[By Pranav Tomar & Umang Chaturvedi] 

The authors are students at the Rajiv Gandhi National University of Law, Patiala. 

Introduction

The commercialization of sports has strongly affected the landscape of sports federations in India. Now, these associations/federations act not only as regulators of domestic sports or facilitators to sportspersons but also add value to business houses. Recent trends prove that these Government-recognized federations are frequently found in conflict while fulfilling their duties due to the unparalleled power that they possess as entities. Hence, a check on such powers is of utmost importance, which can only be ensured through the law of the land.

In consideration of such checks and balances, provisions of the Competition Act, 2002 (‘Act’) prove to be helpful in India. Recently, the Competition Commission of India (‘Commission’) in an information filed by the Confederation of Professional Baseball Softball Clubs (‘CPBSC’) held the Amateur Baseball Federation of India (‘ABFI’) in contravention of Section 4 of the Act (abuse of dominant position).

In this piece, the authors analyse the acts of ABFI through the lens of precedents and the Indian competition law regime and will attempt to provide solutions to sports-related competition law violations.

Facts of the Amateur Baseball Federation’s case

CPBSC was a not-for-profit organization that worked for the development of baseball and softball privately, whereas ABFI was a National Sports Federation affiliated to the Sports Ministry that acted as the national regulator of baseball. ABFI was also affiliated with international baseball regulators and was officially entrusted with the duty of promoting the sport through various means.

The matter stems from the act of CPBSC where it intended to organize an intra-club national Championship in February 2021 to provide a platform to young players. However, ABFI through its regulatory powers issued a letter dated 7^th January 2021 that prohibited State affiliates from acknowledging private bodies and further threatened the interested players with disciplinary action if they participate in any unrecognized league. In fright, the registered clubs revoked their participation from the Championship which caused losses to organizers, i.e. CPBSC. Simultaneously, ABFI scheduled its flagship National Championship amidst the second wave of pandemic in late March 2021 and notified through a communication dated 1^st March 2021. Eventually, the aforementioned communication turned out to be malafide considering that it was released after CPBSC finalized the dates of its private Championship and ABFI deliberately scheduled it on similar dates only to cause hindrance to CPBSC.

ABFIs Championship was an event of utmost importance to all players as it gave them a chance to be considered for representing India in future. Hence, such acts caused chaos amongst the players and state bodies which forced them to choose ABFIs league only by not participating in another opportunity which was offered by CPBSC.

ABFI case vis-à-vis precedents

To tackle abuse of dominant position information, the foremost question the Commission faces is whether the organization is an enterprise? The commercial role of sports organizations forces them to comply with the definition of “enterprise” as provided under Section 2(h) of the Act. It was noted in Surinder Singh Barmi v. BCCI (‘Barmi’) that the definition of an enterprise is “wide enough to include any economic activity by an entity”. However, in ABFI’s case, the Commission went a step ahead and noted that even a non-commercial economic activity shall be subjected to the scrutiny of the Act. To do so, it used the “functional approach”, which has been relied upon in various Indian cases but primarily finds its mention in MOTOE v. Elliniko Dimosio. The approach suggests that every function shall be assessed separately as a federation may act as an enterprise when it is carrying one activity and not when carrying any other. In MOTOE, the Grand Chamber of the European Court of Justice stated that the economic activity having any connection with a sports-related act i.e. essential function does not restrict such entity from being scrutinized as an enterprise that in Indian parlance is defined under Section 2(h) of the Act.

Further, the procedural set-up of the Act suggests that when the Commission adjudicates upon abuse of dominant position, a three-fold process is followed –

• Delineation of the relevant market in which enterprise exists

Section 2(s) of the Act defines the “relevant market” for appropriate adjudication and determining the scope of the investigation. The relevant geographic market from Barmi to ABFI has always remained the same, in essence, India. It is the delineation of the product market that was presented through different approaches – (i) Consumer & multitude relationship approach (which states that federations have multiple functions to discharge with regards to other enterprises and consumers) in Dhanraj Pillay & Others v. M/s Hockey India (‘Pillay’); and (ii) the principle of substitutability (of sport & of services provided by one governing body) in Ministry of Youth Affairs and Sports v. Athletics Federation of India (‘AFI’).

