ’) held that the disciplines of antitrust provisions would not ‘affect’ a rule that is of ‘pure sporting interest’ and, thus, has ‘nothing to do with economic activity’. (Philip. J. Closius, Professional Sports and Antitrust Law: The Ground Rules of Immunity, Exemption and Liability, Government & Sport – The Public Policy Issues 143 (Arthur T. Johnson & James H. Frey eds, 1985) s principle applies so long as the rule is of ‘pure sporting interest’ and remains ‘limited to its proper objective’(Ibid, at paragraph 8). In the United States (‘US’), professional sports were considered games rather than businesses, and for a long time, were not subject to a high degree to legal scrutiny (The US Supreme Court in Federal Baseball Club v National League, 259 U.S 200 (1922), decided that baseball was entitled to an immunity from the proscriptions of the Sherman Act.) However, with the increase in wealth and prominence of professional sports leagues, the judicial system underwent a change in perception and outlook. The US Supreme Court began by refusing to extend the antitrust exemption given to baseball  to other sports. This gave players and other stakeholders a mechanism to redress management’s unilateral control over professional sports and bring a sense of equilibrium to the table (Supra Note 4, at page 141).

 

The equilibrium introduced by judicial action in the US is absent in India. Sporting associations in India are more often than not tied to political aspirations. The lack of accountability and the accumulation of power at these organisations are factors capable of skewing the competitive landscape. Sportspersons tend not have a say in matters that concern them and the system for grievance redressal is painfully opaque.

 

Despite this, it appears that CCI has a good handle on the inherent structural deficiencies that characterise organized sports in India, particularly those that can lead to abusive conduct. CCI has tried to address these issues in the cases of BCCI and Hockey India. It remains to be seen whether the principles of fair play and Chinese walls between regulatory powers and economic incentives would be adhered to by other sporting bodies as well.

 

AZB

 

For further information, please contact:

 

Kamya Rajagopal​, AZB & Partners

[email protected]

 

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