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Heightened antitrust/competition law risk for sport governing bodies facing new market entrants
In recent years, the European Commission (EC) and National Competition Authorities (NCA) have shown increased appetite to investigate sport governing bodies in relation to rules that restrict competition from new market entrants (principally, “outsider” commercial event organisers). These rules most commonly operate by either imposing on new market entrants to respect the rules and regulations of the sport as conceived by the governing body, and/or by disciplining athletes (and other participants, such as coaches, match officials etc.) if they participate in events that are not sanctioned (i.e. approved) by the governing body.
The most notable recent case in relation to such rules is the EC’s continuing investigation into the eligibility rules of the International Skating Union (ISU). This case represents the most significant intervention by the EC in this area since the landmark Fédération Internationale de Sport Automobile (FIA) case in the late 90s/early 00s, in which the EC expressed concerns that the FIA was using its regulatory powers to exclude competing events for its own commercial benefit, ultimately leading to significant structural changes in the organisation of Formula One following commitments offered in order to meet those concerns.
The ISU is the sole body recognised by the International Olympic Committee to regulate the sports of figure skating and speed skating on ice. Its members are national ice skating associations (the ISU is therefore at the top of the ‘pyramid’ for ice skating).
The ISU’s eligibility rules impose bans on ice skaters, potentially for life, if they participate in events not approved by the ISU. A complaint about these rules was made by two Dutch professional speed skaters, Mark Tuitert and Niels Kerstholt, resulting in the EC opening proceedings in October 2015. On 27 September 2016 – despite the ISU making changes to its rules in June 2016 – the EC sent a Statement of Objections to the ISU, stating that the EC’s preliminary view was that the ISU’s rules unduly restricted the athletes’ commercial freedom and prevented new entrants from organising alternative events, because they were unable to attract top athletes.
In announcing the Statement of Objections, Commissioner Vestager alluded to the balance that is to be struck:
‘International sports governing bodies play a unique role in setting the rules of the game and ensuring standards of conduct. They are responsible for both the health and safety of athletes and for the integrity of competitions. We have concerns that the penalties the ISU imposes on skaters through its eligibility rules are not aimed at preserving high standards in sport but rather serve to maintain the ISU’s control over speed skating.’
The ISU’s immediate reply, by way of press release (also dated 27 September 2016), was a robust one. It stated:
‘Any allegation that the ISU’s rules are somehow anti-competitive appears to be based on a misplaced understanding of the governance structure of sport and the Olympic movement. The European Union’s founding Treaty as well as the EU institutions have long recognized the autonomous governance structure of sport as being essential to the protection of the integrity, safety and health in sport. These rules benefit sports organizers, sportspersons and spectators…
It appears then that the European Commission has failed to take adequate account of the importance of the legitimate objectives pursued by the ISU’s eligibility rules. A neoliberal and deregulated approach to sport could destroy the Olympic values underpinning sport.’
The ISU case is not the only recent case, and NCAs have either opened or decided cases such as:
- Italy, in relation to provisions of the Federazione Italiana Sport Equestri (FISE) providing it with exclusive jurisdiction over sporting and/or recreational activities and restricting FISE members (riders, technicians, trainers, etc.) from participating in events outside FISE’s jurisdiction;
- Sweden, in relation to rules of the Swedish Bodybuilding Federation (SKKF) under which members were suspended or fined if they participated in events not affiliated to SKKF; and
- Belgium, in relation to the ‘unsanctioned events’ rule of the Fédération Equestre Internationale (FEI), according to which the FEI had the power to suspend for up to six months riders, horses and officials from participating in FEI-promoted events if they participated in events not approved by the FEI.
The ‘pyramid structure’ of sports governance
Those involved in European sport will be familiar with the pyramid structure of sports governance, whereby a sport will have one international federation sitting above continental and/or national federations (which might in turn sit above a number of regional federations). Indeed, the pyramid model is one unique characteristic of sport that the EC has long recognised: the so-called “specificity of sport” includes:
‘…a pyramid structure of competitions from grassroots to elite level and organised solidarity mechanisms between the different levels and operators, the organisation of sport on a national basis, and the principle of a single federation per sport.’
