Sport & Antitrust - Italian Competition Authority fines sports media agencies for bid rigging

On 24 April 2019, the Italian Competition Authority (ICA) imposed on the global sports media agencies MP & Silva, IMG, B4 Capital and BE4 Sarl/B4 Italia (the Parties) fines totalling more than EUR 67 million for breaching antitrust regulations. According to the ICA, the Parties had coordinated their bids in the tenders for broadcasting rights of matches organised by the Lega Nazionale Professionisti Serie A (LNPA), the governing body of Italy’s major professional football competitions. In particular, the ICA found that between 2008 and 2015, the Parties colluded in all tenders called by the LNPA to acquire and distribute overseas broadcasting rights of matches of Serie A and B and the main domestic cup competitions (Coppa Italia and Supercoppa Italia).

The investigation was launched in July 2017, after the ICA was tipped off by the Milan Public Prosecutor. The LNPA, its media rights advisor (Infront Italy S.p.A.) and two of the media agencies (the premises of MP Silva S.r.l. and B4 Italia) had been dawn raided in July 2017, while IMG had applied for leniency in October 2017. The London offices of all the agencies were also targeted by the European Commission in April 2018 in raids on companies involved in the broadcasting of sports and distribution of rights.

According to the ICA, the Parties coordinated their participation in the tenders, intending to limit the final bid price submitted to the LNPA. The ICA also found that in addition to partaking in price coordination and the exchange of sensitive information, the Parties also divided the geographic markets of distribution and shared the revenues of the subsequent resale to downstream broadcasters abroad by deciding, for example to withdraw bids against a share of the resale profits. These agreements were either included in contractual stipulations or made note of in correspondence between the agencies’ representatives.

This violation of Article 101 TFEU was found to have decreased the value of international broadcasting rights, damaging both the LNPA and the Italian football teams that benefit from the overseas distribution of audio-visual rights. The collusion was thus found to have affected the entire national football industry. According to the ICA, for the period 2009/2010- 2017/2018, the LNPA’s revenue from the assignment of broadcasting rights grew on average only 13.6% per year, while the annual average growth registered in other European countries (UK, Spain, France, Germany) amounted to 21-23%. The ICA also noted that the most recent tenders put out after the beginning of the investigation already registered an increase in the value of the contracts.

Given the very serious nature of the antitrust infringement, the length of the collusion and the remarkable revenue loss it caused, the ICA adopted a strict approach in terms of calculation of the fines. Moreover, the initial fines were increased by 15% to ensure deterrence. IMG received a 40% reduction for its leniency application and a further 5% reduction for the implementation of a compliance programme. In light of the above, the fines imposed totalled more than EUR 67 million. However, this might not be the end of the story since the ICA’s decisions can be (and frequently are) appealed before the Italian administrative courts (in first instance before the Italian administrative court of Lazio, within 60 days from the service of the decision.

The ICA’s decision comes at an uncertain time in the market, with MP & Silva being wound up by the High Court of England and Wales in 2018, following payment failures. In a similarly concentrated market environment, with only two bidders remaining for broadcasting rights of German Bundesliga matches, the German Federal Cartel Office has tolerated geographic market sharing between the two pay-TV operators in order to avoid the creation of a monopoly. A prohibition would have meant that one of the bidders would have exited the market due to financial difficulties.

The ICA’s fining decision is yet another illustration of the recently increased investigation activity in the sports and sports related sector by national competition authorities and the European Commission. These investigations relate, inter alia, to activities of both sports governing bodies (the International Skating Union, the International Equestrian Federation, the International Olympic Committee and the German Olympic Sports Confederation), and to commercial activities related to sports (sale of sports equipment, broadcasting of media rights). This trend shows how the competition law approach to sports has developed in recent years – from timid investigations that were respectful of the “specificities” of sports and sports business to fining and prohibition decisions that are currently reshaping the world of sport.