Competition law in professional sport

Competition law is playing an increasingly larger role in sport case law, as evidenced by three current cases which have created a stir in the media. In one case, at the request of the Federal Cartel Office, the “No-Single-Buyer-Rule” concerning the marketing of the German Football League (Bundesliga) was introduced for the 2020/2021 playing seasons. (This is currently on appeal before the Higher Regional Court of Düsseldorf.) In the second case, the Federal Court of Justice dismissed Claudia Pechstein’s claim against the ISU arbitration agreement on competition law grounds. (This is also on appeal.) In the third case, involving professional basketball, the Euroleague and FIBA are in dispute about the future of European club competitions. Here, too, competition law aspects play an important role.

Below we explore these three cases in more detail.

1. German Football League - tender of rights

It is common knowledge that the German Football League (GFL) is centrally responsible for the marketing of the television, radio and Internet broadcasting rights of the GFL’s and the second German Football League’s games. The marketing is carried out in the form of a bidding procedure and it awards packages for broadcasting rights for several seasons. Sky received the most recent tender of rights concerning the 2013/2014 to 2016/2017 seasons for all means of distribution.

Earlier this year, in the course of the bidding process for the 2020/2021 season broadcasting rights, the Federal Cartel Office expressed concerns about the league association/GFL’s marketing model, which again provided for sole acquisition of all live rights. Sole acquisition allegedly caused a restriction of the innovation competition, in particular with regard to Internet offerings. Content pay rights, according to the Federal Cartel Office, that at least account for the innovation potential of the Internet, must be awarded to a second competitor who offers a reasonable price in relation to the main competitor. In response, the league association and the GFL proposed a modified marketing model to the Federal Cartel Office, which was approved by resolution on 11 April 2016.

The new marketing model provides for the “No-Single-Buyer-Rule” (Alleinerwerbsverbot) concerning the core live rights of the GFL games. In the award of rights for the 2020/2021 season, at least one of the A – E live packages or the platform-exclusive OTT package ("over-the-top", for distribution via web TV and mobile TV) with 102 GFL games had to be awarded to a second provider. The alternative purchaser of these packages would thus be put in a position to develop a competitive GFL offering from which sufficient market impacts would likely emanate, according to the Federal Cartel Office. This would avert the restrictions of the innovation competition associated with sole acquisition, in particular concerning Internet-based offerings.

Sky filed an appeal with the Higher Regional Court of Düsseldorf against the decision of the Federal Cartel Office’s decision. However, this decision no longer had any influence on the auction of the GFL broadcasting rights as the tender is now completed. Sky was awarded the live broadcast of 572 of the total of 612 games of the Bundesliga and the second Bundesliga on all distribution channels (satellite, cable, IP, DVD, Web and mobile, Packages B, C, D, E and F). The remaining live games can be seen on Eurosport (Discovery) (Package A). The OTT package was not awarded. Financially, the award of rights for the seasons up to 2020/2021 has so far been the most lucrative for the GFL. For the national TV rights, the GFL – and thus the 36 professional clubs – took in 1.59 billion euros per season.

2. The Pechstein Case

In the Pechstein case, antitrust authorities scrutinised an arbitration agreement used by the International Skating Union (ISU) and, indirectly, the procedural laws of the Court of Arbitration for Sports (CAS). The judgment is among a number of decisions in which German courts applied the particularly strict competition law provisions concerning market-dominating companies to sporting organizations.

The central competition law issue in the Pechstein case was whether the arbitration agreement signed by Claudia Pechstein – with which she subjected herself to CAS jurisdiction – was invalid due to abuse of market power. The Federal Court of Justice (Bundesgerichtshof) thoroughly weighed the interests of both the ISU and of Claudia Pechstein and concluded that there was no breach. The Court referred in particular to the following two points:

1. Functioning worldwide sports arbitration is in the interest of the sports associations and also the athletes who behaved fairly. Uniform application of the anti-doping rules was necessary, precisely in the area of doping, to facilitate fair international sporting competition among the athletes.

2. The CAS statutes and the CAS procedural rules were acceptable with regard to the appointment of arbitrators for arbitration procedures. The Federal Court of Justice noted that the CAS list of arbitrators contained a sufficient number of independent and neutral persons. The ISU was the only association that was not institutionally "overweight" when it came to drawing up a list of arbitrators and the composition of the arbitration court. Adequate neutrality was additionally warranted through the option of rejecting an arbitrator on conflict of interest grounds as well as by reason of the fact that, to a certain extent, the arbitration awards could be submitted to the Swiss courts for review.

Claudia Pechstein has meanwhile lodged an appeal of the Federal Court of Justice’s judgment on a constitutional issue.

3. The Euroleague/FIBA Case

The current legal dispute between Euroleague and FIBA is also based on competition law issues. In spring, both sides lodged competition law complaints with the European Commission, accusing the other of abusing its superior position of power in the market. The civil law case is currently before the Regional Court of Munich.

Although it has since been lifted, the Regional Court initially issued an interim injunction prohibiting FIBA and FIBA Europe from excluding national basketball teams from FIBA competitions (Eurobasket 2017 and Olympic Games 2016) if the relevant national basketball associations admitted participation of their club teams in the Euroleague competitions. The Regional Court of Munich justified the interim injunction by saying that by way of the threatened exclusion from the competitions, FIBA and FIBA Europe had abused their market-dominating positions. 

Further, the Regional Court found that, on grounds of the "one place principle" applicable to the competitions of national teams, the two organisations were monopolists. [MH5] The approach taken by the two associations was "asymmetrical warfare" because pressure was being put on the national associations or their national teams in order to clarify a dispute in the area of the club championships. According to the Regional Court, both areas (national teams on the one hand, club teams, on the other) independently stand alongside each other and – as has happened – may not be linked to each other.

At the request of FIBA and FIBA Europe, however, on 23 June 2016, the Regional Court of Munich repealed the interim injunction following an oral hearing. The grounds behind this decision are not yet available and are being keenly awaited.

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