CCI introduces Leniency “Plus” regime in India- Will it suffice?
The attempt by three leading international volleyball players to teach their sport regulator, the Volleyball Federation of India (VFI), a lesson for its grant of long-term exclusive marketing rights for 10 years to a selected private consulting agency for arranging sponsorship etc for the international volleyball league tournaments in India have failed finally. The fair market watchdog, the Competition Commission of India (“the Commission/CCI ”) has , after a detailed examination , has dismissed the case unlike the case against the Board of Control for Cricket in India (BCCI), which was penalized for doing the same thing for the Indian Premium League (IPL) matches in 2013 and again in 2017.
CCI in re Shravan Yadav & Ors. Vs. Volleyball Federation of India & Baseline , vide its order dated 03 June 2021dismissed the allegations of refusal to deal and denial of market access under S. 3(4) & S. 4 of the Competition Act, 2002 (“the Act”) , respectively against the national volleyball regulator of India, the Volleyball Federation of India (VFI) and Baseline Ventures (India) Pvt. Ltd (“Baseline”) .
The order comes after consideration of the objections filed by the VFI against the investigation report submitted by the Director General finding (“DG Report”) by the Commission and considering the specificities of volleyball, which is a sport that has not gained much popularity in India as compared to other established sports, like the Cricket.
Background
Three international volleyball players, Mr. Shravan Yadav (‘Informant No.1’), Mr. Amitsinh Tanvar (‘Informant No.2’) and Mr. Lavmeet Katariya (‘Informant No.3’) ( collectively referred to as the ‘Informants’), registered with Volleyball Federation of India (‘VFI’) filed joint Information before CCI in against VIF and Baseline alleging that VIF has abused its dominant position and also entered into an anti-competitive agreement with Baseline which is prejudicial to the volleyball players in India and also lead to monopolization in the volleyball services market. It was also alleged that VFI further restricted the availability of Volleyball players from participating even in global events like Asian Games, Olympics or Volleyball World Cup if the dates of the said events clash with Baseline’s Volleyball League.
VFI is a National Sports Federation (‘NSF’) for volleyball in India recognised by the Ministry of Youth Affairs & Sports (‘MYAS’), Government of India, Fédération Internationale de Volleyball (‘FIVB’) and Indian Olympic Association. It is the exclusive holder of all the rights pertaining to volleyball including commercials associated with it.
Baseline is a company engaged in the business of providing consultancy services, arranging sponsorships, marketing brands and sports events, brand licensing, including providing consultancy for sports management, celebrity endorsements and management, etc.
In 2015, VFI set out to organize Volleyball League in India similar to Indian Premier League organized by BCCI for international limited over cricket matches , with the objective of promotion of volleyball in India as well as provide much needed impetus to Indian players to improve their game by playing with world-class players and also providing them financial incentive.
On 21.08.2018, VFI entered into an agreement (‘Impugned Agreement’) with Baseline granting it exclusive rights to organise a Volleyball league for Men, Women and Beach Volleyball in India for the next 10 years.
The CCI found the conduct of both VFI and Baseline as prima facie anti-competitive and CCI directed a probe against VFI and Baseline by directing investigation by the DG vide its prima facie order dated 07 August ,2019.
DG Report– The DG noted that (i) VFI is an “enterprise” being a registered society generating revenue through fees as well as organising championships which is an economic activity in terms of S. 2(h) of the Act. VFI also had a revenue sharing agreement with Baseline. Therefore, it an enterprise in terms of S. 2(h) of the Act. The DG defined the relevant markets as the “market for organisation of professional volleyball tournaments/events in India” and “market for services of volleyball players in India” and found that VFI being the only official organisation affiliated to FIVB and Indian Olympic Association is in charge of all the matters concerned with the game of volleyball in India, playing a dual role, as a custodian of volleyball in India as well as that of a regulator granting international affiliation and organising both national and international events/tournaments was in a “dominant position “in both the relevant markets.
DG then found that there are numerous anti-competitive clauses in the Impugned Agreement that are in the contravention of S. 4(2)(a)(i), S. 4(2)(b)(i) and S.4(2)(c) of the Act. The clauses found restrictive of competition were- (i) VFI not allowing any other league of the nature of Pro Volleyball League within the territory of India or abroad during the term of the agreement (10 years). (ii) VFI prohibiting players from participating in any other volleyball league of same or similar nature/idea/format during the term of the agreement as well as its renewal and/or extension. (iii) Restricting players from participating in any international league, beyond the control of VFI, if they come in conflict with the dates of Baseline’s league. However, the DG did not find the selection of Baseline as the exclusive partner / commercial vendor /agency for 10 years by VFI as arbitrary as “Baseline’s proposal was chosen out of four proposals by core committee of VFI”.
Further, noticeably, DG also noted that post the filing of the information before CCI, VFI made certain amendments in the Impugned Agreement vide which , (i) the clause imposing restriction on organising volleyball league was deleted, (ii) Baseline was required to seek consent of VFI for delegating any of its rights relating to the organisation, which were previously unfettered and (iii) the players who had participated in the Volleyball league were free to participate in other tournaments provided that the dates of the tournament did not clash with those of the league. Further, VFI terminated the Impugned Agreement with Baseline and parties-initiated arbitration proceedings.
The DG Report thus brought out that the “abusive” clauses of the Impugned Agreement were in force for the period 21.02.2018 to 13.04.2019 (i.e., from the date of execution to the date of the amendments, and the conduct of VFI, during this duration was in contravention of provisions of Section 4(2)(c) of the Act.