The pyramid structure has a number of advantages for the governance of sport, including:
- enabling sports to define uniform rules, both on and off the field (including the rules of play, anti-doping regulations, anti-corruption regulations etc.);
- aiding the equitable distribution of revenue from the elite to the grassroots level, encouraging participation, development and competitive balance; and
- the prevention of conflict within sport, which is desirable for the selection of national athletes and teams, and the identification of champions at each level of the sport.
The pyramid structure is justified and it should not be automatically offensive from a competition law perspective, and there are several good reasons why sports governing bodies will seek to protect it by introducing rules which may have an anti-competitive effect. Indeed, these rules could negatively impact the economic interests of “outsider” event organisers and any participants who may wish to participate in events organised by them. Drawing the line between these competing interests is not a straightforward exercise.
The relevant legal test
Put very simply, it is settled that sporting rules with economic effects are compatible with EU competition law if they pursue a legitimate objective and if the restrictions that they create are inherent and proportionate to reaching that objective.
So, for example, it would be a legitimate objective for a governing body to seek to ensure uniform application of anti-doping regulations across participants in its sport, for instance by testing athletes prior to their participation in events. However, it may be disproportionate for a governing body to prevent any participation of athletes to events organised by new entrants and to ban an athlete for life should he/she participate in such an event without the possibility of an appeal.
Concluding remarks
Competition law challenges can represent a significant burden on the resources of sport governing bodies, and significant penalties can arise in the event of a finding of infringement (up to 10% of their global turnover).
There is a clear recent trend for governing bodies to be challenged by competition authorities at both the European and national level. This trend is likely to continue as rules that restrict competition are common to sports that adopt the pyramid model (which is most sports across Europe), and athletes and new entrants demonstrate continued and perhaps increasing willingness to challenge the perceived anti-competitive behaviour of sports governing bodies.
On the one hand, competition law respects the ability of sport governing bodies to pursue legitimate sporting objectives in a proportionate manner. On the other hand, their decision making process must ensure that their regulatory power is not misused to grant them a commercial advantage. Sports governing bodies would therefore be well advised to review their rulebooks to ensure that they mitigate the risk of antitrust challenge.
Latest News
7-Eleven selects Jackpot.com as their official lottery partner
Online Lottery Courier Service Jackpot.com Announces Exclusive Collaboration with 7-Eleven, Inc.
Jackpot.com will serve as the official lottery courier service of 7-Eleven, Inc., initially launching in Ohio and Massachusetts
Jackpot.com – the online lottery courier service that allows consumers to purchase official state lottery tickets on their phone, tablet, or computer – announced today an exclusive collaboration with 7-Eleven Inc., the largest convenience store chain in the world, to serve as their official lottery courier service.
As part of the collaboration, 7-Eleven customers in Ohio and Massachusetts will be able to sign up and play lottery games and scratchers on the Jackpot.com app or website. The program will initially be launched in over 600 7-Eleven and Speedway stores in Ohio and Massachusetts, with a special launch promotion that gives 7-Eleven customers a free lottery ticket on their first deposit by using promo code, “7Eleven”.
“We’re thrilled to work with 7-Eleven, the leading retailer of lottery tickets in the country,” said Akshay Khanna, CEO and co-founder of Jackpot.com. “Leveraging our technology and innovation, we can provide additional convenience for their customers, while adding an additional source of revenue. A true win-win relationship for all.”
By launching in Ohio and Massachusetts in 2023 and 2024, respectively, Jackpot.com aims at adding another avenue for player convenience with one of the most widely recognized brands in the convenience-retailing space. With a presence in Ohio, the nation’s seventh-largest lottery market, and Massachusetts, whose state lottery produced $1.2 billion in net profit for the Commonwealth during the 2024 fiscal year, Jackpot.com’s collaboration with 7-Eleven represents an added layer of accessibility for players.
