Competition Landscape in the Sports Industry: Unravelling CCI’s Decisions

[By Sumit Jain]

The author is a Senior Resident Fellow at the Centre for Competition Law and Economics.

Introduction

The Competition Act, 2002 (“Act”) was introduced in order to keep pace with economic reforms and pay due focus on sectoral expertise in the country. One such industry which has gained prominence since the Competition Commission of India’s (“the Commission” or “CCI”) inception, is the Indian sports industry.  The Act has changed India’s economic regulatory framework, and it remains important to chart the Commission’s evolution since its inception in the said sector.

Background

The sports sector has observed a tectonic shift in its development post liberalization. From a nationalized industry, the said sector has attracted large investments from private players, majorly in order to exploit the entertainment aspect of it. With the advent of events like Indian Premier League and Go Kabaddi, the organization of sports leagues have seen complete commercialization, thereby leading to an exponential rise of the sports sector in the share of the Indian economy. This sudden increase has also led to invitation of various economic regulators which ensure the infusion of capital into the industry happens in a sustained manner. The increase in investment is also important from the perspective of majority of the sports being played by multiple countries, and governed by a pyramid structure. The structure is ruled by an international regulator at the top, and member countries like India and/or the UK subscribing to it through their respective sports association. This brings efficiency to the game, but at the same time sees continuous influx of regulations across the border. This sometimes leads to a deflection where the policy goals set by the national government may be different from the objects of the international regulator.

CCI’s decisions in the chronological order

1. Surinder Barmi v. Board of Cricket Control of India (BCCI) – 8 February 2013[i]

The Commission first looked into the sports sector in September 2010, where one Surinder Barmi alleged that BCCI was abusing its dominant position in the relevant market of private professional leagues to impose unfair conditions on the various business stakeholders. The informant claimed that the said organization had intentionally auctioned media rights for a period of 10 years in order to foreclose competition for other players in the market. The Commission held BCCI in contravention of the law, and said that there is an inherent conflict of interest in positioning of the Board where it acts as a de-facto regulator for the sport in India, and at the same time accrues financial gains on behalf of conduction of events like IPL. CCI made a clear distinction between regulation of national/first class cricket by the Board, where the primary aim of the event was to play for honour of the game, and organization of IPL where the same was done to exploit the popularity aspect of it. It held that the organization of private cricket professional league should be treated as a separate Relevant Product Market (“RPM”) given that the entertainment offered by it is unique, and is incomparable by other TV programmes and/or national and first-class cricket. The CCI took due cognizance of the pyramid structure of the cricket regulating body, where the national body has to abide by the instructions issued by the international organization, and at the same time show compliance with the national legislative framework.

2. Dhanraj Pillai v. Hockey India – 31 May 2013[ii]

Dhanraj Pillai, among other players, alleged that Hockey India (“HI”) was abusing its dominant position as de-factor regulator of the sport in the Indian market, and imposed unfair conditions on the players while promoting the said sport. Facts of the matter included one Indian Hockey Federation (“IHF”) which organized the World Series Hockey League (“WSH”) in collaboration with Nimbus Sport, and HI along with International Hockey Federation (“FIH”) which had imposed restrictions on Indian players as the said league was an ‘unsanctioned’ event. The CCI held, that HI is not acting in contravention of the law, and certain restrictions imposed by the said body are justifiable in the light of efficiency brought by them. The Commission paid due emphasis on pyramid structure of the sport, and paid heavy reliance on by-laws framed by FIH before concluding the said case.

3. DLF City Club Members Welfare Association v. DLF Limited – 1 July 2013[iii]

The third case was initiated by DLF City Club Members Welfare Association against DLF Ltd. for violation of Section 4 of the Act, alleging appreciable adverse effects on competition. The informant in the said case alleged that the opposite party promised club facility along with the apartment through various advertisements and promotions in the newspapers, however post allotment, DLF started operating the same on a purely commercial basis where it charges exorbitant membership fee from the club users. The Commission closed the matter and held that DLF does not enjoy position of dominance in the delineated RPM, and therefore the question of abuse does not arise.

4. Pan India Infra Projects Private Limited v. BCCI – 16 January 2014[iv]

The fourth case, the relief sought by the informant was quite similar to the one claimed in Surinder Barmi case. The Commission while closing the matter paid due reliance on the said case law.

5. Om Datt Sharma v. Adidas A.G. – 13 May 2014[v]

The informant in the instant case alleged that Adidas, through various acquisitions occupied a dominant position in the delineated relevant market, and was abusing the same by granting less commission rate to the informant, as compared to other dealers in the market. The Commission held that no case for violation of the Act could be brought out by the informant. It recognized the right of the opposite party to enter into an agreement best favorable to its business requirements. It also questioned the inconsistency of allegations on informant’s part where it waited for five years to point out the alleged abuse, and used the same reasoning to rule in favour of Adidas.

