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Effect of Competition Law on the Sporting Enterprises

*Harsh Mawar



Introduction

Sports over the years has evolved to be an important sector for all economies with various business and career opportunities. The size of this business differs internationally. It covers a variety of categories, such as sporting equipment, athletic activities, preparation, merchandise development and distribution. Moreover, the sports industry is not only confined to such areas, it has a far-reaching influence on the global economy owing to its strong connection with other industries, including education, real estate and tourism. Further sports provide a major contribution to the general health and well-being of the region.


Sports was not always viewed as an industry. From just being a recreational physical activity, sports has turned out to be a global industry. At present, global sport’s industry worth is estimated to be around $480 to $630 Billion dollars[1]. The growth in the sports industry is due to the rapid growth of media and technology which include the Internet and satellite services. This has made the sports industry one of the biggest revenue-generating industry. As an industry, sports is connected with many other industries like broadcasting, licensing and entertainment industries.


Professional sports leagues such as the NFL (National Football League), NBA (National Basketball Association), Premier League and IPL ( Indian Premier League) have unique business structures in a free-market economy. They seek monetary gain through many ways such as TV contracts, licensing agreements, sponsorship, endorsements and revenue sharing.


Sports as Business in India


The sports revolution in India has sparked a tussle for the economic benefits resulting out of the league system of sports entertainment such as the Indian Premier League. The broadcasting rights for these sporting events have grown to be commercially viable both for the broadcaster and the regulatory authority. The ticketing arrangements, sponsorship allotments and rigging of bids are the major concerns where the realm of competition law and regulations clearly subsume themselves. Thus the separation between the regulatory policies and anti-competitive behaviour is of the primary concern for the Competition Commission. The issues that the sports industry is currently grappling is with regard to the domination of single players in the field of sports. The


The mandate of the Competition Commission of India deals with issues that plague sports industries around the world such as broadcasting rights, discrimination in selection processes, improper allocation of funds and non-accountability in addition to immoral and undemocratic elections.[2] The Indian Competition Act, 2002 states that a dominant position arises when the enterprise has the power to function independently of its competitors and affect them and its consumers in its favour.[3] The Commission then proceeds to identify this dominant position based on Section 19 of the Competition Act. The definition of such a position on the market in the sporting field is difficult, as sporting exceptions are enforced in accordance with the law of reason.


The competition law in India does not refer to the rules of the sport. The rules of the Act shall be drawn only where economic interests are concerned. The Commission's concern is to keep an eye on the economic activities involved in the game. The Competition Act bears intolerance towards activities such as –

• Obtaining an undue advantage of dominance

• Secretly conspiring business activities

• Cartelization in business practices as well as in the bidding process


In India, two cases are primarily responsible for taking the commercialisation of sport into the framework of competition law, as these cases formed the starting point for making the provisions of the Competition Act theoretically applicable to the activities of the sporting authorities which appeared to be anti-competitive in nature. The case that needs primary notice in this research is the Indian Premier League (IPL) and the Indian Cricket League (ICL) disputes [4] and the second is the lawsuit against Hockey India (HI).[5]


BCCI & the IPL Enigma


In the cricket game section, BCCI has held the highest role in the administration of the game since 1929. While BCCI has the status of a private body as stated in the Zee Telefilms case [6], it has been agreed that the functions performed by the body fall within the scope of public duties. In 2008, BCCI launched a new T20 cricket competition, the Indian Premier League (IPL). The league started with a total of eight teams, consisting of a mix of players of different nationalities, and the number of teams could increase to a maximum of ten in the course of time. The appointment process of the Board of Directors (BoD) of IPL shall be carried out by the BCCI.


