2011 (5) TMI 1124 - Commission - Indian Laws

Summary

Issues Involved:
1. Relevant market(s)
2. Dominant position of AICF
3. Abuse of dominant position by AICF
4. Anti-competitive agreement under Section 3(4) of the Act

Detailed Analysis:

Issue 1: Relevant Market(s)
The Commission delineated the relevant markets as:
(a) The 'market for organization of professional chess tournaments/events in India'
(b) The 'market for services of chess players in India'

The Commission noted that chess, due to its unique characteristics, cannot be substituted by other sports or entertainment forms. Thus, the relevant product market for assessing restrictions on chess event organizers is the "market for organization of professional chess tournaments/events." For restrictions on chess players, the relevant product market is the "market for services of chess players."

Issue 2: Dominant Position of AICF
The Commission found that AICF enjoys a dominant position in both relevant markets due to its regulatory powers as the sole national chess federation affiliated with FIDE and its NSF status granted by MYAS. AICF's control over the selection of players for international tournaments and the organization of national and international chess events in India underscores its dominant position.

Issue 3: Abuse of Dominant Position by AICF
The Commission identified several abusive practices by AICF:

(i) Restriction on Chess Players and Organization of Chess Tournaments:
AICF imposed restrictions on chess players from participating in tournaments not authorized by it, leading to disciplinary actions including bans and removal of ELO ratings. This conduct was found to limit the services of players and restrict market access for other organizers like CAI, violating Sections 4(2)(b)(i) and 4(2)(c) of the Act.

(ii) Sharing of Non-refundable EMD and Entry Fee:
While the DG found this practice to be anti-competitive, the Commission concluded that sharing of EMD and entry fees was not unfair or in contravention of the Act, as the funds were used for various expenses related to chess promotion.

(iii) Special/Donor Entries and Non-implementation of LTDP:
The Commission accepted AICF's justification that special/donor entries help discover hidden talents and are internationally accepted practices. Thus, this practice was not found to be abusive under Section 4 of the Act.

Issue 4: Anti-competitive Agreement under Section 3(4) of the Act
The Commission found that the undertaking prescribed by AICF, which restricts players from participating in unauthorized events, amounts to exclusive distribution and refusal to deal under Sections 3(4)(c) and 3(4)(d) read with Section 3(1) of the Act. This conduct creates entry barriers, forecloses competition, and restricts opportunities for chess players, causing an appreciable adverse effect on competition.

Order:
The Commission ordered AICF to:
(a) Cease and desist from the abusive conduct.
(b) Lay down fair, transparent, and equitable parameters for authorizing chess tournaments.
(c) Ensure disciplinary actions against players are proportional, fair, and transparent.
(d) Review the disciplinary actions against the Informants and other similar players.

AICF was directed to comply with these orders within 60 days and submit a compliance report.

Penalty:
The Commission imposed a penalty of INR 6,92,350/- on AICF, calculated at 2% of the average relevant turnover for the financial years 2014-15, 2015-16, and 2016-17. The penalty was to be deposited within 60 days of the order.