6. Ministry of Youth Affairs & Sports v. Athletics Federation of India (AIF) – 16 March 2016[vi]

The said matter which was related to Indian Athletics industry, was initiated by Ministry of Youth Affairs & Sports, Government of India against AIF where it alleged that its decision of taking action against the state units/ officials/ athletes, who encourage unauthorized marathons without taking its permission, is anti-competitive. The CCI delineated the relevant market, and held that the decision by AIF to take action against the state units/ officials/ athletes appears prima facie in violation of Section 4 of the Act. It ordered DG investigation to look further into the case, however the said matter is still pending with the Commission currently.

7. Surinder Barmi v. Board of Cricket Control of India (BCCI) – 29 November 2017[vii]

The Competition Appellate Tribunal (“COMPAT”) remitted the decision delivered by the CCI in Surinder Barmi case back to it on 29 November 2017. The Commission while re-deciding the said matter held on to its definition of RPM, and kept on focusing the inherent conflict of interest present in Board’s positioning. The Commission while finding contravention of Act did give BCCI a chance of hearing, and relied on more credible evidence as per the COMPAT’s Order.

8. Pan India Infra Projects Private Limited v. BCCI – 1 June 2018[viii]

The COMPAT remitted the decision delivered by the Commission in Pan India case, back to it on 30 March 2015. It ordered DG investigation under Section 26(1) of the Act. The facts of the case were quite similar to the Surinder Barmi case, and the matter is ongoing currently.

9. Hemant Sharma v. All India Chess Federation (AICF) – 12 July 2018[ix]

The last case which went to the Commission in the said sector was related to Indian chess market. The informants alleged that the AICF was abusing its dominant position as the de-facto regulator of the sport, where it imposed unfair conditions on the players not to participate in any other league, which was not sanctioned by them. The informants claimed that this affected their ELO ranking, which is widely accepted across the globe to rate the players. The Commission held that AICF is acting in contravention of the law, and made a clear distinction between the regulatory and economic functions of the same. It kept on emphasizing the inherent conflict of interest present in Federation’s positioning, and levied a penalty keeping in line with provisions of the Act.

Analysis

A closer reading of the said case laws would suggest that CCI provided a coherent line of reasoning as far as Surinder Barmi, Pan India and Hemant Sharma cases are concerned. The facts of the cases were quite similar in nature and the Commission took due cognizance of the pyramid structure of sports governance. It acknowledged respective bodies acting as de-facto regulator for the given sport in India. It also showed consistency in defining RPM where it separated the national/state level contest from private professional leagues, and emphasized on the conflict of interest aspect while finding violation. The given line of reasoning could serve as an aid to the Commission for further adjudicating the cases. However, the Commission did falter with its reasoning when it came to the Indian hockey market, where it ultimately found no contravention of the law and let the HI go scot-free. The Commission rationalized imposition of restrictive conditions on the players, even when they had no bargaining power and facts of the case suggesting the opposite. The HI was simultaneously organizing a private league for economic gains when it imposed restrictive conditions on its players not to participate in Nimbus league. This augmented the conflict of interest aspect, thereby putting the HI in a dubious position.

Conclusion

The Commission’s success in deciding sports competition legal disputes has remained somewhat mixed. The aim of the Competition Act was to see economy on a piecemeal basis, and the same is duly reflected in the definition of RPM in the said case laws. The Commission has by and large, done a fair job in interpreting the Act, however, Dhanraj Pillai case should act as a point of reflection where the timeline of events can play a pivotal role in determining questions related to conflict of interest. With sports sector seeing a tremendous rise in the investments from the private sector, one is only hopeful that the Commission’s line of reasoning would get more predictable to give more clarity to the policymaker.

End Notes

[i] Case No. 61 of 2010 of Competition Commission of India.

[ii] Case No. 73 of 2011 of Competition Commission of India.

[iii] Case No. 25 of 2013 of Competition Commission of India.

[iv] Case No. 91 of 2013 of Competition Commission of India.

[v] Case No. 10 of 2014 of Competition Commission of India.

[vi] Case No. 1 of 2015 of Competition Commission of India.

[vii] Case No. 61 of 2010 of Competition Commission of India.

[viii] Case No. 91 of 2013 of Competition Commission of India.

[ix] Case No. 79 of 2011 of Competition Commission of India.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact Us

Kerwa Dam Road., 
National Law Institute University, Bhopal
Madhya Pradesh, India. 462044​.

write to us at – cbcl@nliu.ac.in