Based on the above-mentioned principles, the relevant market in ABFIs case was delineated as “market for organization of baseball leagues/events/ tournaments in India” because (i) no other sport can replace baseball; and (ii) no other regulatory body provides the necessary services.

• Establishing the dominance of enterprise within its relevant market

The term “pyramid structure” finds utmost importance when determining the dominance of a sports organization. It refers to the organizational structure of sports entities which is modelled to fulfil governance loopholes. For instance, the Basketball Federation of India is the regulator and facilitator of basketball in India and has been recognized by another bigger regulator at the international level i.e. Fédération Internationale de Basketball. The same stands true with BCCI and ICC in the context of cricket. The pyramid structure has been noted in various cases in India like Barmi and Pillay. Although the pyramid is a monopolistic structure in itself, it ensures uniformity of sports globally. However, such structure makes these organizations the de facto authority coupled with factors like unilateral decisions, malafide bans on respective athletes, disapproval to local leagues, etc. further establishing their dominance before the Commission.

Hence, in the instant case, the Commission held that an apex organization with such international links and affiliations plays a decisive role which makes ABFI a dominant enterprise.

• Abuse of such a dominant position by the enterprise in its relevant market

The duties of federations to regulate welfare within the domestic circuit and further promote it as the sole authority are sufficient to decide that these organizations thrive because of the monopolistic pyramid setup. However, the traditional three-fold analysis of the abuse of dominant position does not reprimand mere dominance in the relevant market but additionally, requires the abuse of such dominant position.

In the context of sports federations, Hemant Sharma v. All India Chess Federation (‘AICF’) guides with respect to a non-exhaustive list of acts that were considered abusive by the Commission. The players in the AICF case were supposed to sign a declaration that would bind them in restrictions like – (i) withholding participation from any event not recognized (sanctioned) by the AICF; (ii) violation of the aforementioned condition would bar them from participating in recognized events for one year and might affect their ELO rankings adversely. Further, any monetary benefit gained from an unsanctioned event would force the player to share his earning with AICF to the extent of 50%.

While drawing parallels to the present case, it can be construed that the act of ABFI (through communication dated 7^th January 2021) restricted the growth of players by restraining them from participating in private championships. In addition, the imposition of a ban in case a player representing in a private league is also violative under the Indian competition law regime. The malafide act of ABFI to deny market access to CPBSC by obstructing its championship violates Section 4(2)(c) and also “restricts the provision of services and market” thereby violating 4(2)(b)(i). Moreover, the communication mandated strict action against players who appear in CPBSCs Championship imposing an unfair condition like in the AICF case and violates Section 4(2)(a)(i) as well.

Conclusion

It is a matter of time when the limited defences lying with these sports organizations will become obsolete as with each decade passing, the commercial and economic function of federations have seen an upward trend. Though profit-making is not the primary focus of federations but the fact that they generate money in contemporary times is undisputed.

The ABFI case cannot be solely looked at from the perspective of federations or offenders. On the other side of the table are athletes/sportspersons/players who mostly have a short career when compared with other professions. The peak of these participants do not subsist for a long period of time and hence, these malafide unilateral decisions by federations act as a huge obstacle and additional burden to players. This is not merely an issue of competition violation but forms overlap with sports law and governance as well. A live example of the same lies with the Basketball Federation of India where players and sporting culture is suffering because of the power-tussle of two factions in organizational structure.

Indian dispute resolution mechanism can take lessons from the Australian Sports Commission that is empowered by the Act of 1989. The Australian Commission works in “supporting and investing” sports in Australia. In India, the Indian Olympic Association established the Indian Court of Arbitration for Sports with a similar objective i.e. to facilitate sports-related matters and settle such disputes in the country, but its mention cannot be found since its declaration in 2011.