Is competition law curbing sports monopolies?

This sweltering sports summer has given the Netherlands a great deal. Not only unexpected Olympic medals, but also the awareness that a national sports association may play a crucial role in many respects in answering the question whether and, if so, on what conditions sportsmen and women may take part in matches. Sportsmen and women are well aware of that fact and regularly object to the (actual or alleged) monopolies of the sports associations. In principle, the arrival of rival sports associations may present a threat to those monopolies. The established sports associations often obstruct the arrival of those newcomers. Competition law plays a crucial role in that regard. So what’s going on exactly?

Exclusivity rules

Sports associations whose monopolies in organising matches are threatened often take measures to sideline rivals sports associations. Established associations often make use of “exclusivity rules” or “loyalty clauses”, for instance. Such rules allow the association to impose severe sanctions on their members if they take part in matches of rival sports associations. They may consist of temporary or even permanent exclusion from participation in events organised by the established sports association. The sanctions are often directed not only against the athletes, but also against coaches, trainers, doctors, assistants, officials, jury members, referees, volunteers and other parties involved. They make it difficult, if not impossible, for rival associations and event organisers to gain a foothold. They cannot count on the participation of a representative group of sportsmen and women and other parties involved. Their events therefore often don’t get off the ground or are of less appeal to the public and sponsors. Athletes also miss out on extra income because the number of matches is restricted or there is much less incentive to participate. Sportsmen and women might decide not to take part in (lucrative) events of rival associations for fear of sanctions. Exclusivity rules or loyalty clauses are a thorn in the flesh of rival associations and sportsmen and women, which have filed complaints with the European Commission or national competition authorities these past few years, requesting that the exclusivity rules be declared in breach of competition law. A summary of the current state of affairs of the investigations in question is presented below.

European Commission

Fifteen years have passed since the European Commission closed its first investigation into a sports association. The Commission investigated at the time whether various practices of the Fédération Internationale de l'Automobile (“FIA”), an international motorsports association, were in breach of the European competition rules. The Commission addressed not only the frustrating of rival matches, but also a possible conflict of interest between the FIA’s role as a regulatory authority for four-wheel motorsports on the one hand and its commercial interests on the other hand. The investigation was terminated when the FIA promised not to frustrate rival matches and to hive off its commercial interests (thereby limiting its role to that of a regulatory authority). This suggested that the Commission was in favour of sports associations strictly separating their regulatory tasks from their commercial activities.

National competition authorities

While the European Commission did not investigate exclusivity rules of sports associations for many years after the FIA case, the national competition authorities received various complaints in that field. That resulted in a wide range of sports associations waiving or at the very least drastically amending their exclusivity rules. The Italian competition authority, for instance, investigated equestrian sports and motorsports. The Irish authority also investigated equestrian sports, as did the Belgian authority. Motorsports was the subject of an investigation by the Swedish competition authority, which also investigated exclusivity rules of the national bodybuilding association. Competition law was relied on not only before the national competition authorities, but also before civil courts. Two snooker players, for instance, conducted partly successful civil-law proceedings against the snooker association in England.

Every single complaint filed with the national competition authorities regarding the exclusivity rules was successful. It is remarkable that the national competition authorities did not subscribe to the European Commission’s approach in the FIA case. Unlike the Commission, the national competition authorities did not always believe that the sports associations had to withdraw all their exclusivity rules or had to cease or hive off their commercial activities.

The national competition authorities did acknowledge the anticompetitive effect of exclusivity rules, but also took into account the specific nature and rules of the sports world. The Irish competition authority, for instance, accepted a rule that prohibited participation in competing equestrian sports events if they failed to uphold specific health and safety standards or did not take out adequate insurance. The Swedish competition authority allowed a Swedish bodybuilding association (SKKF) to demand that athletes taking part in rival events undergo a doping test at their own expense before taking part in events organised by SKKF.

What’s the Commission’s answer to #ChanceToCompete?

Although some sports associations withdrew or significantly amended their exclusivity rules after investigations by national competition authorities, many established sports associations still apply such rules. In October 2015 two Dutch skaters gave the European Commission the opportunity to take action to put an end to those practices. The Commission has since investigated the complaint filed by skaters Mark Tuitert and Niels Kerstholt regarding the exclusivity rules of ISU, the International Skating Union. Those rules prohibit skaters from participating in matches not approved by the ISU. A possible sanction for breach of that rule is lifelong exclusion from participation in events organised by ISU. At the same time as filing their complaint Tuitert and Kerstholt launched their #ChanceToCompete campaign, requesting Euro Commissioner Verstager in an open letter to present his views on the range of a sport association’s power. Tuitert and Kerstholt’s campaign against the ISU has been successful; the ISU in any event appears to be changing its policy in anticipation of the Commission’s ruling. Although the Commission is still investigating the complaint, the ISU announced this last July that it would allow commercial competition in the organisation of skating events. That will be of no avail to Tuitert and Kerstholt, who are no longer professional athletes, but the Commission’s decision will allow the next generation to make the most of their talents. And in response to Tuitert and Kerstholt’s complaint the Commission may furthermore rule on whether the measures taken by the ISU to date suffice, thereby answering the question raised by Tuitert and Kerstholt in their #ChanceToCompete campaign on behalf of numerous athletes in other sports. It will give the Commission an excellent opportunity to kill two birds with one stone. Increased competition in a field of sport due to an increase in matches may lead to better performances in that sport, while increased rivalry between the organisers of those matches may lead to easier access to those matches and better conditions for the spectators.                                            

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