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TMI Blog2013 (5) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... in future. (ii) to cease and desist from using its regulatory powers in any way in the process of considering and deciding on any matters relating to its commercial activities. To ensure this, BCCI will set up an effective internal control system to its own satisfaction, in good faith and after due diligence. (iii) To delete the violative clause 9.1(c)(i) in the Media Rights Agreement. The Commission considers that the abuse by BCCI was of a grave nature and the quantum of penalty that needs to be levied should be commensurate with the gravity of the violation. The Commission has to keep in mind the nature of barriers created and whether such barriers can be surmounted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers. The Commission decides accordingly. The directions of the Commission must be complied within 90 days of receipt of this Order. The amount of penalty determined of Rs. 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Test matches (10 Members). 2.4 Associate Members are the governing bodies for cricket of a country recognised by the ICC, or countries associated for cricket purposes, or a geographical area, which does not qualify as a Full Member, but where cricket is firmly established and organised (36 Members). 2.5 Affiliate Members are the governing bodies for cricket of a country recognised by ICC, or countries associated for cricket purposes, or a geographical area (which is not part of one of those already constituted as a Full Member or Associate Member) where the ICC recognises that cricket is played in accordance with the Laws of Cricket (60 Members). Allegations 2.6 The allegations levelled by the informant centre on the following three dimensions of organization of Indian Premier League (IPL), a Twenty 20, professional cricket league tournament conducted by BCCI: a. Irregularities in the grant of franchise rights for team ownership. b. Irregularities in the grant of media rights for coverage of the league. c. Irregularities in the award of sponsorship rights and other local contracts related to organization of IPL. 3. Summary of DG's findings and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uge costs. Whatever surplus is left after defraying all the expenses is ploughed back by them in the organization itself. It will be taking a deliberately distorted view of the right claimed by such organizations to telecast the sporting event to call it an assertion of a commercial right. Yet the MIB has chosen to advance such contention which can only be described as most unfortunate. It is needless to say that we are, in the circumstances, unable to accept the argument. The Ministry or the Government as a whole should not denigrate the sporting organizations such as BCCI/CAB by placing them at par with business organizations sponsoring sporting events for profit and the access claimed by them to telecasting as an assertion of commercial interest". 3.6 On the basis of aforesaid arguments and owing to the nature of its activities, BCCI contended that it cannot be compared to a commercial organization and it does not qualify to be an enterprise within the meaning of Section 2(h) of the Act. DG's Findings 3.7 The DG concluded that though BCCI is a society and supposed to be a non-profit organization, its activities related to IPL such as grant of franchise rights, media rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot be awarded by any other agency except BCCI as BCCI is the only agency approved by ICC to organize Twenty 20 cricket in India. 3.15 The DG concluded the relevant market as the "underlying economic activities which are ancillary for organizing the IPL Twenty 20 cricket tournament being carried out under the aegis of BCCI". Assessment of Dominance BCCI's submissions 3.16 BCCI admitted that it holds a monopoly, but it should be treated on a different footing owing to the unique nature of the market for professional sports league and the pro-competitive effects of the existence of single professional sports league. BCCI stated that this is especially true in situations like that of BCCI where it is not acting for profit, because that means the negative effects of monopoly, including seeking economic rent from the activity, do not take place. 3.17 It also stated that the dominance of BCCI can additionally be attributed to ICC, which typically recognizes one cricket board/authority from each country as its member. DG's Findings 3.18 The DG based its' findings on the following: a. BCCI is the national governing body for all types of cricket activities in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Commissioner, IPL, impliedly with the consent and approval of IPL Committee. This was being reported to BCCI on regular basis and ratified by the Governing Council. Therefore, for all acts of commission and omission, BCCI cannot be absolved from its responsibility in the process of tendering. 4.4 Another contravention was found by DG in respect of rights of franchise teams been given till the IPL continues. According to DG, the agreement so made will have the effect infinitum. BCCI has countered the same by submitting that the agreement contains the termination clause and secondly there is a clause which permits sale of franchise rights after an initial lock in period of three years. The lock in condition has also been dropped for the two new franchises created later. BCCI also stated that the franchise agreement specifically contemplated listing of the franchise on the stock exchange thereby providing an opportunity to public at large to invest in such franchise. 