PLAYERS IN LEAGUES: ANTI-TRUST REGIME IN SPORTS
Updated: May 8, 2020
This post has been authored by Eukti Garg, a B.A. LL.B (Hons.) candidate at the Rajiv Gandhi National University of Law, Patiala.
At the very root of the development of sports law, inter alia, lies the welfare of players and athletes which in consequence helps the sport reach its full potential. In this contemporary world, players can get infinite opportunities by playing in leagues. For instance, with the introduction and surprising success of the Pro Kabaddi League, kabaddi players[i] playing in the league received name, fame and better financial prospects, something they were deprived of prior to the league. These leagues not only pave the way for players’ development but also exposes them to various stakeholders like the club owners, broadcasters, league sponsors, club sponsors, etc., the existence of which would not have mattered in domestic or national level competitions. These and other stakeholders collectively work to make their league more profitable every season. As a result, the athletes, many of whom don’t know English[ii], are subject to multiple contractual obligations and restraints.
How are Players Restrained?
Clubs and Leagues on the pretext of obtaining procompetitive effects of the rules, use several clauses to bind players’ mobility, salary, compensation, and many other rights. Some of the clauses inserted by the leagues include[iii] (i) Reserve clause which helps leagues or clubs retain the player even upon the expiration of his or her contract (ii) Salary clause, inserted to make players expensive so that it becomes challenging for the clubs to buy him or her (iii) Right of first refusal means that the league or a club reserves the first right to retain the player and only upon its refusal to do so can the player, subsequently, transact freely.
The Monopsony power of these leagues allow them to put restraints in place. The leagues have tried[iv] contending that the single entity structure leverage them into preventing any kind of restraint as they would not conspire to hurt their own marketplace. However, due to competition law sanctions in place, many leagues and their governing bodies have been put under scrutiny on account of unreasonable exercise of restraint on players.
Instances of Player Restraints in India
Baseline and the Volleyball Federation of India[v]:
The Volleyball Federation of India (‘VFI’) is the exclusive holder of the rights of all Volleyball tournaments, players, and even commercials associated with it. Being the monopoly and the monopsony, it has the power to control everything in and around volleyball ranging from tournaments to goodwill.
In 2018, VFI, arbitrarily and unilaterally appointed Baseline (a limited company) for organising men and women Volleyball Premier League for the next 10 years. The agreement of VFI and Baseline included the following[vi];
1. Gave Baseline unrestricted powers to organize the league for ten years, thereby creating monopoly;
2. The agreement included an undertaking from VFI to Baseline to not give permission in any way to organize any other Volleyball League in India or abroad for the next 10 years;
3. VFI gave another undertaking to Baseline stating that the players playing in Baseline’s volleyball league cannot participate in any other league in India or abroad;
4. VFI will not allow any player to participate in any tournament or event (inclusing Asian Championship, Olympics and World Championship) in case dates of the tournament clash with that of Baseline’s tournament;
5. VFI cannot, during the tenure of 10 years, engage in any sort of activity similar to the nature of Baseline’s tournament.
Moreover, the Secretary General of VFI announced at the time of actions that the team winning the 2019 edition of Baseline’s Volleyball League will represent India in Asian Championship to be held in Chinese Taipei.
These practises not only indicate towards the VFI’s abuse of its dominant position under S. 4(2)(c) and 4(2)(b) but also usage of anti-competitive agreement to bind the players under section 3(3)(b) and 3(4)(d).
Dhanraj Pillai v. M/s Hockey India[vii]
This is a controversial judgement involving informants Sh. Dhanraj Pillai, Gurbax Grewal and V. Baskaran and the opposite party Hockey India (HI) which became the sole governing body of Hockey in 2009. Indian Hockey Federation, the previous ultimate authority for governing the sport of Hockey in India, had envisioned a hockey league with the name “World Series Hockey” in partnership with Nimbus Sport, a registered company under the Companies Act, 2013.
From March 31, 2011, HI adopted the International Hockey Federation (FIH) notified Regulations on Sanctioned and Unsanctioned Events and accordingly, amended its Code of Conduct (CoC) agreement entered into between players and HI. The player restraints that the amendment envisaged were two:
Firstly, disciplinary action to be taken against any player participating in any event not sanctioned by HI.
Secondly, players to obtain a No-Objection Certificate from HI before playing for an foreign team, club or league other than that of HI or its registered member unit.
Ceterus Paribus, these particular player restraints bring out the importance of the anti – trust regime. It is another side of the coin that the Commission did not find merit in the allegations of unreasonably restraining the players and hence, sided with the HI. How much restrain is unreasonable is a question of fact that necessitates subrogating oneself into player’s shoes and simultaneously understanding authorities’ perspectives.
The pyramid structure of the sports manifests these governing organisations with handful powers and few responsibilities. Anti – trust is, undoubtedly, one of the few. Due to anti- trust laws regulating the unique sports arena, the respective monopolies cannot place unreasonable restraints on its players. For instance, BCCI was fined 52 Crore[viii] because it consciously tried to protect the interests of its broadcasters by pledging to not sanction or recognize any other league in competition to IPL for ten years.
That is the reason, USA jurisprudence has focussed on Rule of Reason approach[ix]. According to it, every contract can be said to be restrictive in one way or the other but competition law has to figure out the unreasonable restraints in the contract. Fortunately, the Indian Anti-trust regime, has tried doing justice in whichever player restraint case it has received. This can be followed from the two cases discussed above. The first one not only has a prima facie case but also impedes the players’ welfare and growth for almost the life of an athlete’s career. The second case, on the other hand, looks restraining at first yet the Competition Commission noted that as the sole binding authority of Hockey in India, HI can, rightfully, instruct the players to obtain an NOC before joining any other event. The commission held both the restraints valid in the second case.
Hence, the Indian jurisprudence should adopt the rule of reason that is the case-by-case approach to come to solutions. It is commendable how the Competition Commission, in less than twenty years of establishment has used the Rule of Reason principle in weighing the procompetitive effects o