Competition Law

Abuse of Dominance

See generally the sections on competition law at national and EU level. General principles of competition law arise in various contexts in relation to sports.

Many Sporting organisations have a monopoly. Various sporting organisations have a effective monopoly in relation to the organisation of certain sports. They are accordingly subject to the rule against abuse of dominant position.

Where clubs and sporting bodies and or transactions in relation to promotion of sport, including sales of tickets, merchandising, broadcasting, general principles of competition law may arise where the sporting bodies seeks to prevent its members, others organising competitions and sports are restricting members who compete in the competition, there may be an abuse of dominant position where sports persons are unreasonably restrained in their trade.

See the sections on competition law and dominant position in relation to denying of essential facilities. In some cases, actions by sporting organisations in abuse of their monopolistic position might be held to be an abuse of dominant position.

Dominant Body

In many sports there are national body and an overarching international body. Other sports are fractured and there are a number of competing bodies such as in boxing. It generally accepted that a single organisation is desirable in most sports.

Where the body with exclusivity prevents rival organisations establishing a rival league or organisation. It may prevent its own members participating in the other league by buying them from its competitions. In instances where rival organisation sought to cherry pick to the detriment of the structures of the game as a whole, and other clubs, restrictions have been held to be justifiable.

In Henry v World Professional Billiards and Snooker Association, the Association was held to have abused its dominant position by requiring players to have its permission for playing in snooker matches. This restricted rival federations. Although rules of this nature could in principle be justified, the particular overly broad versions of the rules was impermissible.

There may well be justifications for a single Association to defend the interest of the sport as a whole. Although, regulatory exclusivity or dominance may be readily justified, abuse of commercial dominance may be more readily abused. It may use its regulatory powers in manners that close out competitors. It may compel organisers, venues and organisers who wish to host the sport to follow its rules, for example, seeding rights, broadcasting rights to it.

Restrictive Practices

Although the famous Bosman ruling is based on the right of establishment, the case was also justified to some extent by members of the court on competition grounds. The Commission required modification by FIFA of its transfer rules on competition grounds. An agreement was reached modifying the existing transfer rules, so that they were less restrictive but still and were better tailored towards provision of legitimate objectives.

Rules that regulate equipment that may be used if a competition, may impact on competition if particular type of equipment is mandatory or the official equipment or supplier, this may preclude competition from other providers. The Commission has upheld complaints against unnecessary exclusivity.

Ticketing arrangements may breach competition law. Distribution channels requirement  may constitute an abuse. In a case concerning the Wimbledon, ticketing arrangements and distribution channels, there was held not to be  abuse of a dominant position.

FIFA’s organisation of the World Cup, by which exclusive distributors and providers of travel package for a country, are held to be overly restrictive on competition. There may be discrimination in the distribution of tickets where it is easier for certain groups to buy tickets than others.

Financial

Certain professional sports have sought to cap player’s salaries in order to protect the clubs, keep them viable and to ensure competition within the sport so that a dominant club could not seek to purchase all the best players. Many such rules have raised questions of restraintive trade. Where however the effect of the rules was to enable clubs earn vast amounts of money without fairly rewarding the players, it is unlikely to be justifiable and may constitute abuse of dominant position as well as breaching the restraintive trade doctrine.

State support for sport, subject in principle to the State aid rules, if they benefit economic organisations. In most part, grants, payments by sporting bodies and tax breaks are not subject to the rules as there is no economic element. However, if the sports are for business, issues of State aid may arise.State aid rules have arisen where municipalities have built facilities for.

A sporting club might be granted significant benefits which assist it in becoming a dominant club. State aids to football clubs have been the basis for certain clubs achieving dominance and the ability to buy the best players.

However some injections to sporting bodies have been upheld where they pursue the legitimate objective of improving the organisation, promotion of sport and physical activity. However these aid must in fact assist the provision of the legitimate object and not have any  and be tailored as such.

Justified Regulation

Certain rules are clearly in contrary to competition law and general European Union law. Some such rules a prima facie incompetitive but justified under the excepting provisions in the legislation.

Sports bodies and organisations and rules sometimes provide financial arrangements which sustain smaller clubs which might otherwise not be able to survive in a market. Some such rules would appear to be justifiable on objective grounds and accordingly not infringe competition law. They would require to be proportionate, reasonable and proportionate.

Some rules are an integral part of the rules of the sport and are not seen as capable of violating competition law as such. They must however be applied in a transparent and objective fashion and be non-discriminatory. Where the rules are not economic but sporting in nature, they are generally regarded as outside the scope of the competition law.

The EU Commission approved  broadcasting rules limiting the Irish or English football matches could be televised in order to support countries own domestic football soccer league.  The Commission has accepted national league and organisational structures, national identity notwithstanding the discrimination of non-nationals, to the extent that it is necessary to preserve the national identity.

Rules which uphold social and cultural aspects of sports, assisted solidarity between clubs have been held prima facie in breach of competition law but to be justified under the permissible exceptions. It must be objectively justifiable relative to the objective and proportionate.

There are limitations  under European Union laws in relation to the establishment etc. and in particular in the postman Bosman rule set out in another section. In the above category would include rules of nationality and team selection, selection of persons on objective and discriminatory basis, transfer windows, transfer periods which support the general structure of the sport.

Broadcasting Rights

The sale and purchase of broadcasting rights has been subject to competition law considerations. Such revenue represents a large proportion of the entire sports revenue. Sale of broadcasting rights may have competition laws where they are exclusive duration issues, collective selling, collective purchase.

Broadcasting rights are regional, sold at different prices at different parts of the market. Certain sports may be popular in some areas and not in others.

Exclusive broadcasting contracts such as those held by Sky Sports are permissible in itself. However, the manner in which they operate may foreclose a particular market or be an abuse of the dominant position. The award must be on an objective basis for a fixed and limited period. There must not be an automatic right of renewal.

The longer the period of exclusivity, the more justification that is required. This may be justified in terms of recouping startup costs, critical mass would justify that which would otherwise be anticompetitive. Sky Television formerly had exclusive rights to the premiership and was dominant in the market.

Broadcasting & Competition Law Issues

The selling on mass of broadcasting rights for a period may raise significant competition law issues. In some European States, competition authorities have required that individual clubs should be able to negotiate their own deals.

There may be price-fixing, restriction of availability, segmentation of markets may restrict certain high-profile clubs from fully exploiting their earning capacity. The collective sale of rights thus uphold solidarity of clubs, solidarity of the league. Although, collective selling in itself is likely to be consistent with competition law, the manner in which it is implemented may breach competition law. It must be transparent and nondiscriminatory. It must not close particular markets.

Broadcasters might collectively seek to purchase sporting rights in a way that forecloses competition between them for the rights. This is effectively equivalent to — the Commission has indicated that collective purchasing is in principle capable of complying with competition law, provided that there is a reasonable licensing system. The joint purchase was indispensable to secure access for the relevant public service broadcasters within the European Broadcasting Union.