Besides finding conduct of VFI constituting abuse of dominance under Section 4 of the Act, the DG Report also concluded that VFI, by granting exclusive and unfettered rights to Baseline for 10 years, thereby denying market access to other competing vendors /agencies and also restricting the choice of the players desirous of playing the event/tournament of their choice was likely to cause appreciable adverse effect on the competition (‘AAEC’) in regard to the organizing volleyball tournaments and leagues in India, violating S. 3(4)(d) of the Act for the said period of 21.02.2018 to 13.04.2019.
Objections by VFI and Baseline to DG Report-
Given below is a gist of the main objections filed by the Opposite Parties to the findings in the DG Report –
- Informants have stopped pursuing the instant case and thus the matter should be closed forthwith.
- VFI does not enjoy virtual monopoly rights for Volleyball events as many tournaments are organised on state/district level.
- VFI is not an “enterprise” under Section 2(h) of the Act. VFI does not regulate all the Volleyball events in India.
- There are no regulatory barriers in the sport of volleyball in India, much less, high barriers. Further, VFI does not enjoy dominant position in the relevant market.
- DG has not considered that no event, of the nature of a national league, was organized in India in last many years. Therefore, no market existed for such events. Such a market was developed by VFI and it was necessary that a corporate entity conducts such a league. No corporate entity was willing to sign a contract for less than 10 years.
- There was no other competitor who approached VFI with the intent to hold such event in India.
- Amendments were made to the Impugned Agreement to reveal the true intent of the agreement and the understanding between the parties rather than to amend the agreement. This amendment is, in no manner, an admission of anti-competitive nature of certain clauses by the VFI.
- Reliance placed upon the case of Shri Surinder Singh Barmi Vs. Board for Control of Cricket in India by the DG is misplaced as the sport of cricket, which has an existing market, cannot be compared with sport of volleyball, which does not have an existing market.
- Agreement does not restrict any other person from organizing any league because there was no requirement for any third person to take any permission or consent from VFI to organise any league.
- Not allowing a player to participate in more than one league with conflicting schedules is the basic requirement for any league as players have to be available to participate. This is not a violation of the Act.
- It is a prevalent market practice where the organizer or team owner puts reasonable restrictions on their players and pays them reasonably for their participation. In fact, a group like Reliance owns the exclusive rights in the sports of football in India for a term of 15 years in lieu of the amount paid to All India Football Federation. Such a practice is common in Kabbadi, Badminton, Wrestling, etc. Further, the restriction on selected players from participating in other league exists in all such other league being conducted from an older time.
- The player not participating in the league is free to participate in any league of similar nature. None of the Opposite Parties compelled any players to participate in the Pro Volleyball League and is by their own choice that the players have opted to play in the said league. The restriction being imposed upon the players participating in the league is necessary for safeguarding the interest of the franchises engaging such players in lieu of consideration amount being decided between the players and franchiser as per agreement between them.
CCI decision-
On due consideration of the objections of VFI and Baseline, the Commission framed the following issues: –
- What is/are the relevant market(s)?
- Whether VFI enjoys dominant position in the relevant market(s)?
- Whether VFI is in contravention of provisions of S. 4 and 3(4) of the Act?
At the outset, CCI agreed with the DG that both VFI and Baseline were both ‘enterprises. Particularly, VFI was rightly found to be enterprise based on the earlier decisions of CCI with regard to sports federations held to be ‘enterprise’ under S. 2(h) of the Act . The Commission cites Dhanraj Pillay and others v. Hockey India (Case No. 73 of 2011), Surinder Singh Barmi v. Board for Control of Cricket in India (Case No. 61 of 2010) and Hemant Sharma & Ors. v. All India Chess Federation (Case No. 79 of 2011) in this regard. Further, the Commission also refers to Motosyklestistiki Omospondia Ellados NPID (MOTOE) v. Elliniko Dimosio, a decision from the European Union. Therefore, it found the VFI to be an ‘enterprise’.
CCI determined the relevant markets as-(i) ‘market for organisation of professional volleyball tournaments/events in India” and (ii) “market for organisation of professional volleyball tournaments/events in India.”
On position of dominance, CCI also agreed with the DG that VFI as the de facto regulator and an exclusive body responsible for the conduct and governance of all volleyball events in India thereby enjoying both regulatory powers coupled with right to carry out economic activity (such as organising professional leagues) had a virtual monopoly and was in a dominant position in both the relevant markets.
For the third issue, the Commission noted that competition issues usually always emerge when the “sports regulator dons the mantle of a business entity.” However, the Commission was persuaded by the submissions of the opposite parties considering the specificities of volleyball, which as a sport has not yet gained much popularity in India as compared to other established sports, like Cricket and Football, Hockey etc. CCI noted that VFI does not place restrictions on conduct of another league, except some limited restrictions that apply to the chosen players who are to play in that season. CCI also acknowledged that post amendment, the anti-competitive clauses in the Impugned Agreement also stand abated and that the Impugned Agreement itself had come to an end on account of some financial differences between the parties. The Volleyball league had also come to an end with just one season that was held in February 2019.The Commission further observed that there was nothing on the record to show that the Informants or other players were denied any effective opportunity to participate in any Volleyball league, national or international, during the relevant period.
Thus, taking into consideration the overall change in the facts and circumstances of the case, the Commission did not find any contravention of S. 3(4) or S. 4 of the Act and decided to close the matter.
Comments:
The Order demonstrates the due acknowledgment of mitigating factors and changed circumstances coupled with a matured handling of competition in marketing and commercials in a sensitive sector like sports on the part of the CCI. Although the absence of any follow up by the Informants cannot and ought not to sway the CCI decision yet the fact that the Volleyball regulator VFI amended the agreement and purged it of all anti- competitive clauses, after filing of the Information by the noted players, seemed to have served its purpose which must have been the reason for the players to stop following their case before CCI.
#Volleyball #Exclusivity
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