Jackpot.com remains committed to responsible play and has significantly invested in protocols by allowing customers of legal age to set spend limits and limits on daily deposits, all while providing access to local and national responsible gambling resources, self-exclusion, self-suspension and automated notifications that offer help should problematic behavior be detected. Jackpot.com is also the only lottery courier service to launch with an iCap certification from the National Council on Problem Gambling.
To learn more, visit jackpot.com. First-time users can also download the official Jackpot.com Lottery App on the iOS or Android App Stores, where available.
eSports
The World Esports Summit 2024 Is Here!
The IESF World Esports Summit returns this December to Busan, South Korea. Hosted at the Busan Esports Arena (BRENA) from December 5-6, the Summit will bring together prominent figures from Esports, global brands, government officials, and sports executives for a deep dive into the current Esports trends, its rapid transformations, and future challenges.
This year’s theme, “Building Bridges, Not Barriers, Through the Power of Esports,” will highlight the role of Esports in uniting cultures, ideas, and industries. Under the slogan “We Empower Success,” the
Summit provides a great platform for Esports experts to engage in meaningful discussions and sessions, sharing their insights on trends and presenting forward-looking ideas for our industry.
The event, strategically timed at the close of the competitive season, presents a perfect environment for reflection on the year’s biggest events, industry shifts, and the next steps for Esports. Attendees can follow the expert’s perspectives on topics like:
- (R)Evolution in Esports
- East Meets West
- Esports Integrity: The Role of Referees
- The Rise of International Esports Competitions
- (In Korean) Korea’s Secret Sauce etc.
Also, featured at this year’s event are the IESF World Esports Training Camp and the World Esports Referee Academy.
These are very important IESF programs that are aimed at advancing the skills and professional standards of the next generation of Esports leaders.
Join us in Busan for two days designed to inspire, connect, and empower the international Esports community.
Registration for the World Esports Summit is free and open to all interested attendees.
To register, please complete our online registration form: iesf.formstack.com/forms/wes2024_participation_registration
See you in Busan!
eSports
Akhil Sarin CMO at Easygo named as key note at ICE Esports Conference
Clarion Gaming has confirmed that Akhil Sarin CMO at Easygo, the technology powerhouse behind the success of global brands Stake and Kick will headline the Esports & Games Conference (EGC) taking place on 21 January as part of the ICE Barcelona experience. As a key member of the executive team, Akhil Sarin has been instrumental in securing the high-profile partnerships that have accelerated Stake’s growth, including the Stake F1 team, UFC, Drake, and Premier League Everton FC.
Through these strategic alliances he has amplified Stake’s brand presence at the same time as creating unique, immersive player experiences, in the process setting new industry benchmarks.
Announcing the high profile speaker Will Harding, Head of Esports at Clarion Gaming said: “Securing Akhil Sarin as EGC key note at ICE Barcelona represents a remarkable opportunity for our attendees to gain invaluable insight into cutting-edge strategies in digital and influencer marketing .
“Akhil’s expertise with Stake and Kick.com embodies the forward-thinking, innovative approach that defines the digital marketing landscapes. His participation underscores the calibre of knowledge-sharing that we are committed to delivering at ICE and he is sure to both inspire our attendees and elevate their strategic perspective.”
Looking ahead to ICE Barcelona, Akhil Sarin stated: “Collaborating with Clarion Gaming at ICE Barcelona is an exciting opportunity to showcase Stake’s journey and continued focus on bold partnerships and creative marketing strategies that resonate with audiences.”
He added “The EGC is a vital platform for exchanging transformative ideas and shaping the future of gaming and entertainment. I look forward to discussing Stake’s vision and collaborating with industry leaders to inspire growth and innovation across the sector.”
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