Sports & Antitrust – 2019 developments and 2020 outlook

2019 saw an upsurge in the enforcement of antitrust rules in the sports sector. Tentative investigations respectful of the “specificities” of sports are soon be a relic of the past. This trend, which is reshaping the world of sports law, will continue in 2020.

We summarise three important developments from 2019, and cast a view on how antitrust considerations will continue to impact the sports industry in 2020 and beyond.

No more hiding in plain sight

Sports regulatory bodies, long known for enforcing restrictive governance rules on their members, found themselves on the receiving end of multiple antitrust sanctions in 2019. Competition authorities across the world left no room for doubt: conduct and governance rules aimed at preventing competing associations from organising their own competitions and members from participating in such competitions can – and often do – run afoul of competition rules.

In Europe, the Finnish Competition and Consumer Authority struck down a blatant competition law infringement by the country’s elite hockey league, which had organised a boycott against a former member club. The Italian Competition Authority fined the Federation of Equestrian Sports for exclusionary abuse.

The trend expands beyond the EU. The Indian Volleyball Federation came under fire for alleged abuse of a dominant position. Players submitted a complaint that the federation prevented other volleyball events from being organised within its jurisdiction and limited players’ rights to participate in other tournaments (including in the Olympics). The Japan Fair Trade Commission explicitly stated – for the first time – that the sports sector is subject to the country’s Antimonopoly Act. This prompted the national rugby-football and boxing bodies to voluntarily revise their governance rules.

Broadcasting and media rights under the spotlight

Antitrust authorities around the world have taken a tough stance on the sports industry’s economic model. The joint-selling of broadcasting rights; exclusivity clauses in distribution contracts and media rights; and the lack of fair and transparent tender procedures were all firmly in the eye of the enforcement storm in 2019.

African antitrust authorities are changing the way football broadcasting rights are commercialised on the continent. At a national level, Cairo’s Court of Appeal upheld the finding by the Egyptian Competition Authority that the Confederation of African Football (CAF) abused its dominant position by concluding exclusivity broadcasting agreements with Lagardère. At a multinational level, COMESA’s Competition Commission (CCC)* progressed its parallel investigation into the same agreements affecting COMESA’s free trade area. The CCC is yet to issue a decision. However, following the decision of the Egyptian authority, the CAF has already terminated the agreements which were due to run until 2028. The CAF will also have to ensure that all future commercialisation of broadcasting rights follows fair and transparent tender procedures.

Following a class action in the US, the joint commercialisation agreements between the National Football League and its teams, and between the NFL and broadcaster DirecTV, are said to eliminate competition in live-game broadcasts. The parties have filed an appellate brief to the Supreme Court. This indicates that the NFL and its teams are not willing to settle the case (unlike the MLB and the NHL did in similar suits in 2015 and 2016).

The increasingly high-profile world of Chinese football was also caught by the storm. China’s top antitrust regulator progressed its investigation against the Chinese Football Association (CFA) in 2019. SAMR is targeting the CFA’s policy of prohibiting media channels from selling to third parties photographs they’ve taken during matches organised by the CFA. Pending SAMR’s decision, the CFA has already suspended its controversial policy.

Merger review of football club acquisitions: a first step?

The French Competition Authority’s (FCA) merger control investigation into the acquisition of OGC Nice football club set out a welcome framework for analysis of future football club acquisitions. In an area largely unexplored by merger control rules, the FCA gave its first definition of the market for football transfers in the EU.

Sports & Antitrust – 2020 outlook

A signal has been sent, loud and clear. Governing bodies will need to closely scrutinise their own rules and agreements with third-party organisers of events in the future. For rival organisers of sporting events worldwide, this will bring an opportunity to use competition rules as a tool to obtain market access.

It appears that the next wave of antitrust investigations could focus on international sports governing bodies. The European Commission is investigating two complaints that the International Cycling Union is abusing its regulatory power to restrict other stakeholders’ ability to set up alternative professional road cycling events. Meanwhile, in the US, a lawsuit is ongoing against the US Soccer Federation (USSF) for conspiring with FIFA to block the organisation of foreign-league games on US soil. If successful, this could challenge USSF’s control over games hosted in the US as well as FIFA’s control over those issues globally.

Commercial benefits deriving from sponsoring sports activities continue to attract numerous stakeholders. Consequently, an increasing number of similar agreements might be challenged on competition law grounds. Indeed, a recent UK court judgment has already paved the way for Liverpool FC to switch its sponsor to Nike despite contractual restrictions protecting the incumbent sponsor New Balance.

Revenue and investments in sports are on the rise. In particular, esports has evolved into an industry in its own right and is expected to generate close to EUR 1.3 billion in revenue by 2020. Consequently, the likelihood that sports-related M&A activity will fall under the scope of merger control is also on the rise. It will be interesting to see how competition authorities worldwide grapple with sports markets in 2020, some of which are unexplored territory for antitrust analysis.

* Note that the Common Market for Eastern and Southern Africa (COMESA) is a free trade area in Africa with twenty-one member states. The trading bloc has its own competition authority, the CCC.