ROLE OF

COMPETITION LAW IN
SPORTS AND SPORTS
COMMERCIALIZATION
Meghana N
3 Years LL.B, V Semester
40321111062
CONTENTS
INTRODUCTION
PYRAMIDICAL STRUCTURE
OF GOVERNANCE
COMPETITION LAW IN
SPORTS
CASE LAWS
CONCLUSION
 INTRODUCTION
 At the time of the industrial revolution or rather when the world was facing urbanization, sports were
regarded as a leisure activity rather than a means of livelihood. It was something which people looked
towards to take a break from their daily monotonous lives.

 Largely due to urbanization there was a substantial rise in working-class spending power and a
concentration of free time on Saturday afternoons in spectator sports, all of which encouraged the
marketing of sports sector.

 In response to this, sports promoters and sport club executives enclosed their grounds, erected stadiums,
and started charging fees from people for entry.

 This was the initial bit of commercialization in the sports industry which only caught up from there and
developed into one of the major contributors to the world economy.

 Wherever commercialization comes into the picture, competition law also comes into picture.
 PYRAMIDICAL STRUCTURE OF
GOVERNANCE
 With the development of sports, there was a rise in sports bodies for different sports. In other words, there
used to be governing organization for every sport on the national or the international level.

 In sports industry, we generally see a pyramidical structure of governance. For example, for governing the
sport of cricket in India, we have International Cricket Council (ICC) at the international level and Board of
Control for Cricket in India (BCCI) at the national level.

 It is observed that this pyramidical structure or hierarchical structure of governance allows concentration of
power in a single body because a single organization has authority to call shots, power to decide how the
sport functions, control over sponsorships, participation in competitive events, doping tests, etc.

 When such monopolistic behaviour is portrayed, competition law steps in to monitor if the organizations
are involved in anti-competitive practices or abuse of dominant position in the market.
 COMPETITION LAW IN SPORTS
 Section 3 and 4 of the Competition Act, 2002 are important sections to be noted here. Section 3
deals with prohibition of anti-competitive agreements and Section 4 speaks about probation of
abuse of the dominant position in the market.

 Competition Act is not applicable to the rules of play in the sports. The provisions of the Act
shall be attracted only where economic interests are involved in the play.
 CASE LAWS
In India, there are few cases which are responsible in bringing sports commercialization within the realm of
competition law and they are as follows:

1. SURINDER SINGH BARMI v. BCCI:

 BCCI holds a supreme position in the administration of the game of cricket since 1929.

 In 2008 BCCI introduced a novel T20 cricket tournament, namely Indian Premier League (IPL).

 With the entry of IPL in the world of cricket which went on to become extremely popular, BCCI has
benefited in a humongous way raking in thousands of crores every year. The source of these benefits lies in
the very commercial nature of the game. There was an agreement between BCCI and IPL according to
which a certain percentage of income earned in the course of the league must be shared by the BCCI, IPL,
and franchisees in a fixed specific number.
On November 2, 2010, Shri Surinder Singh Barmi, a cricket enthusiast residing in Delhi filed a complaint against BCCI
before the Competition Commission of India (CCI) alleging:

a. Irregularities in the grant of franchise rights for team ownership.

b. Irregularities in the grant of media rights for coverage of the league.

c. Irregularities in the award of sponsorship rights and other local contracts related to organization of IPL.

The Director General of the Competition Commission of India investigated the matter with respect to the following
issues:

a. Whether the Act is applicable to BCCI or not? and whether BCCI is an ‘enterprise’ as defined u/s 2(h) of the Act.

b. What would be the relevant market in the said case?

c. Whether BCCI has a dominant position in the relevant market as determined?

d. If so, whether BCCI has abused its dominant position in the relevant market in contravention of the provisions of
Section 4 of the Act?
 One defense which was put forth in favor of BCCI was that it cannot be categorized as an
enterprise, a requirement which is necessary in order to be ruled by the Competition Law. The
CCI traced the historical evolution of BCCI and its linkages with the International Cricket
Council (ICC) to hold that the BCCI is a de facto regulator of the sport of cricket in India. At the
same time, BCCI organized cricket events and was thus a commercial beneficiary of the sport.
Given BCCI’s revenue generating capacity by virtue of being an organizer, the CCI held that
BCCI was an ‘enterprise’ under the Competition Act.

 Thus the CCI held the relevant market in the present case to be organization of private
professional cricket leagues/events in India.
 The CCI further held that BCCI was in a dominant position in the relevant market for the following reasons:

(a) BCCI was a de facto regulator of cricket in India

(b) BCCI was empowered by ICC by-laws with the right to sanction/approve cricket events in India and consequently, its
approval is required by any prospective private professional league

(c) BCCI was at a significant commercial advantage by owning infrastructure

(d) BCCI controlled a pool of cricket players under contract.

 The CCI then examined whether BCCI had abused its dominant position in contravention of Section 4 of the Competition
Act. In this respect, the CCI examined Clause 9.1(c)(i) of the IPL media rights agreement whereby BCCI had agreed to not
organize, sanction, recognize or support any other professional domestic T- 20 tournament which is competitive to the IPL.
The CCI held that the above restriction was anti-competitive inasmuch as it resulted in denial of market access to any
potential competitor. It was held that this was in violation of Section 4(2)(c) of the Competition Act.

For the above contravention, the CCI imposed a penalty of Rs. 52.24 crores, being 6% of the average annual revenue of BCCI
for the past three years.
2. THE ALL INDIA CHESS FEDERATION (AICF) CASE:

In the case of Hemant Sharma and others v. All India Chess Federation, AICF by virtue of the authority that it
possesses imposed arbitrary requirements to be fulfilled on its registered players. These players were required to
put a signature on a declaration document which consisted restrictions such as-

 Complete refrainment from taking part in any of the unsanctioned events

 In case of their inability to abide by the above rule, three outcomes would follow. Firstly, they would be
barred from taking part in any event organised by AICF for a period of one year; secondly, in the event of
them gaining any monetary reward through their participation in the unsanctioned event, they should
handover half the income to AICF; and lastly they would lose their significant ELO ratings.

Four of the chess players filed a case against the AICF for indulging in such non-competitive practice. The
findings of the Authority disclosed AICF to have abused its dominant position.
Competition Commission of India (CCI) issued order against All India Chess Federation (AICF)
for abuse of dominant position and imposition of unreasonable vertical restraints on chess players
and organization of chess events and imposed a penalty of Rs. 6.92 lakhs on AICF for indulgence
in anti-competitive conduct.
 CONCLUSION
The remarks made by the CCI in the above-mentioned cases reflects the opinion of the CCI on the
impugned intersection that “certain sporting activities are excluded from the purview of
competition and the other being the activities generating commercial gain will be within the ambit
and the scope of the competition statute.”