BCCI-Caught Behind in Economic Times
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.. ;WW.ECONOMICTIMES.COM BCCI: Caught Behin he cricke tboardhasviola tedcompet ition awwhenhanding out IPL'song -term TV, mobileand websit e rights MSHARMA p or t, an d p ar ti cu lar ly c ri cke t, ha s be - come big business inthe country. The rec nt inquiries initiated by the 'd of Control for Cricket in Iridia ICCI )a ga inst La lit Modi have brought se- j ou s f in an ci al i rr eg ul ar it ies , i nc lud in g li d-rigging in th e award of co ntracts dur- gprevious three Iridian Premier League )L ) seasons, to the fore. But the compet i- ton issues involved t ereinl have been Ive rlooked. The BCCI' s conduct of award- gcontracts, say,for broadcasting rights, ises serious competition issues. With an Iverarching competition watchdog, Com- etition Commis sio n of Iridia (CCI),in ac - ion, the time has come to bring the anti- ompe ti tive pr ac ti ces of the cash-rich lodytopublic notice. For the record, competition issues in ricket arose for the first time when the I CCI , b y ab usi ng i ts d om in an ce , r ef us ed 0 recognise Essel Sports-promoted Iri- l ia n Cr ic ket Lea gue ( ICL) an d, i ns tea d, lromoted it s own ' of fi ci al ' I rid ia n P re - ie r League (IPL) for Twenty-20 ma tche s. le issue never reached CCI as it was not linforce at that time and the MRTP Com- ission co uidnot go beyond investigation. lutthat is hi story. . The world over, competition in sport is l re gulated like that in othe r sectors of the economy. For instance, Sin).on Rottenberg, awell-knownUSeco nomist , in his pap er TheBaseball Players' LaborMarket states thatthe "eco nomi cs of professionalsports leagues couldbe analysed usi ng the same economicf ramework asforany oth er ind- ust ry' . SinceIri dianowha s amodern com- petit ion law,compet ition issue s in crick et ca rmot be al lowed to be overlooked any more. Letus fir st examine them in the con- text of the BCCI-spon soredofficial'IPL. ButbeforeIdwell on them,itmaybe aptto remove doubts on t he va st s co pe of the CompetitionAct, 2002. Sufficewould be to statet hatwhilet heBC Clma y ormaynot fit in the defi nitio n of a 'public authorit y' for the purp oses of applicability of th e RTI Act, which was the Competition Act, whichequally coversmost the state-con - trolled ent erp rises and run s on the basic premise of 'competitive neutrality'. Con- sequentl y,we have the CCI examining a complaint of ca rt el is at ion med by Re- lianc elrid ustri es, thelargest priv ate enter - pr ise,ag ai nst the three public sector oil market ing companie s. Hence, no enter- pri se inthe cou ntr y isnowpermit ted to in- dulge in any anti -competi ti ve business pr actice prohibited by the Compet it ion Act.Of cour se,the BCCIisnoexce ption .Iri thisbackdrop,le t us nowseeho wtheB CCI, per hap s out of ignorance , is continuin g with app are ntl y bla tant vio lat ion of the law byabusing its mono polis t posi tion. COMPETITION ISSUES LIKELY WITH IPL Wit hou t going into t he p as t d ee ds, t he wa y the awar d of contr acts in IPL have bee handled by the BCCI till now is likely to give rise to grave competition issues in times to come. Let us have at lavour of some of thes e issues . ~ Bid rigging: The alleg ation of rigging of bids by IPL bosses as well as collusion am on g bi dd er s, l ik e ca rt el s, i s th e mo st s e- r io us cr im e i n co mpe ti ti on l aw . Un de r t he Competition Act, '~y agreement which directly or indirectly results inbid ri gging o r c ol lus ive b id di ng sh al l be p re su me d to have an ap pr ec iabl e adverse ef fect on com- petition." The al legations .t ha t IPL bosses allegedly advised the Dhootsan dAdanis to