[By Anushka Ajay]
The author is a student of National Law Institute University, Bhopal.
INTRODUCTION
Competition law has increasingly addressed healthy competition in sports, where various organizations train athletes and regulate sports. The recent Competition Commission of India (hereinafter ‘CCI’) order in In Re: TT Friendly Super League Association v. Table Tennis Federation of India (TTFI) reflects a growing trend of sports federations engaging in monopolistic and anti-competitive practices, including disputes over player participation in tournaments, raising concerns about the balance of power.
ANALYSIS
Sports organisations as ‘Enterprise’
The first step in applying competition law is determining if the subject is an “enterprise”, a concept explored in Surinder Singh Barmi v. BCCI. In this case, the informant filed a complaint against the BCCI over its handling of IPL franchise, media, and sponsorship rights. During investigation by the CCI, BCCI argued it was not an enterprise, thus outside CCI’s jurisdiction. The CCI ruled that the BCCI qualified as an enterprise under the Competition Act, 2002 due to its commercial activities like media rights sales and ticketing, despite being a non-profit entity. The CCI’s ruling followed European case laws, such as MOTOE v. Elliniko and Meca-Medina, which recognized sports as economic activities subject to competition laws. This was reaffirmed in Dhanraj Pillay v. HI and applied in Hemant Sharma v. AICF, where the AICF was also deemed an enterprise due to its involvement in commercial activities beyond its regulatory functions.
Carving out the Relevant Market
Relevant market is defined under Section 2(r). The CCI agreed with the Director General’s (hereinafter referred to as DG) market definition, considering table tennis’ unique characteristics, event and player restrictions, and the national oversight by TTFI, with rules enforced by state and district associations, reflecting the competitive pressures faced by the enterprise. It was defined as:
- ‘Market for organization of table tennis leagues/events/ tournaments in India’- Upstream Market
- ‘Market for provision of services by the players for table tennis leagues/events/ tournaments in India’- Downstream Market.
Dominant Position
The Commission recognized the dominance of organizations in India’s table tennis ecosystem, including district associations, state associations, and the national federation- TTFI. TTFI, the apex body, oversees player selection, organizes events, and has authority at all levels, thereby monopoly in regulating the sport. This domination extends to player participation and unsanctioned events. The Commission referenced the European Commission’s 2007 White Paper on sport, noting that sports organizations, structured as pyramids, require autonomy to enforce regulations like integrity standards and broadcasting rights, which can limit economic freedom.
Abuse of Dominanace
Violation of Section 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the Act- Abuse of dominant position.
The Informant claimed that The Suburban Table Tennis Association (TSTTA) General Secretary posted a WhatsApp message restricting players, coaches, clubs, and academies from joining non-affiliated organizations, with penalties for non-compliance. Despite receiving a petition and legal notice, TSTTA continued these practices. The Commission upheld the DG’s findings that TSTTA violated Section 4(2)(c).
The DG found Clauses 22(d) and 22(e) of the MSTTA Constitution anti-competitive. Clause 22(d) restricts unauthorized tournaments, and Clause 22(e) allows preventing harmful actions. A WhatsApp message advising against participating in an “unofficial” tournament violated Sections 4(2)(c), 4(2)(a)(i), and 4(2)(b)(i) of the Act. The Commission agreed, but excluded Clause 22(e) stating that it is necessary to uphold sports integrity.
The CCI found that clauses in TTFI’s MoA are restrictive, unfair, and anti-competitive. They prevent the organization of unauthorized tournaments and prohibit player participation in unaffiliated events. This limits player opportunities, creates barriers for independent organizers, and stifles competition, violating Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Competition Act.
The CCI partially agreed with the argument that TTFI issued a notice to clarify misrepresentation. However, TTFI went beyond clarification, actively discouraging participation and restricting affiliated state associations from organizing the GSL event without prior approval. The CCI concluded that TTFI’s actions violated violate Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Competition Act.
Violation of Section 3(1) read with Section 3(4) of the Act- Anti- competitive agreements.
The DG found a vertical relationship between TSTTA and its players, similar to the AICF-chess player relationship in the Hemant Sharma case. CCI in Hemant Sharma case observed that there exists a vertical relationship between AICF and chess players as AICF buys their services for organisation of chess events AICF is the consumer of services of chess players for the organisation of any chess event. This tantamount to a vertical relationship as AICF and the chess players are at different stages of the supply chain. Similarly, The WhatsApp advisory by TTFI created barriers to market entry and hindered competition, violating Section 3(4) of the Competition Act.
CCI agreed with the DG’s conclusion about the vertical relationship between TTSTA and players. It found the advisory restrictive, creating entry barriers and foreclosing competition, thus violating Sections 3(4)(c) and 3(4)(d) of the Act.
