Introduction
Sports activities have been recognized as an important financial contributor to a nation’s economy and the same is applicable in the Indian Context as well. Organized Sports in India have gone through a remarkable evolution from being a traditionally on-field activity to a commercially rich industry contributing to society in different forms. The Indian Sports Industry has attracted large investments from private market players, majorly in order to exploit the entertainment aspect of it. The huge commercial development of Indian Sports has resulted in unregulated control and power of Indian Sports Governing Bodies. Due to the constant evolution and diversification of this industry, there has been a rise of denigrators which has not only obstructed fair competition but has also hindered the free flow of funds required for efficient administration by the Sports governing bodies. These drawbacks and shortcomings in the governance and administration of the sport can be solved by the proper application of Competition Law and its enforcing authorities, as it will ensure the protection of interests of all the stakeholders, thereby preserving the fundamental and core values of sports.
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Surinder Barmi vs. Board of Cricket Control of India[1]
Surinder Barmi (hereafter Informant), a cricket fan from Delhi alleged that the Board of Cricket Control of India (hereafter BCCI) has abused its dominant position in the sector of private professional cricket league which led to the imposition of unfair terms of the association over its various stakeholders. The informant further stated that BCCI with a motive to foreclose competition, intentionally auctioned media rights for a period of 10 years with the agreement stating that broadcaster “shall not organize, sanction, recognize, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league”[2] was found to be in contravention of Section 4(2) (c) of the Competition Act 2002.
The Competition Commission of India (hereafter CCI) took the pyramid structure of various regulating bodies of Cricket into consideration which followed a system where National Bodies abided by the policies framed by the International Organization, without violating any provision of the National Legislative framework. CCI further made a distinction between the regulation of national cricket by BCCI, where the primary objective is to play for the honor of the game; and the organizing Indian Premier League, where the primary motive was to warn profit and exploit the entertainment aspect of the sport. CCI held that private professional leagues should be treated in a separate market given the entertainment and commercial aspects involved and should be considered incomparable by other programs and forms of cricket leagues. It was held that BCCI was in contravention of Law and there existed an abuse of dominance as well as an inherent conflict of interests, as it accrues financial gains by organizing commercial leagues like the Indian Premier League and acts as the de-facto regulator of Cricket in India respectively.
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Dhanraj Pillai vs. Hockey India[3]
Indian Hockey Federation (hereafter IHF) had organized the World Series Hockey (hereafter WSH) in collaboration with Nimbus Sports and Hockey India (hereafter HI) along with International Hockey Federation (hereafter IHF). In 2011, IHF released The Regulations on Sanctioned and Unsanctioned events which were applicable from 31st March 2011 and not applicable to any prior participation commitment. HI adopted these regulations and modified its Code of Conduct Agreement, by inducting a clause related to disciplinary action (disqualification from the selection in Indian National Team) for participation in any unsanctioned events. Following this amendment in the Code of Conduct Agreement, HI announced plans for starting their own professional hockey league, rendering WSH as an unsanctioned event.
India’s Hockey maestro Dhanraj Pillai, among other players, alleged that HI had abused its dominant position being the regulator of the sport in India. It was further alleged that HI had imposed unfair terms upon the players. The CCI took cognizance of the matter and held that HI did not abuse its dominance as the regulator of the sport, and the restrictions imposed by HI are justifiable in nature. However, there might be a possibility of a conflict of interest as HI was both the regulatory body as well as the organizer of the league.
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Hemant Sharma vs. All India Chess Federation[4]
Four Chess players alleged that the All India Chess Federation (hereafter AICF) was abusing its dominant position as the regulator of Chess in India. AICF made it mandatory for Indian Chess Players to give a declaration stating that they will not participate in any tournament which is not authorized by AICF. If the player did participate in any such tournament, the player would be banned for a period of one year as well as be penalized fifty percent of the prize money to AICF and the Elo points (Elo Points is a widely used rating algorithm that is used to rank players in many competitive games. Players with a higher ELO rating have a higher probability of winning a game than a player with a lower ELO rating) earned by the player will be removed.
CCI held that AICF denied market access to the chess tournaments’ organizers and therefore their policy was held to be anti-competitive. It was decided that there was a conflict of interest due to the dual capacity held by AICF as the Regulator of Chess in India and as Organizers of Chess Tournaments.
Although Competition Law authorities have ensured a fair sports market, still there is a need to understand their importance and role in Developing Sports in India.
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Competition Law can play an important role in demarcating between economic and regulatory functions of Sports Governing Bodies. Such demarcation is required because governing bodies make a large sum of money through commercial activities which usually get entwined with their regulatory functions resulting in major mismanagement.
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Competition Law can help in striking a balance between the accountability and Independency of Sports Governing Bodies. Over-Accountability of the Governing Bodies towards the government hinders the effective functioning of these bodies thereby obstructing free development of sports. There needs to be a balance between the decision making authority of the Sports Governing body and their accountability to ensure that they are not subject to abuse of dominance by the Government.
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Competition Law can help in ensuring that there is no abuse of dominance by the Government in the form of controlling investment and funding of governing bodies. The Competition Commission can frame a policy to promote an influx of funds by the Government. The Constant flow of funds would ensure that the governing bodies do not solely rely on private bodies for funding.
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Competition Law can help in ensuring Transparency in order to promote healthy competition and reduce the intervention of Government authorities in the administration of Sports. Competition Law can help in ensuring transparency within the governing bodies to build a fair market for the development and sustenance of sports. Activities like granting media rights, banning players, and determining the events as authorized or not should be done in a predetermined and fair manner.
Development and improvement of the Sports Industry and proper administrations of the Sports environment can be ensured not by abuse of dominance or any other anti-competitive practices, but by effective management and application of Competition Law. The effective and efficient application of competition law will help in reducing malpractices with respect to competition in the Indian Sports Industry. Competition Law will not only regulate the industry and ensure a fair market but will also ensure the protection of all the stakeholders involved in the sports administration.
The restraining behavior, anti-competitive practices, and economic limitation of the sports organization need to come under the antitrust scrutiny of the provisions of the Competition Act, 2002, in order to ensure that no sports governing entity engages in anti-competitive behavior. Most of the controversies in the sports industry have led to the conclusion that there needs to be strict regulation for the efficient and effective commercialization of sports. Though the commercialization of sports has resulted in huge investment and development, one cannot negate and ignore the negative impacts it does due to lack of regulation. These impacts can be effectively tackled by the application of a transparent governing mechanism which is regulated under the provisions of the Companies Act, 2013.
-Ishaan Michael
KIIT School of Law
References
[1] Case No. 61 of 2010 of Competition Commission of India.
[2] Clause 9.1(c)(i) of its IPL Media Rights agreement.
[3] Case No. 73 of 2011 of Competition Commission of India.
[4] Case No. 79 of 2011 of Competition Commission of India.
LAWBEES 