ke ep t he ir b ids m od est ly a bo ve $ 30 0 mi l- lion or that IPL administration also alleg- . \ agen cyto cont rolthe orga nisat ion of crick~ ty of long er duration, of overthree years, et inthecountry,the BCCl isundo ubtedlya as granted by the BCCIand that too for a mon opo lis t pro vid er of. cricket-viewing wide r range of rights can defmitely re- servi ces forthe peop le of Iri diaand , hen ce, str ict compet ition.This isparti cularl y the an enterprise ina 'dominant position' un - ca seif thebroadca ste r tooisina dominant der the Co mp etition Act. Th e BC CIhas position. Th us , ifSonycanbeprovedtobe bee n 'selli ng'broa dca sti ngrights to its'ex- havingalargemarketsha re of viewership clusivepartners' for along time. in telecast of cri cke t mat che s in Iridia,be- Firstly, how these 'excluSivepar tners' sides BCCI,it willalso facethe charge of were selectedis shrouded in mystery.The abuse of its dominant posit ionfrom other compli ance wit h the Competition Act is competingTVch ann elssuchSTARSpo rts , nowmandatory for selection of anye xc lu- ESPNorTEN Sports,etc. sive'agent' orpart ne rforanyb usinesspur- ~ Mobile appl icati on rights: DCIMobile pose, i.e.,it has to be donebycomp et itive St udios,a division of DotComInfoway,in bidding process in a fair and transparent conj unctio n wi th Si gma Ve ntures of Sin- manner. Secondly,even if one ove rlo oks gapore,hasreporte dlyjointlyacqui red the this selec tionprocess of theBCCI ,the con- ri ghts to be the exclus ivemobile applica- centration of ri gh ts i n a f ew a ge nt s s er i- t io n pa rt ne r a nd r ight s ho lder for t he I PL ous ly hanlpers the pro spe cts of fai r pla y cri cketmat che s worldwidefor the lon gpe- and s erious competition i ssues arise. nod of the nex t eig ht years (mc lud ing the Nowlet us see what th e BCCIhas done. 2017season). Recently,they released the Theboardsoldfive-ye arc ontracts toESPN IPLT 20mo bilea ppli catio nsfo rthe iPhon e, STAR Spor ts (1995- 99 ) nd Pr asar Bh arati Nokia smartphone s and Bl ac kberry de - (1999-2004 ). hereafter, it soldthe rights on vi ces. Soon, these wi ll be ma de available a territorial ba si s and Nimbus Commun i- acrossallothermajormobi leplatf or ms in- catioDS'bought the ri ghts forIridiaforfive el uding the Andr oid, Wmdows Mo bile, years (2006-10), ESPN Palmaridothers. Thisisalsolikelytoraise STARSpo rts foroverseas similar exc lusivityissues. matches. for four years ~ Offzcial websiterights: The IPLhas re- (2005- 08 )and Zee Te levi- port:edl ynegotiated a cont ract wi th a Ca - sion for matches in neu- nadian company, Live Current Media tral venues for fiveyears Iric,torun and operate its portals and the (200 6-11).The broa dc ast minimum guarantee ha s been negoti at ed righ ts forIPLwer esoldex- at$5Qmilli onov erth elon gextended peri od clusi vely toWSG-Son y En- of the next10yea rs.Theofficialwebsi te of. tertainInent combine for the tournament is www.iplt20.com.This is 10 y ea rs re por te dl y for a ls o l ike ly t o r ai se s imi la r e xc lus ivi ty i s- $1.03 billion. Although sues as market foreclosure for new en- grant of e xc lus ive br oa d- tr ant si sa lmos ti nl mi ne nt . ." casting and telecasting .,~, '$' ..... ri gh ts isacommo n co mmercial practice in INTERNATIONALEXPERIE NCi thespor industry,itisimportantto cons id- The law on the subject is almost sett led in er the impact of such long-term agree- coUntries having a developed ju rispru - ments on competition in this market . Th e dence on competiti on issu es in sport. For BCCI'sgr antofexclusiverightsca nl eadt o instance, Ir i the EU,EC competition law anti-competitiveconsequ ences such as (i ) is no w applicable to economic activiti es creation of