The dual aspects of globalization and commercialization have turned sports and
sports merchandising into a multi-billion dollar business all around the world.
But it is pertinent to note that sports organizations or sports entities are
significantly different from business organizations even if both such entities
or organizations are a part of the sports industry.
Due to the growing interface between business and sports, the aspect of
competition law heavily comes into play. This has resulted in a growing need to
balance the two entities or organizations as under competition law to include
the sharing and balance of income, a ceiling on spending amounts, drafts and of
course, non-tampering provisions. This development is in the spirit of fairness
and legal trade practices.
Although these restrictions and guidelines are a common occurrence in the field
of modern-day sporting events, this has led to the advent of competition law in
the sports industry. This advent of competition law aims to shield the sports
industry and its allies markets from anti-competitive behaviour or
illegal/restricted/unfair trade practices that hamper healthy and legal
competition in the industry and its allied businesses.
The legality of this development has been challenged and repeatedly questioned
in numerous territories and jurisdictions and India is no different in this
The Competition Commission of India (CCI) establishing under the Competition
Act, 2002 has ruled on three major decisions that have repeatedly brought the
focus back to sports and competition and the interplay between the two entities.
In June 2018, the CCI found a prima facie instance of maltreatment of dominance
against the BCCI for restrictions imposed on the Indian Cricket League (ICL).
In July 2018, CCI likewise disposed of two separate complaints filed against:
- All India Chess Federation (AICF) and
- Athletics Federation of India (AFI).
According to section 2(h) of the Competition Act 2002 (CA,2002) enterprise
includes any firm or individual engaged in activities relating to production,
capacity, flexibly, distribution, and acquisition and so on of goods or
provision of services.
In accordance with the definition of section 2 (l) CA,2002, it has thus been
ruled consequently that the sporting entities in India do fall under the ambit
of individual and are hence enterprises under the Act. The underlying
explanation for such reasoning is that an association of people or a body of individuals,
regardless of whether incorporated or not, in India or outside India according
to 2(l) (v) of the CA,2002.
In the landmark judgement of Hemant Sharma and Ors v Union of India and Ors
India Chess Federation was considered
to be an enterprise
on the grounds that it levied an extra charge. In
the Hockey India case it was stated that since the body was engaged in the
income generating economic activities such organization
occasions involving award of media rights and offer of tickets and so forth
should be considered as an enterprise according to CA, 2002.
It is pertinent to note, at this juncture, from the reasons provided by the CCI
that nature of activity is the basis or defining guideline to decide whether
or not an entity can be defined as an enterprise under the Act or not.
It is in this manner that, today, the sports industry and competition law are
intermingled. Sports governing entities or organizations may be considered to be
commercial enterprises and may be considered to be business establishments
with reference to their entrepreneurial conduct.
As a result of falling under
the purview of the Competition Act, there have been numerous cases wherein these
entities have been accused of being engaged anti-competitive practices as
defined under Section 3 & 4 of the Act. It is as a result of this reasoning and
deduction that time and time again, issues of sports and competition law have
appeared before the Indian legal system.