The Order
The Commission found that the OPs violated competition law, including anti-competitive agreements and abuse of dominance. While violations were established, the Commission opted against a monetary penalty due to the OPs’ corrective actions, such as withdrawing anti-competitive clauses and issuing clarifications. However, a cease-and-desist order was issued with a stern warning of aggravated penalties for future violations.
DIFFRENTIATING BETWEEN REGULATORY AND ECONOMIC ROLES
The CCI has frequently examined the distinction between regulatory and economic roles of sports organizations, starting with the Dhanraj Pillai v. HI. It highlighted the variety of relationships in the sports sector, such as federations selling media, sponsorship, and franchise rights. It also emphasized that viewers and sports federations themselves are key consumers, shaping the relevant market.
Competition concerns often arise in sports due to the clash between federations’ regulatory and economic functions. While a hierarchical structure is common in sports, overly restrictive rules governing players and events can hinder economic activity. These restrictions, though potentially justifiable for development of integrity, violates competition law if unwarranted. Moreover, the dual role of sports bodies as both regulators and organizers can create conflicts of interest, potentially leading them to suppress competition to safeguard their own commercial interests.
SCOPE OF IMPROVEMENT FOR CCI
There are several areas where Indian competition law can be enhanced: (i) Defining legitimate goals to justify actions, (ii) Justifiability of bans, (iii) Thorough evaluation of the commercial viability: whether benefits that can outweigh their anti-competitive effects.
Legitimate Goals
Section 4(2) of the Competition Act prohibits dominant entities from restricting market access, but the CCI allows restrictions if they serve a legitimate objective, similar to the ‘objective justification’ defense. However, the concept of a legitimate goal remains unclear in Indian law, with regulators often presenting various objectives without systematically evaluating their legitimacy in practice.
The concept of “destructive competition” and “discipline in sports” which is used by the courts to support anti competitive practices by sports federations is vague and lacks clear definition. In the TT Friendly Super League case, the regulator banned players from participating in unrecognized competitions, citing “discipline” and “avoiding destructive competition” as reasons. While the CCI called for further investigation, it did not address the ambiguity of these terms. “Destructive competition” is unclear in the context of sports, and “discipline” was not well-defined. Similarly, when the All India Chess Federation imposed bans for “instilling discipline,” the CCI accepted this explanation without probing its meaning or considering other possible justifications.
Even when rejecting justifications, as seen in the Surinder Barmi case where the CCI dismissed a media company’s commercial interests as incompatible with cricket’s “best interests,” it has not consistently analyzed the merit of such objectives. This lack of scrutiny undermines the essential task of balancing legitimate objectives with the prevention of anti-competitive behaviour. If a regulator cannot justify its actions, it risks facilitating anti-competitive practices.
A more thorough and critical evaluation of regulatory objectives could improve the investigation process. In the TT Friendly Super League case, the CCI might have concluded its inquiry by questioning the rationality of the stated objectives. Therefore, a deeper analysis by the CCI is crucial for effective competition regulation, ensuring that regulations genuinely foster fair competition and do not obscure anti-competitive conduct.
Player Ban
In the Dhanraj Pillay case, the CCI deemed a twelve-month ban acceptable, noting it was applied prospectively and without malice. However, it did not assess broader justifications for bans or set a maximum duration. The CCI has often ruled lifetime bans as violations, such as in the TT Friendly Super League case, where the Association issued letters stating that players involved in unapproved competitions would be barred from participating in tournaments organized by the District or State bodies and the Federation.
The CCI’s approach to player bans is overly normative and insufficient. It should assess whether the ban’s duration is proportionate to the violation. The view that bans are always unjustifiable is unsustainable, as sports regulators have legitimate objectives. Bans should be reserved for serious infractions, though defining serious violations can be challenging.
Commercial viability
The CCI has often failed to consider the commercial viability of sports when relevant, as seen in the Surinder Barmi case. In 2011, despite cricket’s uncertain commercial success at the time, the CCI did not assess how regulatory backing could benefit the sport. While the outcome might have been the same, the lack of reasoning to clarify this is concerning, raising the broader question of how to evaluate a sport’s commercial viability.
CONCLUSION
The CCI’s decision in the TTFI case, while holding them liable, resembles the Dhanraj Pillai case where the organization escaped punishment despite acknowledging potential violations. This marks a step back from the progressive Hemant Sharma judgment, which emphasized healthy competition.
The mere cease-and-desist order is insufficient, especially considering the commercial losses suffered by players due to TTFI’s past actions. The CCI should have analyzed the legitimacy of TTFI’s objectives, distinguishing between genuine justifications and attempts to mask anti-competitive motives.
Furthermore, the decision lacks a nuanced analysis of the circumstances under which bans may be justifiable, considering their potential impact on players’ careers. Finally, the CCI should have considered the sport’s commercial viability and provided a framework for navigating the intersection of competition law and sports.