barriers fo r new entrants, (ii) generated bysport, particul ar ly af ter the drivin g out exi sti ng competito rs, and (ill) Mec ca- Med ina cas e(2004).rianother cas e,. foreclosure of competition by hi nd er ing UEFAcase(2OO1) , heEC commissio n orig- entry into themarket.Allthes e arespec ifi c inallyobjectedtothe joi nt sellingarran ge- violations of the CompetitionAct. . ments, which we re no ti fied in 1999,be- The grant of excl usivi tyforsuchlongduo causethe European Footb allOrg anisation ratio ns willf 6rec losur e competitio n on ac- (UEFA)sold all Chanlpions League TV count of the factthatatthe ti me of renego- rights inonepack agetoa sin glebr oad cas t- tiation at the end of the contract, the ero nan exc lus ive bas isf oru pto fou rye ars broadcaster with the exclusiverights will at a ti me . ASa result of the commission's b~ at an adva nt age in.compari son to the objections ,UEFAproposedanewjoint sell - - Compliance withhe Com~n Actls' mandatory forselecting anyexclusive 'agent'or partnerfor any business purpose ANIMISI Iri the US, broadcas ti ng issues in PoP\) sport are governed by 1:l\eSports Brc casting Rights Act, 1961. Co mpetition sues relating t() professional sport h a ri se n p ri mar il y m pr iV at e l it iga ti on der section 1 of t he S he rm an Ac t. Although there are some antitrust 'emptions - such as baseball, collec bargaining and poolin g of broadcasi rights - yet,conductnot covered by exempt ions re ma ins subj ect to thea tr us t laws, and is.typically analysed dertil e 'rule of reason'. ,,!J'}lus,'iU.tl1oughtheputcom~.maY-be d cUl t t 6b e p i- ed ici ed , on C fu 1s af el y sa y' the BCCI and its exclusive br,oadcas ma y so on ha ve q ue st io ns toanswer be t he CC I i n ca se a vi gi la nt v ie we r or a c peting br oa dcasting TV channe l or a sumer group decides to me a compll The C CI i s al so n ot l ik el y t o i gn or e t he tIed international law on the subj ec proactive CCI may also take up suo r. cognisance of such anti-competitive 1 ness agreements. . The interest in ma tch es w il l b e d et er mi ne d by the lev competition in the league. The prof es ! al sport leagues in the US have str ov erthe year s toensure 'parity' as theI a viewer iswillin topay isdirectlyre] tothe enjoymenthegetsfrom watchin
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Transcript of BCCI-Caught Behind in Economic Times
8/3/2019 BCCI-Caught Behind in Economic Times
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;WW.ECONOMICTIMES.COM
BCCI:CaughtBehinhecricketboardhasviolatedcompetitionawwhenhandingout IPL'song-termTV,mobileandwebsiterights
MSHARMA
port, and particularly cricket, has be-come big business in the country. Therecent inquiries initiated by the'd of Control for Cricket in Iridia
ICCI)againstLalit Modi have brought se-jous financial irregularities, includinglid-rigging in the award of contracts dur-gprevious three Iridian Premier League)L) seasons, to the fore. But the competi-ton issues involved thereinl have been
Iverlooked. The BCCI's conduct of award-gcontracts, say,for broadcasting rights,ises serious competition issues. With anIverarching competition watchdog, Com-etition Commission of Iridia (CCI), in ac-ion, the time has come to bring the anti-ompetitive practices of the cash-rich
lodyto public notice.For the record, competition issues inricket arose for the first time when the
ICCI,by abusing its dominance, refused0 recognise Essel Sports-promoted Iri-lian Cricket League (ICL) and, instead,lromoted its own 'official ' Iridian Pre-
ier League (IPL) for Twenty-20 matches.le issue never reached CCI as it was not
lin force at that time and the MRTP Com-
ission couidnotgo beyond investigation.lut that is history. .
