Sport & Antitrust: EU Summer round-up
While the wider world was slowly trying to get back to normal, recent months have seen swift and extensive regulatory and competition law developments in the sports sector. Competition law disputes have been at the forefront both in the EU and further afield.
This post focuses on notable legal developments in the EU, where regulators have shown a heightened interest in the lucrative world of sports broadcasting rights.
French football broadcasting rights – It’s all kicking off
In France, the longstanding battle over broadcasting rights continues. In 2018, the governing body of French professional football (Ligue de Football Professionnel, LFP) sold the broadcasting rights of the Ligue 1 and Ligue 2 for a record sum of €1.14 billion to the Spanish-Chinese group Mediapro (which committed to pay €814 million per season for 80% of the broadcasting rights) and beIN Sports (€330 million for the remaining 20%). beIN Sports later sublicensed its rights to Canal+, Ligue 1’s longstanding and historical broadcaster, for the same price.
Following the collapse of Mediapro in December 2020, the LFP decided to arrange a new tender for the broadcasting rights. It announced that it would tender only the rights previously attributed to Mediapro, and not the rights assigned to beIN Sports (ultimately Canal+). In other words, despite subsequent changes to the market landscape, beIN Sports / Canal+ would still have to pay the €330 million per season agreed in 2018 for 20% of the broadcasting rights. beIN Sports and Canal+ jointly argued that the new tender should include all broadcasting rights and that the price agreed in 2018 for their rights (i.e. €330 million) was artificially high due to Mediapro’s excessive proposal at that time. Canal+ sued the LFP before the Paris Commercial Court and filed a formal complaint with the French competition authority for the LFP’s alleged abuse of dominance. Both proceedings were rejected though Canal+ has filed appeals for both.
The situation became tenser still when the LFP decided to award the broadcasting rights previously attributed to Mediapro to Amazon for €250 million. Canal+ insisted that it defied logic that it should pay €330 million for 20% of the French broadcasting rights when Amazon would only spend €250 million for 80% of the same rights. It therefore announced that it would unilaterally withdraw from French football; Canal+ would not broadcast the Ligue 1, and would not pay the corresponding €330 million to beIN Sports.
At this point, all hell broke loose: beIN Sports sued Canal+ and the LFP, and the LFP in turn sued beIN Sports. Eventually, in August 2021, the Nanterre Commercial Court ruled in summary proceedings that Canal+ shall continue to produce, broadcast, and pay for the rights it sublicensed, under penalty of €1 million per day of delay. Canal+ has already announced that it will appeal, though given the appeal does not have a suspensory effect, Canal+ will continue to broadcast the Ligue 1 for now.
The saga, however, continues. While awaiting the results of the various appeals, beIN Sports has reportedly made a formal complaint to the European Commission accusing the LFP of abusing its dominant position on the market for broadcasting football matches. If the Commission agrees, it could, in theory, impose behavioural remedies, which could take the form of an order to the LFP to re-tender all of the rights.
The debt of French clubs has soared to more than €1 billion after Covid-19, up from €500 million before the end of the 2018-2019 season. What happens next could therefore be even more important for French football than the arrival of Lionel Messi.
Italian and Spanish watchdogs on the telecoms trail
In March 2021, internet streaming service DAZN won the domestic broadcasting rights for the Serie A, Italy’s top football league, beating out incumbent broadcaster Sky Italia. DAZN secured the deal for the 2021-2024 period with a bid of €840 million per season. The sports streaming giant now holds the rights to exclusively broadcast seven matches per matchday and will also co-exclusively broadcast the remaining three matches, together with a competitor. This is the first time in Italian football that domestic broadcasting rights have gone exclusively to a streaming service.
Even before DAZN was awarded the contract, DAZN and TIM (formerly Telecom Italia) had reached an agreement whereby TIM would be permitted to broadcast matches on its TIMvision streaming platform. DAZN committed not to share its broadcasting rights with anyone else; the agreement prevented DAZN from distributing matches via its DAZN app on third-party operators’ devices. The arrangement prompted TIM's competitors, including Vodafone Italia and Sky Italia, to file complaints with the Italian antitrust watchdog, the AGCM.
