Why the BCCI was rapped on the knuckles
Written by Bharat Sundaresan
Updated: November 30, 2017 1:14 am The Competition Commission of India imposed a fine of Rs 52.24 crore on the BCCI.
THE COMPETITION Commission of India (CCI), the country’s fair trade watchdog, imposed a fine of Rs 52.24 crore on the BCCI on Wednesday for utilising their dominant position in the cricket market to monopolise the organisation of T20 leagues.
In what way has the CCI found the BCCI guilty of indulging in anti-competitive practices?
The issue relates to the IPL media rights which Star India won with a bid of over Rs 16,000 crore. The CCI has ruled that the Indian board’s decision to accept the demand of the broadcasters vying for the rights to include a non-compete clause, which eliminates the possibility of anyone bar the BCCI organising a professional T20 league or event in India, in the tender was a clear abuse of its powerful position in the market.
This denied market access to anybody other than the BCCI to hold a similar league. Hence, it was a move that basically killed any chance of competition to the IPL. In contract law, a non-compete clause (often NCC), or covenant not to compete (CNC), is a clause under which one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer). Some courts refer to these as “restrictive covenants.”
Didn’t the CCI find the BCCI guilty of a similar offence a few years ago?
Yes, in 2013 the CCI had imposed the exact same penalty of Rs 52.24 crore on the BCCI. The judgement passed in February of that year had, in fact, gone on to deem the deal with Sony, the then rights holders, as “illegal” because of the very same non-compete clause. The BCCI subsequently had appealed to the Competition Appellate Tribunal and gotten a reprieve. The Tribunal had ruled that the “issue of abuse of dominance was legally unsustainable”. However, the CCI directed its Director General to conduct another investigation where they found the BCCI to be in the wrong again.
What did the CCI’s investigation throw up?
The CCI found that the concerned clause read, “it (the BCCI) shall not organise, sanction, recognise, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league”. However, the watchdog’s view was that the BCCI already held a dominant position to organise professional domestic cricket leagues in India and the non-compete clause was them abusing this dominance. The CCI further noted that the decision to include the controversial policy did nothing but “enhance the commercial interest of the bidders of broadcasting rights”, which in turn, would also be to the BCCI’s benefit. They also found that the BCCI Rules impeded any non-member of the Indian board from conducting any tournament or match without the BCCI’s approval.
What does the final order say now?
The CCI did acknowledge that the BCCI’s powers to approve and disapprove tournaments might be a “natural phenomenon of sports administration” but they found no “justification” in the “self-imposed restriction” on not approving or organising any T20 league rivaling the IPL.
The order said that the clause was in no way “connected to the interest of cricket”. “BCCI shall not place blanket restriction on organisation of professional domestic cricket league or events by non-members,” the order said. In addition, the CCI also ruled that the BCCI should not “impede” any competition while “preserving the objective of development of cricket in the country”. That is apart from imposing the fine, which is 4.48 per cent of the average of the relevant turnover of the BCCI in the last three financial years – which is calculated to be approximately Rs 1164.7 crore.
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