CCI imposes Rs. 52.24 crore penalty on BCCI for abuse of dominant position

The Competition Commission of India has imposed Rs. 52.24 crore penalty on the Board of Control for Cricket in India (BCCI) for abuse of dominant position in contravention of Section 4(2)(c) of the Competition Act, 2002..The case has its genesis in clause 9.1(c)(i) of BCCI’s IPL Media Rights agreement entered into with the broadcasters of Indian Premier League (“IPL”). The said clause provides that the BCCI “shall not organize, sanction, recognize, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league”..CCI had passed an order in 2013, holding that the BCCI was found to be abusing its dominant position. BCCI had preferred an appeal before the Competition Appellate Tribunal (COMPAT). The COMPAT had, in 2015, set aside the CCI’s order of 2013 on the ground of violation of principles of natural justice and remitted the matter back to the CCI for fresh disposal..The CCI proceeded to decide the matter afresh after considering a supplementary investigation report by the Director General..The CCI considered the following three issues:.(i) Whether the DG is correct in concluding that the relevant market is the market for ‘organization of professional domestic cricket leagues/events in India’?.(ii) If the relevant market defined by the DG is correct, whether BCCI enjoys a dominant position therein?.(iii) If answer to Issue No. 2 is in affirmative, whether BCCI has abused its dominant position in the relevant market?.Regarding the first issue, the contention of the BCCI was that IPL and general entertainment television programmes are substitutable and form part of the same relevant product market. It argued that IPL competes with all forms of entertainment programmes telecasted on television and therefore, all of them constitute one relevant product market..The CCI, however, turned down the same and upheld the finding of the DG in this regard..“As pointed out by the DG, TRP ratings or viewership details of IPL, other forms of cricket and television programmes at most reflect the popularity of the concerned programme/ content. However, they do not in any manner reflect consumer perception in treating two different programmes as substitutable or interchangeable…...The characteristics of these television programmes and regional distribution of their target audience being different, they are not comparable with professional domestic cricket league like IPL, which has a pan-India reach and popularity”.CCI also distinguished IPL from other formats of cricket to conclude that the relevant market in the instant case is the market for ‘organization of professional domestic cricket leagues/events in India’.Moving on to the question of whether the BCCI enjoys a dominant position, the CCI held as follows:.“Undoubtedly, the most significant source of dominance in the relevant market is the regulatory/ governance powers of BCCI emanating from the pyramid structure of the sport governance. BCCI is the only association for cricket in India at national level and in that capacity, ICC vests it with certain rights. Prime amongst them is the right to sanction/approve cricket events in India BCCI’s regulatory role empowers it to create entry barriers for cricket leagues, other than those organized by it, in the form of requiring approval. .Besides the authority vested in BCCI under the pyramid structure of sports governance and the Rules discussed above, the DG has drawn attention to the undisputable market share and strong position of BCCI in terms of size, resources and economic power to conclude its dominant position in the relevant market. As per the audited financials of BCCI, its financial surplus ranged between Rs. 53.77 crore in 2008-09 and Rs. 525.95 crore in 2013-14.”.It, therefore, answered the second question in the affirmative..Regarding whether the BCCI abused its dominant position in the instant case, the CCI noted that the BCCI has not provided any justification as to how the self-imposed restriction of not organizing, sanctioning, approving or supporting another T20 cricket event that will be competing with IPL, is connected to the interest of cricket..“Being the de facto regulator of cricket in India, it is understandable that imposition of restrictive conditions, in certain circumstances, might be indispensable to preserve the interest of the sport in the country. However, in this case, the only rationale offered by BCCI for the impugned clause in the IPL Media Rights Agreement is protection of commercial interest of the media company. While the restriction may serve the interest of the media company by helping it recoup investments, BCCI has not been able to show how the impugned restriction serves the legitimate interest of cricket in the country and the consumers in the relevant market.”.The CCI, therefore, held that the explanation by BCCI is not acceptable as the restriction helps BCCI to ensure monopoly for itself in the relevant market for organization of domestic professional cricket leagues..“In fact, the clause clearly reflects the intent of BCCI to foreclose competition.”.It, therefore, proceeded to impose Rs. 52.24 crore as penalty on BCCI while ordering the following:.“(a) BCCI shall cease and desist from indulging into the aforesaid conduct, which is found to be in contravention of the provisions of Section 4(2)(c) read with Section 4(1) of the Act; .(b) BCCI shall not place blanket restriction on organization of professional domestic cricket league/ events by non-members. This shall, however, not preclude BCCI from stipulating conditions while framing/ modifying relevant rules for approval or while granting specific approvals, that are necessary to serve the interest of the sport. Such changes shall entail norms that underpin principles of nondiscrimination and shall be applied in a fair, transparent and equitable manner; .(c) Having done the above, BCCI shall issue appropriate clarification regarding the rules applicable for organization of professional domestic cricket leagues/ events in India, either by members of BCCI or by third parties, as well as the parameters based on which applications can be made and would be considered. Besides, BCCI shall take all possible measure(s) to ensure that competition is not impeded while preserving the objective of development of cricket in the country ; and .(d) BCCI shall file a report to the Commission on the compliance of the aforesaid directions from (a) to (c) within a period of 60 days from the receipt of this order.”.Senior Advocates Amit Sibal and Ramji Srinivasan appeared for BCCI. Cyril Amarchand Mangaldas is representing BCCI in this matter..Read the order below.