The AGCM announced its intention to carry out an investigation and it specifically reserved the right to take precautionary measures to prevent serious and irreparable damage to competition. The next season of the Serie A was, after all, already in sight, beginning in August. The regulator was concerned that the provision forbidding DAZN from allowing other operators to broadcast could reduce DAZN’s ability to offer discounts to end users and/or prevent TIM’s competitors from undertaking its own commercial initiatives. AGCM said that could lead to “significant distortions of competition”.
TIM is Italy’s largest telecommunications provider. Its competitors argue that the deal with DAZN could strengthen the dominance of TIM in the (ultra-)broadband market, as it would be the only telecoms provider able to include the (extremely popular) Serie A in its offers to consumers. Their contention is that the agreement also diminishes DAZN’s incentive to collaborate with other operators on new technical improvements to DAZN’s services. Following its preliminary investigation, the AGCM found that the agreement could undermine competitive development in the pay-TV market as well as in the broadband and ultra-wideband telecommunications and mobile telecommunications markets.
However, the investigations and corresponding threat of precautionary measures have persuaded the two companies to reach an agreement with the regulator: DAZN will retain full freedom to offer discounts and special offers to customers. DAZN content will also be available via TIMVision and the DAZN App to customers who have a subscription with an operator other than TIM. The AGCM has acknowledged that the new agreement seeks to avoid discrimination against non-TIM customers and is capable of eliminating risks to competition. Nevertheless, it announced that it would continue to closely monitor the cooperation between DAZN and TIM.
Similar developments have taken place in Spain, where the Spanish competition authority (the CNMC) published a resolution urging telecoms giant Telefónica to modify certain provisions of an agreement reached with DAZN. The agreement saw Telefónica sublicensing Formula 1 broadcasting rights exclusively to DAZN, with the parties also agreeing on the conditions under which Telefónica would be granted access to DAZN content. Spain’s antitrust watchdog considered these contractual provisions to be incompatible with commitments Telefónica made in its 2015 acquisition of the pay-TV operator DTS. The CNMC has consequently stated that Telefónica must abolish the provision that limits DAZN’s ability to distribute its content to third-party operators, in order to fulfil its 2015 commitments.
No-poach agreements: Portuguese football under investigation
Earlier this year, the Portuguese competition authority (the Autoridade da Concorrência, or AdC) issued its first Statement of Objections for a no-poach agreement, involving the Portuguese League of Professional Football (PLPF) and 31 football clubs and sports companies. This followed the AdC’s year-long investigation into an agreement between the PLPF and football clubs in the first and second tier domestic leagues to not recruit or hire football players who unilaterally terminated their employment contracts with any of these clubs by citing the measures adopted by the clubs in response to the Covid-19 pandemic.
This was the AdC’s first move in the labour market. It was also its first investigation into the exceptional measures adopted by companies in sectors especially affected by the economic impact of Covid-19.
No-poach agreements prevent companies from hiring each other’s employees, thereby reducing competition for human resources, impacting workers’ ability to move on and reducing their bargaining power. Such agreements are known fixtures of M&A deals to prevent the departure of key staff following an acquisition or merger: competition authorities usually intervene during merger reviews to reduce their overall scope and duration, but there have been very few cases of investigations aimed squarely at these agreements as standalone infringements.
The Statement of Objections does not preclude the outcome of the investigation as the PLPF and the clubs now have a chance to present their defence. As it’s the first case of its kind, it remains to be seen how the Covid-19 defence will be invoked by the defendants and dealt with by the AdC. A line of defence that will be of particular interest is that the no-poach agreement was reached as a direct result of fears that clubs less capable to withstand the economic blows of the pandemic would fall prey to stronger competitors by losing their front-line players, thus limiting their sporting chances.
This investigation highlights that labour market competition issues are firmly on the radar of enforcement agencies. The AdC has also released a Best Practices Guide aimed at companies and HR professionals to raise awareness of the competition risks involved in the hiring of employees. While the timing of this guide may raise eyebrows, given we are awaiting a final ruling in the PLPF case, it shows that the AdC will be paying greater attention to companies' or associations’ attempts to impose restrictions on the ability of their workers to move on.
This year's developments should come as no surprise, and are in line with our observations over the last 36 months or so. The sports sector is being closely monitored by the EU member states’ competition authorities. Regulators have again shown in the past year that they are willing to intervene in cases of alleged distortions of competition. Competition law in sports is not just a short-term trend.
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