The world over, competition in sports is
l
regulated like that in other sectors of theeconomy.For instance, Sin).onRottenberg,a well-knownUS economist, in his paperTheBaseballPlayers' LaborMarket statesthatthe "economicsof professionalsportsleagues couldbe analysed using the sameeconomicframework as forany other ind-ustry'. SinceIridianowhas amodern com-petition law,competition issues in cricketcarmot be allowed to be overlooked anymore.Letus first examine them in the con-textof the BCCI-sponsoredofficial'IPL.ButbeforeIdwellon them, itmaybe aptto
remove doubts on the vast scope of theCompetitionAct,2002.Sufficewouldbe tostatethatwhiletheBCClmay ormaynotfitin the definition of a 'public authority' forthe purposes of applicability of the RTIAct, which was the Competition Act,whichequally coversmostof the state-con-trolled enterprises and runs on the basicpremise of 'competitive neutrality'. Con-sequently,we have the CCI examining acomplaint of cartelisation med by Re-
liancelridustries, thelargest private enter-prise, against the three public sector oilmarketing companies. Hence, no enter-prise inthe country isnowpermitted to in-dulge in any anti-competitive businesspractice prohibited by the CompetitionAct.Ofcourse,theBCCIisnoexception.Irithisbackdrop,letus nowseehowtheBCCI,perhaps out of ignorance, is continuingwith apparently blatant violation of thelawbyabusing itsmonopolist position.
COMPETITION ISSUES LIKELY WITH IPL
Without going into the past deeds, the waythe award of contracts in IPL have been
handled by the BCCI till now is likely togive rise to grave competition issues intimes to come. Let us have atlavour of some
of these issues.~ Bid rigging: The allegation of rigging ofbids by IPL bosses as well as collusionamong bidders, like cartels, is the most se-rious crime in competition law.Under theCompetition Act, '~y agreement whichdirectly or indirectly results in bid riggingor collusive bidding shall be presumed tohave an appreciable adverse effect on com-petition." The allegations .that IPL bossesallegedly advised the DhootsandAdanis tokeep their bids modestly above $300mil-lion or that IPL administration also alleg-edly told the promoters of Kochi consorti-umnottoputmorethan$300millionon thetable are sufficient toprovoke a complaintto CCIunder Section 3of the Act.
~ Grant of exclusive broadcasting rights:
This is the most widely-known concernand'directlyproves the allegation of abuseof dominance by the BCC!. As the sole
. \
agencytocontrolthe organisation of crick~ ty of longer duration, of overthree years,etinthecountry,theBCClisundoubtedlya as granted by the BCCIand that too for amonopolist provider of. cricket-viewing wider range of rights can defmitely re-services forthe peopleof Iridiaand,hence, strict competition.This isparticularly thean enterprise ina 'dominant position' un- caseif thebroadcaster toois ina dominantder the Competition Act. The BCCIhas position. Thus, if Sonycanbeprovedto bebeen 'selling'broadcasting rights to its'ex- havinga largemarket share of viewershipclusivepartners' for along time. in telecast of cricket matches in Iridia,be-Firstly, how these 'excluSivepartners' sides BCCI,it willalso facethe charge ofwere selectedis shrouded inmystery.The abuse of its dominant positionfromothercompliance with the Competition Act is competingTVchannelssuchSTARSports,nowmandatory forselectionof anyexclu- ESPNorTEN Sports,etc.sive'agent' orpartnerforanybusinesspur- ~ Mobileapplication rights:DCIMobilepose, i.e.,it has to be doneby competitive Studios,a divisionof DotComInfoway,inbidding process in a fair and transparent conjunction with SigmaVentures of Sin-manner. Secondly,even if one overlooks gapore,hasreportedlyjointlyacquiredthethis selectionprocessof theBCCI,the con- rights to be the exclusivemobile applica-centration of rights in a few agents seri- tion partner and rights holder for the IPLously hanlpers the prospects of fair play cricketmatches worldwideforthelongpe-andserious competition issuesarise. nod of thenext eight years (mcludingtheNowlet us see what the BCCIhas done. 2017season). Recently,they released theTheboard soldfive-yearcontracts toESPN IPLT20mobileapplicationsforthe iPhone,STARSports (1995-99)nd Prasar Bharati Nokia smartphones and Blackberry de-(1999-2004).hereafter, it soldthe rights on vices. Soon, these will be made availablea territorial basis and NimbusCommuni- acrossallothermajormobileplatforms in-catioDS'boughtthe rights for Iridiaforfive eluding the Android, Wmdows Mobile,
years (2006-10), ESPN Palmaridothers. ThisisalsolikelytoraiseSTARSports for overseas similar exclusivityissues.matches. for four years ~ Offzcialwebsiterights: The IPLhas re-(2005-08)and Zee Televi- port:edlynegotiated a contract with a Ca-sion for matches in neu- nadian company, Live Current Mediatral venues for fiveyears Iric,torun and operate its portals and the(2006-11).The broadcast minimum guarantee has been negotiatedrights forIPLweresoldex- at$5QmillionoverthelongextendedperiodclusivelytoWSG-SonyEn- of the next10years.Theofficialwebsiteof.tertainInent combine for the tournament iswww.iplt20.com.Thisis10 years reportedly for also likely to raise similar exclusivity is-$1.03 billion. Although sues as market foreclosure for new en-grant of exclusive broad- trantsisalmostinlminent. ."casting and telecasting .,~, '$' .....