4.5 The DG also found contravention in the fixation of franchise fee by BCCI for grant of franchise rights. The minimum franchise fee was fixed at USD 50 million, which DG held to be a very high capital cost of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he bids. The other 3 submitted the bids. During this period, WSG approached MSM/Sony to explore whether it was willing to be WSG's Indian broadcaster for IPL tender as the broadcasting business was one of the requirements of IPL Global Package which could not be satisfied by WSGI. On 10th January 2008, MSM's representative indicated to WSGI that they would support WSGI's bid for IPL tender. On the date of opening of bids i.e. January 14, 2008, there were 3 bidders present. The Chairman of IPL informed that Sony had pulled out of their individual bid to partner in a consortium with WSG. ESPN bid was declared not eligible. It implied that there was only one party left in the bid that was WSG-Sony consortium. 5.3 WSGI-Sony won the bid with an offer of USD 1.026 billion for a period of 10 years Global Package. The breakup of the bid amount was as under: (a) USD 276 million - Rights for Indian subcontinent to Sony for first 5 years. (b) USD 550 million - Rights to WSGI for Indian subcontinent for next 5 years (c) USD 92 million - Rights for RoW to WSGI for 10 years (d) USD 108 million - Committed promotional spending for IPL Accordingly the following agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erminating 3rd India Territory Agreement or paying WSG, the money or the bank guarantee. 5.5 The 2nd RoW agreement between WSGI and BCCI was terminated on 28th June 2010 on the grounds that the same was vitiated by fraud. The provision relating to bank guarantee/payment in case of Sony's default was inserted by Sh. Lalit Modi without any authority of BCCI. Also the basis of 3rd India Territory agreement was challenged. These are still under litigation in Bombay High Court. After setting aside the 2nd RoW agreement, the 3rd India Territory agreement was modified to increase the amount of media rights fee by Rs. 300 Crores (USD 80 Million as reduced by Rs. 125 Crore apparently paid by Sony to WSG). 5.6 In 2011, ITT was called for RoW rights again and this time the rights were granted to Times Internet and Nimbus consortium through Agreement dated March 20 2011. 5.7 The DG made the following observations: i. The first meeting of tender committee was postponed from 11 am to 1 pm in order to facilitate and allow WSG and Sony to form a consortium. ii. Though Sony and WSGI had submitted the bids separately, they were facilitated to form a consortium and bid was enterta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCI. On other rights, BCCI submitted that it was merely a facilitator, who recommended name of the vendors, the decision to award contract was vested with franchises themselves. Analysis and findings of the Commission 7.1 On examination of the depositions and the DGs investigation report the Commission observes that the allegations levelled by the informant centre around the organization of IPL and irregularities in the sale of various rights associated with IPL viz. Franchise Rights, Media Rights and Other Sponsorship Rights. In its submissions to the DG, BCCI while refuting the allegations also claimed that its actions do not come under the purview of the Competition Act as it is a not for profit making body involved in promotion and development of the sport of cricket in India. DG however concluded that BCCI is an enterprise for the purpose of the Competition Act and cannot claim any immunity from the Act. The Commission noted that the issues required to be addressed at the outsetas under: a. Whether BCCI is an enterprise for the purpose of the Competition Act? b. Whether the actions of BCCI associated with organization of IPL contravene any of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has three categories of members viz. Full Members, Associate Members and Affiliate Members. BCCI is a full member of ICC and is thus recognized as 'custodian' of cricket in India vested with the requisite powers of framing rules, organising events, selections of teams etc. owing to its affiliation to ICC. All state cricket associations in India in turn are the members of BCCI and in turn various cricket clubs are affiliated to their respective State Federation. 8.2 The pyramid structure is considered important for ensuring the freedom of internal organization of sports associations, and indispensable to the performance of essential regulatory task of sports associations which includes, setting the rules of the game, uniformity in application of rules of the sport, maintaining the integrity of the game, orderly promotion of the game and maintaining the fairness of the game (anti-doping regulations) etc. In this structure, three kinds of sports rules can be identified: the "rules of the game"; "club rules" and "competition rules". The "rules of the game" are the technical rules according to which a game is played. The "club rules or statutes" are those adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was conceived during the 1959-60 season to mark the completion of 25 years of the Ranji Trophy championship and was named after the late Z.R. Irani, who was associated with the Board of Control for Cricket in India (BCCI) from its inception in 1928, till his death in 1970. The fixture is always played between the previous year's Ranji Trophy winners and the Rest of India Team. Leading players take part in the game which has often been a sort of selection trial to pick the Indian team for foreign tours. iv. International Cricket: According to ICC definition, 'First Class Cricket' also includes; (a) any Test Match, One Day International Match or Twenty 20 International Match; (b) any Match played as part of an ICC Event; or (c) any other Match organised or sanctioned by the ICC from time to time to which the ICC deems it appropriate that the Regulations should apply such as ICC Standard Twenty 20 International Playing Conditions. 