The Cricket Fan, alleging violation of S.4 of the Competition Act 2002 in 2010, lodged a complaint against BCCI before the Competition Commission of India (CCI). In particular, he lodged a complaint against the BCCI raising objections on three grounds. The first criticism concerned the "grant of franchise rights for team ownership." Second, he asserted asymmetry in the "grant of media rights for full coverage of the game." Then, thirdly, he raised a concern with regard to "sponsorship rights in addition to local contracts relating to the organisation of the IPL." The issues under review, together with the conclusions reached by the CCI, are described as follows in the case:


• BCCI's status as an enterprise–One argument that was put forward in favour of BCCI was that it cannot be classified as an enterprise, a condition that is necessary in order to be regulated by the Law on Competition. In this dispute, the response of BCCI was that it was not a profit-making organization, but its main goal was to promote and support involvement in the cricket game. Nevertheless, the findings of the DG and the Commission made it clear that BCCI's activities and practices have a revenue dimension and therefore fall within the framework of economic activities. As a result, BCCI was eligible to achieve the company's name.


• The problem around the specific market –Every game, be it cricket or hockey or tennis, even though it is covered by a wide range of sports and serves a similar ultimate function of entertainment, has a different flavour and therefore stands in a non-replaceable role with each other. In fact, the separate rights on which the case was based are in a similar position. Even in the cricket group, two distinct subcategories were discussed separately. The first category was the international competition in which 'Team India' plays and the second category was a private T20 league like the IPL organized by the BCCI.


• Place of Supremacy –The origins of BCCI's supremacy stem from the fact that it is the country's sole cricket regulator. Section 4 of the Act sets out the definition of dominant position in the words "dominant position implies a position of strength enjoyed by a company in the relevant market." BCCI deals with all the major aspects of the game, from the provision of organizational resources to the exercise of complete power over the players in the game. The adjudicating authority also considered the attitude of BCCI towards ICL while evaluating its status.


Conclusion


The conclusions reached by the Competition Commission of India (CCI) in the cases under review indicate that the self-regulation of the sporting authorities may, to an appropriate extent, go hand-in-hand with the competition law in the country. CCI, while acknowledging this right to self-regulation in the words "Sports bodies have the right to self-regulation with regard to issues which are solely sporting, such as team selection, the formulation of sports laws, etc., or even issues which have economic aspects, such as the granting of various rights in connection with sporting events or the organisation of leagues, etc." It has also been made clear that promotions in the sports sector will work very well in the competition rules. The remarks made by the CCI in the cases referred to above reflect the opinion of the CCI on the contested intersection that "some sporting activities are exempt from the field of competition and the other being commercial gain-generating activities will be within the scope and purpose of the competition law."


The goal of the game is not to remove the weakest competitors. There is an interdependence between opposing rivals and a need to maintain a balance between them in order to maintain ambiguity as to the outcomes and a degree of equality in order to maintain the interest of the spectators. It is this unique feature of sporting competitions that the competition authorities must bear in mind, as professional sports teams would be free to collaborate in ways that are necessary to maintain a competitive balance and to achieve certain efficiencies that make their sporting brand popular with fans. Sporting federations should not be allowed to dominate the commercial aspect of sport with a view to removing the present pr limiting new entrants in the market.


*The author is a law scholar from Hidayatullah National Law University, Raipur.


(The image used here is for representational purposes only)


References


1. Available at https//www.atkearney.com/documents/10192/6f46b880-f8d1-4909-9960-cc605bb1ff34

2. Gaurang Kanth, 'Emergence of Sports Law in India ' (www.indialawjournal.com 2009)

3. Section 4, Competition Act,2002

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

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

6. Zee Telefilms v. Union of India, (2005) 4 SCC 649.


Endnotes:

[1] Available at https//www.atkearney.com/documents/10192/6f46b880-f8d1-4909-9960-cc605bb1ff34 [2]Gaurang Kanth, 'Emergence of Sports Law in India ' (www.indialawjournal.com 2009) [3] Section 4, Competition Act,2002 [4]Sh.Surinder Singh Barmi v. BCCI, Case No 61/2010, (Competition Commission of India, 08/02/203) [5]Dhanraj Pillay &Ors v. M/s Hockey India, Case No. 73/2011 (Competition Commission of India, 31/05/2013) [6]Zee Telefilms v. Union of India, (2005) 4 SCC 649.