rights isacommon commercial practice in INTERNATIONALEXPERIENCithe sport industry,it isimportantto consid- The law on the subject is almost settled iner the impact of such long-term agree- coUntries having a developed jurispru-ments on competition in this market. The dence on competition issues in sport. For
BCCI'sgrantofexclusiverightscanleadto instance, Iri the EU,EC competition lawanti-competitiveconsequences such as (i) is now applicable to economic activitiescreation of barriers for new entrants, (ii) generated bysport, particularly after thedriving out existing competitors, and (ill) Mecca-Medinacase(2004).rianother case,.foreclosure of competition by hindering UEFAcase(2OO1),heECcommission orig-entry intothemarket.Allthesearespecific inallyobjectedtothe joint sellingarrange-violationsof theCompetitionAct. . ments, which were notified in 1999,be-The grant of exclusivityforsuchlongduo causetheEuropeanFootballOrganisationrations willf6reclosure competition onac- (UEFA)sold all Chanlpions League TVcountof the factthat atthe timeof renego- rights inonepackagetoa singlebroadcast-tiation at the end of the contract, the eronanexclusivebasisforuptofouryearsbroadcaster with the exclusiverights will at a time. ASa result of the commission'sb~ at an advantage in.comparison to the objections,UEFAproposedanewjoint sell-other players due tothe massiverevenues ing arrangement, operational from theit would have amassed during that long 2003-04football season, whereby UEFAtime. Therefore, it does not allow for a real .agreed not to sell the rights to televise theallocationof rights atthe endof exclusivi- UEFAChampionsLeagueforlonger thanaty.Yet,exclusivecontracts forasinglesport three-year duration.Withthesedecisions,
event or for one season in a givencham- the duration of any exclusivity in sportspionship would not normally. pose any coptracts has been limited to a period ofcompetition problem.However,exclusivi- threeyearsinEurope.
-CompliancewithheCom~nActls'mandatoryforselectinganyexclusive'agent'orpartnerforanybusinesspurpose
ANIMISI
Iri the US, broadcasting issues in PoP\)sport are governed by 1:l\eSports Brccasting Rights Act, 1961. Competitionsues relating t() professional sport harisen primarily mpriVate litigationder section 1of the Sherman Act.
Although there are some antitrust'emptions - such as baseball, collecbargaining and pooling of broadcasirights - yet,conductnot coveredbyexemptions remains subject to the atrust laws, and is.typically analysedder tile 'rule of reason'.,,!J'}lus,'iU.tl1oughtheputcom~.maY-be dcUlt t6be pi-edicied, one Cfu1safely say'the BCCI and its exclusive br,oadcasmay soon have questions to answer bethe CCIin case a vigilant viewer or a c
peting broadcasting TV channel or asumer group decides to me a compllThe CCI is also not likely to ignore thetIed international law on the subjecproactive CCI may also take up suo r.cognisance of such anti-competitive 1ness agreements. .The interest inmatches will be determined by the levcompetition in the league. The profes!al sports leagues in the US have strover the years toensure 'parity' astheIa viewer iswilling to pay isdirectlyre]totheenjoymenthegetsfrom watchingame. Therefore, it is in the interest 0league organisers and the BCCI to enan adequate level of competition thaisustain demand and determine the :
run viability of the league.
(Theauthor headscompetitionlawpracticVaishAssociates.Vzewsarepersonal.Hisaate VaibhavChouksecontributed tothean
