Competition and trade law: Commission conditionally approves sponsorship contracts - Danish Tennis Federation

United Kingdom
The European Commission has intervened in the Danish Tennis Federation's sponsorship agreement with its tennis ball suppliers. This is the first time the Commission has come to a formal conclusion about the contents of such sponsorship contracts. It has approved the system following acceptance of the Commission's conditions to guarantee full and fair competition on the market. The DTF has agreed to call for tender every two years to choose a sponsor. The selection will be transparent, non-discriminatory and open to all suppliers. The selected sponsor will be granted the title "Sponsor of the DTF" and will become the only tennis ball supplier for tournaments organised by the DTF during the two-year period. In exchange, it will supply a specified quantity of balls at a preferential price below the Danish market price.

The sponsorship agreements between the DTF and its tennis ball suppliers were challenged for the first time in the eighties. Following investigation by the Commission, these agreements have been adjusted to improve compatibility with competition rules. In particular, there will be an open procedure for calls for tender with objective conditions, rather than allotting exclusivity contracts unilaterally by the DTF without any objective selective criterion. For team tournaments, each team can obtain balls of the brand chosen by the DTF where it wishes, including abroad or via parallel imports, rather than being limited to balls sold by the official network in Denmark. Also, denominations such as "official ball" or "official supplier" have been required by the Commission to be abolished, to avoid misleading consumers into believing that the products which benefit from them are technically superior or of better quality than others, which is not always the case.

The Commission concluded that this type of agreement can contribute considerably to the promotion of sport without threatening competition, provided that the criterion for openness and transparency are met (IP/98/355).