8.5 Private Professional Leagues are structured on private franchise based ownership model and the franchise owners obvious objective is ensuring commercial gains by providing competitive cricket with an added entertainment factor. IPL and tempora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission considered the details available on BCCI's website www.bcci.tv and following facts were noted. Though the history of Cricket in India dates back to the Eighteenth Century, it was only after the World War I ended in the year 1918 that it was thought upon to constitute an administrative body for management of sport in the country. Thereafter, 2 members of the Calcutta Cricket Club were allowed by the Imperial Cricket Conference to attend the ICC meeting at Lord's on 31st of May and 28th of July 1926. Initially permission was granted contingent upon a condition that an administrative body for the control of Cricket in India would soon be formed. 8.10 After the directive had been passed by the ICC, a number of Cricket bodies in India started interacting and discussing about the formation of a central Cricket body in the nation. All the Cricket associations of India agreed upon the belief that a central administrative organization for the control of Cricket in India was very essential for improvement of the sport in the country. 8.11 On November 27 1927, a group of 45 people representing the Cricket associations located in different parts of India got together at the Roshnara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation in India'. Clause 2(d): 'To arrange, control, regulate and finance visits of an Indian Cricket Team to tour countries that are members of ICC or elsewhere in conjunction with the bodies governing cricket in the countries to be visited'. Clause 2(s): 'To select teams to represent India in Test Matches, One Day Internationals and Twenty/20 matches played in India or abroad, and to select such other teams as the Board may decide from time to time'. Clause 2(v): To appoint India's representative or representatives on the ICC and other Conferences, Seminars, connected with the game of cricket'. Linkages with ICC 8.15 BCCI is a full member of ICC and as such BCCI follows the rules/bye laws made by ICC. Specifically, attention is drawn to Section 32 of ICC Regulations which prescribes the definition of 'disapproved cricket'; the authority of the members of ICC to 'approve' cricket leagues; and the course of action to deal with 'disapproved cricket'. 8.16 The explanatory notes to Section 32 of ICC Regulations were also examined. Section 32 provided; "A cricket match will be deemed to be "Disapproved Cricket", and the terms of section 32.4 will apply to it, if: 32.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) BCCI is considered as a National Cricket Federation by ICC for India (b) The teams are addressed as National Teams/National Representative Teams (c) The definition of Test Matches as given in ICC manual also clearly states that the teams playing are representing the countries of Full Members such as BCCI. Approach of Government of India 8.23 The GoI had filed an affidavit in the Supreme Court case against BCCI stating that Board was always subject to de facto control of Ministry of Youth Affairs and Sports in regard to international matches played domestically and internationally. In the said affidavit, it is also stated that the Government of India has granted de facto recognition to the Board and continues to so recognise the Board as the Apex National Body for regulating the game of Cricket in India. In the said affidavit it is also stated that it is because of such recognition granted by the Government of India that the team selected by the Board is able to represent itself as the Indian cricket team and if there had not been such recognition the team could not have represented the country as the Indian cricket team in the international cricket arena. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empts made by GoI to bring BCCI within the ambit of Right to Information makes the Government intent clear, even if there is absence of any documentary evidence to suggest that BCCI is explicitly declared as a National Association for the sport of cricket in India. The Commission from the above evidence concludes that BCCI is a de facto regulator of sport of cricket in India. (ii) Whether BCCI is an enterprise for the purpose of the Act? 8.25 BCCI during the course of investigation has stated that it is a 'not for profit' organisation and the objectives of BCCI as clearly stated in their Memorandum of Association (MoA) are for encouraging and promoting the game of cricket. The DG however contended that BCCI although a ''not-for-profit'' registered society, its activities fall in the commercial sphere. According to the Act, "enterprise" means a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s depends ultimately on their being able to impose, on the relevant market, their services to the detriment of those offered by the other operators..." [Case No: C-49/07, REFERENCE for a preliminary ruling under Article 234 EC, from the Diikitiko Efetio Athinon (Greece), made by decision of 21 November 2006, received at the Court on 5 February 2007, in the proceedings, Motosykletistiki Omospondia Ellados NPID (MOTOE) v. Elliniko Dimosio, THE COURT (Grand Chamber)] 8.28 The activities of BCCI centre both on 'custodian and 'organiser' role, as already detailed. In this broad based objective, BCCI is involved in selection of Team India to represent India in international events, to work for development of cricket by arranging training camps etc. as well as organizing the game. These activities fall under the custodian function of BCCI, however, the aspect of 'organization' brings in activities contributing to the revenues of BCCI such as grant of media rights, sale of tickets etc. The activities of 'organising events' are definitely economic activities as there is revenue dimension to the organizational activities of BCCI. The Grand Chamber of ECJ on the case against ELPA had also o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlying product or service. The Act considers relevant market as the market of various goods or services that are regarded as interchangeable by consumer with reference to product characteristics, intended use and price. The objective of this definition is for precise understanding of the competitive constraints the market forces are subjected to. 8.33 The Act emphasises that definition of relevant market needs to be viewed from the demand perspective and based on characteristics of the product, price and intended use. The Commission considered the definition in accordance with the parameters laid down under the Act. 8.34 Every sports event is unique in itself and commands its own fan following. Cricket also has its own characteristics that differentiate it from other sporting events or other entertainment events. A cricket match cannot be perceived as substitutable by any other sports/entertainment event based on characteristics. It can also be argued that the intention of the ultimate viewer is entertainment and therefore, there is a case for broadening the definition and including other sports and entertainment forms. This argument however does not hold if we consider the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mong the three mega sports events in recent years in India, TV viewership of Cricket World Cup 2007 was highest (113 mn) followed by Olympics 2004 (65 mn) and FIFA World Cup 2006 (39 mn). The latest entrant to the sports leagues was the WSH league. It attracted the cumulative TV viewership of 10.43 million (Source - TAM, CS 4+). The tennis viewership (Grand slam events) was 42.4 million in 2007 as per KPMG- FICCI report on Media and entertainment industry. In comparison, the IPL 5 which was plagued with controversies and talk of excessive cricket attracted a viewership of 122.44 million. Thus, it is very clear that the other sports are not in same market as a cricket league event. (b) Before going into analysis of TAM ratings, it is stated that the TRP rating of 4 is considered as extremely good in the age of so many channels and consumer choices. The analysis of TAM Top 100 Programs of the week as available on Indiantelevision.com reveal that: (i) Set Max before and after the IPL remain on around 9th position with around 4 programs making to the list of Top 100 with all of them having TRP of less than 1. (ii) During IPL, Set Max jumps to the 1st or 2nd positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in Private Professional Leagues. This distinction as we noted earlier arose from the fact that entry of private professional leagues saw the merger of media and entertainment to raise the level of cricket to a different height altogether, contributing to the commercialization of the game. A new genre of cricket emerged with a market distinct from existing cricket events. The Commission, therefore, opines that the relevant market is the Organization of Private Professional Cricket Leagues/Events in India. (b) Assessment of Dominance of BCCI in market for Organization of Private Professional League Cricket events 8.40 Undoubtedly the most significant source of dominance is the regulatory powers of BCCI. BCCI is a monopoly in organization of cricket is axiomatic as BCCI is the de-facto regulator of the game. But the assessment of dominance of BCCI in the market for Organisation of Private Professional Leagues needs examination. The Commission takes cognizance of the pyramid structure and notes that monopoly of sports federations is a natural outcome of the structure. The merits of pyramid structure in sports permits uniformity in application of rules of the sport, orderly d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any private professional league which might be proposed to be organized. The significance of seeking approval for rival leagues can be made out by a reading of Section 32.4 of ICC bye-laws. As per Section 32.4, "A Member shall, to the greatest extent permitted by applicable law: 32.4.1 not participate in any way in any form of disapproved cricket; 32.4.2 not release or permit any