Sport & Antitrust: The new wave of regulatory enforcement

In considering key trends and potential directions of change, more often than not an industry’s first port of call is the traditional powerhouses of regulation and enforcement. Sport is no exception. The European Commission (EC) and national competition authorities (NCAs) of EU Member States are firmly in the spotlight with respect to their pursuit to ‘clean-up’ the sports sector and address competition law infringements.

NCAs outside of the EU are not standing idly by, however. Quite the opposite: in recent months, there has been a significant uptick in the enforcement action of NCAs around the world, including from younger regulators.

The new(er) kids on the block are making their mark.

Broadcasting rights: creating a level playing field

Earlier this year, the Albanian NCA (AK) found that the Albanian Football Federation (AFF), which has exclusive power to regulate and organise professional football in Albania, had abused its dominant position in relation to (i) the sale of broadcasting rights; (ii) the sale of tickets; and (iii) sponsorship and advertising. Accordingly, the AK imposed extensive remedies on the AFF.

  • The sale of broadcasting rights – Restricting entry: The AFF had awarded exclusive rights to broadcast Albanian football competitions to a local media company, DigitAlb, for a seven-year term. The AK found that the duration of the agreement and the exclusivity of the rights restricted competition by preventing other competitors from entering the market. It ordered the AFF to reduce the duration of the agreement to three years (explicitly in line with the standard set by the EC) and to offer alternative options to other broadcasters.
  • Ticket sales – Tying and bundling: The AK found that the AFF would bundle tickets for games generating little interest together with ‘premium’ international matches of the Albanian national team. Further, after conducting a detailed cost analysis and drawing comparisons from the ticket prices in neighbouring countries, the AK also concluded that prices charged were excessive. The AFF is now required to explain its methodology in setting ticket prices.
  • Sponsorship and advertising – Preferential/Discriminatory treatment: Lastly, the AK found that the AFF obliged broadcasters to steer clear of airing advertisements of the competitors to the AFF’s main sponsors – the adverts of competitors were only permitted to be broadcasted during non-prime time slots. The AK accordingly mandated that the AFF remove any such restrictions and allow equal footing of all sponsors.

In spite of – or indeed, perhaps because of – the AK’s resolute stance, the AFF pulled no punches when offering its opinion on the decision. It dismissed the decision as “absolutely invalid”, which might suggest that judicial recourse is more than likely.

Imposing high barriers to entry: restricting access to the top-table

On the other side of the world, in Chile, the Tribunal responsible for overseeing the competitive functioning of markets upheld the conclusions of the Chilean NCA (FNE) and imposed a €2.1 million fine on the national professional football association for anticompetitive unilateral conduct.

The national football body, which exclusively organises competitions of Chilean professional football, charged clubs in the lower leagues a fee for their promotion to the Chilean second division (Primera B). The fees were significant, in particular for smaller football clubs with shallow pockets, and in antitrust terms effectively created a barrier to entry of the second division. Football clubs outside of the top two divisions do not receive a cut of lucrative television broadcasting rights, further deepening the gulf between the coffers of the elite and non-elite.

The association denied any wrongdoing, arguing that the fee was calculated by a team of expert economists. However, the FNE’s investigation revealed that the ‘fee’ in practice prevented lower league clubs from entering the lucrative second-tier division. As a result, it found that the association’s conduct “prevents, restricts and thwarts competition” in the Chilean professional football market.

As the FNE recalled in its conclusions, the sports sector is clearly firmly on the agenda. This investigation is also one of few where the FNE has taken action against unilateral conduct, rather than traditional cartel activity, which has been its main enforcement priority to date.

‘Traditional’ bid-rigging: collusion in Colombia

The Colombian NCA (SIC) recently ordered fines of more than €4 million, including against the Colombian Football Federation (FCF) and both its current and former presidents, for anticompetitive conduct in relation to ticketing for FIFA World Cup qualifiers.

The SIC found that two leading ticketing companies, Ticketshop and Ticketya, agreed to allow Ticketshop to win the contract to distribute tickets for the national football team’s qualifying games for the 2018 World Cup. Following a long chain of collusion, once the ‘deal’ between the retailers was agreed, the FCF provided both companies with commercially sensitive information on their rivals’ tender bids. Unsurprisingly, the tender was awarded to Ticketshop which subsequently subcontracted most of the sales to co-conspirator Ticketya. The tickets were eventually put on resale with up to a 350% mark-up.

The SIC’s decision, framed as a bid-rigging cartel, has attracted significant attention, not least in light of the global corruption investigations into the conduct of football’s governing bodies. In total, 17 individuals, two ticketing companies and the FCF were fined. Ticketshop applied for leniency and received full immunity.

Comment

With many international sporting events compromised by the fallout of COVID-19, it has been an unusually uneventful summer on the pitch. Off the pitch, however, NCAs around the world have played on and proceeded full steam ahead with their enforcement of antitrust rules in sports. These developments show that:

  • Competition regulators are gaining confidence in bringing actions against sports governing bodies. The political balance can be a fine one, in particular in countries like Chile and Colombia where football is considered to be much more than just a national pastime.
  • The organisation of sporting competitions is subject to competition rules insofar as they constitute an economic activity. This has been the case for many years in the EU.
  • A ‘sporting exception’ for competition infringements is no longer tolerated. Multiple warning shots have been fired, and all stakeholders in the sports sector should take note.

Antitrust regulators in emerging and developing jurisdictions are beginning to show their teeth to the sports sector. The world outside the European Union is no longer an antitrust ‘safe haven’ for sports governing bodies.

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