Search

Competition Law in Sports

*Rutuja Dhotre



“One man practising sportsmanship is far better than a hundred teaching it” - Knute Rockne


Introduction


With the globalization and liberalization of the world, the markets have become very competitive in the economy. However, competition can produce reasonable prices for the consumers; innovation, productivity, and optimum resource allocation can also be misused by resorting to anti-competitive practices. In India, the Competition Act, 2002 (hereinafter referred to as the ‘Act’) was established to ‘prevent practices having an adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets.[1] The Competition Commission of India (CCI) is set up by the Central Government, which came into effect on 14th October 2003. The duty of CCI is to create and sustain fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets work for the welfare of the consumers.[2] Sports are no less than entertainment these days. It is making millions of money in the industry, contributing to the economy. With the development and commercialization of the sports sector, competition has tremendously increased between the various sports industries. This competitive nature of the sports sector has further attracted the sports industries to share and invest in the Indian economy. The competition law comes into play to govern the economic practices of the sports industries and prevent them from pursuing anti-competitive behaviour in the market.


Governance of Sports


All around the world, sports are governed in a pyramid structure, i.e. the International Federations (IF) being at the apex and other various National Sports Federations (NSF) are affiliated to the IFs. For example – in cricket, International Cricket Council (ICC) is the apex body, i.e. the IF and the Board of Control for Cricket in India (BCCI) is the national body for cricket governing in India. The function of the IFs is to lay down the rules and regulations for the particular sport, such as the eligibility criteria, playing conditions, etc. The IFs also schedule the annual sports calendar of that sport and conduct tournaments at the world championships and the international level. On the other hand, the NSFs being the member of the IFs regulate the sports at the national level. They also schedule the annual calendar under the guidance of the IFs and conduct tournaments and training camps for the players of their respective country. Though the pyramid structure provides an efficient system of sports governance, it has led to many issues with the regulation across borders.


Applicability of the Competition Act

The Act does not apply to the rules and regulations of the game or that particular sport. The Act plays its role only when there arises economic conflict in the game. The CCI only looks upon the economic practices of the sports industries of the games.

The Act ensures the following activities are not practised [3]:-

  1. Undue advantage through dominance

  2. Conspiring business activities

  3. Cartelization in business practices as well as in the process of bidding


Case laws


The competition law and sports interface were brought into play when CCI gave decisions in some cases. These cases are the reasons why sports commercialization is regulated under the competition law, and provisions were framed in the Competition Act accordingly.


The BCCI’s Case – Surinder Barmi v. BCCI [4]


In the game of cricket, BCCI holds a supreme position in the administrative body since 1929. In 2008, BCCI introduced the T20 cricket tournament, also known as the Indian Premier League (IPL). IPL became a very popular sport and earned huge profits. In September 2010 a complaint was filed by one Surinder Barmi before CCI alleging that BCCI was abusing its dominant position. The 3 allegations were:

  1. Grant of franchise rights for team ownership;

  2. Asymmetry in the grant of media rights to make full coverage of the league;

  3. Sponsorship rights in addition to local contracts related to the organization of IPL.[5]


The CCI held that –

  1. BCCI was given a tag of an enterprise;

  2. The relevant market was considered as “underlying economic activities which are ancillary for organizing the IPL T-20 cricket under the aegis of BCCI”;

  3. The CCI took cognizance of the pyramid structure wherein BCCI misused its dominant position and power.


Another case of BCCI was that regarding the Indian Cricket League (ICL), which the board of Zee Group brought. The ICL alleged that BCCI had abused its dominant position through various ways such as[6]:-

  1. Introducing IPL, which is similar to that of ICL and hurt the sentiments of ICL.

  2. Banning cricket players and other officials from participating in the tournaments that the BCCI has not authorized.

  3. Denied ICL to access the stadiums and other essential facilities because ICL faced a major loss.


Thus the CCI held that the BCCI had abused its dominant position by being contrary to the provision of S.4(2)(c) of the Act and was also fined with a charge.


The Hockey India Case – Dhanraj Pillai v. Hockey India [7]


International Hockey Federation (FIH) is the apex body in the pyramid structure of the hockey game. It operates in India through Hockey India (HI). Indian Hockey Federation (IHF) and sports marketing company ‘Nimbus Sports’ organized an event ‘World Series Hockey. The HI and the FIH banned the Indian players from participating as the said league was an ‘unsanctioned’ event. So Dhanraj Pillai, one of the players, alleged that HI was abusing its dominant position in the Indian market by restricting players during the promotion of the sport. The CCI held that HI was not acting against or contrary to the rules. It followed the pyramid structure-based model and paid attention to the laws imposed by the apex body.


All India Chess Federation (AICF) Case – Hemant Sharma &Ors. v. AICF [8]


In this case, the informants alleged that the AICF abuses its dominant position by imposing restrictions and unfair conditions on the players. The players were refrained from participating in any unsanctioned event. As a result of which the players had to divide their income in half with AICF and also they would lose their ELO rankings which rate the players across the world. The CCI held that AICF was abusing its dominant position and the AICF also made a distinction between the revenue aspect and the administrative aspect of the game.


Conclusion

With the pyramid structure, one can see how the apex bodies sometimes abuse their dominant position by inculcating dominance over the other sports governing bodies, players and officials. Many sports organizations utilise monopoly practices in the market to earn profits and success, leading to anti-competitive behaviour in the market. According to CCI, it was held that the sports bodies could impose regulations by themselves provided it is implemented for the sake of sports issues only. The CCI mentioned that those games which aim for commercial gain will be drawn in the ambit of the Competition Act and the Act will come into play further on. Thus, the commercialization of sports should not be overlooked as it can lead to the loss of players at an individual level and can result in the loss of the country in terms of reputation and economics.


*The author is a law scholar from Indian Law Society's Law College, Pune.


(The image used here is for representational purposes only)


References


1. Competition Act, 2002, Preamble


2. Competition Commission of India, 15 March 2021, https://www.cci.gov.in/about-cci


3. Gazala Parveen, “Role of competition law in sports commercialization in India”, Blog.ipleaders, 16 March 2020,https://blog.ipleaders.in/competition-law-sports-

commercialization/


4. Gazala Parveen, “Role of competition law in sports commercialization in India”, Blog.ipleaders, 16 March 2020,https://blog.ipleaders.in/competition-law-sports-commercialization/


5. Sh. Surinder Singh Barmi v. BCCI, Case No 61/2010, (Competition Commission of India, 08/02/203)


6. Gazala Parveen, “Role of competition law in sports commercialization in India”, Blog.ipleaders, 16 March 2020https://blog.ipleaders.in/competition-law-sports-commercialization/#_ftnref4


7. Saksham Malik, “Role of Competition Law in Sports”, penacclaims, Volume 8, January 2020, ISSN 2581-5504 http://www.penacclaims.com/wp-content/uploads/2020/02/Saksham-Malik.pdf


8. Dhanraj Pillay &Ors v. M/s Hockey India, Case No. 73/2011 (Competition Commission of India, 31/05/2013)


9. Hemant Sharma and others v. All India Chess Federation (CCI, Case No 79/2011)