players, match officials, coaching or management staff contracted to the member to participate in any way in any form of disapproved cricket; 32.4.3 prohibit the participation by organizations and individuals under its jurisdiction in any form of Disapproved Cricket; 32.4.4 prohibit organizations under its jurisdiction from releasing or permitting any players, match officials, coaching or management staff contracted to them to participate in any form of Disapproved Cricket; 32.4.5 impose appropriate disciplinary sanctions on any organization or individual under its jurisdiction who breaches the foregoing prohibitions; 32.4.6 recognize and enforce within its own jurisdiction any sanction, restriction or exclusion imposed on a player or organization by another Member breach(es) of the foregoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... always coincide with specific commercial objectives. Therefore, it is acknowledged that there should be a clear demarcation between the governing body's governance function and any commercial activities. It is acknowledged that this demarcation may be achieved by the allocation of the various roles to different committees or bodies. In such a case each committee or body should have clearly defined responsibilities and reporting lines. The committee or body with commercial responsibilities shall, where appropriate, consider the possibility of open tenders for any commercial contracts and any contracts. Such contracts should be no longer in duration and no more exclusive or restrictive than is demonstrably essential". 8.47 It emerges from above that internationally too there has been concern that role overlap may lead to competition concern. In the present case, it is strengthened by the powers vested with BCCI to give consent to application for authorisation to organise cricket events. The concern deepens if this power is not subjected to restrictions, obligations and review, sports associations such as BCCI in the present case, to thwart competition by favouring events which it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the issue of ICL DG considered the submissions of ICL and referred to the minutes of meeting of IPL held at Jaipur on 17th November 2007 and noted:- "This clearly indicates that BCCI had a concern over the organization of ICL and the allegations made by ICL shows that BCCI owing to its dominant position has tried to sabotage the ICL tournament through various ways and means and subsequently the ICL tournament was not organized" 8.53 Opposing reasons have been advanced to explain the failure of this initiative. On the one hand the arguments were made that BCCI's decision of not granting approval to ICL was responsible for ICL failure. On the other hand, BCCI in its submissions attributed ICL failure to factors such as lack of transparency for award of media rights, low television viewership, failure to attract crowds, underinvestment, and lack of fan appeal. All of BCCI's submissions lead to questions being raised regarding the overall viability of the business model of ICL. 8.54 ICL, the first attempt to create a private professional league cricket event relates to the period when the provisions of Sections 3 and 4 of the Act were not notified and, is therefore, not bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sport". Examination of Section 32 reveals that the intent behind this regulation introduced by the international regulator at the top of pyramid ICC is not so much in preserving the specificities of sport, rather of assuring revenue for Cricket Sports Federations under the guise of pyramid structure. 8.58 The role and functioning of BCCI have already been examined in detail earlier in this order. An analysis of the position clearly brings out that there is an overlap between the way BCCI is discharging its regulatory and commercial roles respectively, and the modus operandi/decision making process does not clearly separate the two roles. The conduct of BCCI in incorporating the clause (Clause 9.1(c)(i)) mentioned above in its agreement conclusively indicates that BCCI has also used its regulatory power in the process of arriving at a commercial agreement. It is to be noted that regulatory power of BCCI enables it to make a commitment not to recognize or sanction any competing event to other parties, who, in turn would not have given any credence to such a commitment but for the regulatory power exercised by BCCI. The Commission notes that by explicitly agreeing not to sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers. BCCI's economic power is enormous as a regulator that enables it to pick winners. BCCI has gained tremendously from IPL format of the cricket in financial terms. Virtually, there is no other competitor in the market nor was anyone allowed to emerge due to BCCI's strategy of monopolizing the entire market. The policy of BCCI to keep out other competitors and to use their position as a de facto regulatory body has prevented many players who could have opted for the competitive league. The dependence of competitors on BCCI for sanctioning of the events and dependence of players and consumers for the same reason has been total. BCCI knowing this had foreclosed the competition by openly declaring that it was not going to sanction any other event. BCCI undermined the moral responsibility of a custodian and defacto regulator. The Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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