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The Interface between Competition Law and Sports in India

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 respect.

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, All 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 of sporting 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. 

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