2013 (5) TMI 962 - Commission - Law of Competition

Hockey India Faces Scrutiny: CCI Urges Internal Controls Amid Dominance Concerns in Hockey League Market.

The Competition Commission of India (CCI) determined that Hockey India (HI) and the International Hockey Federation (FIH) qualify as 'enterprises' under ... - Issues Involved:1. Jurisdiction of the Competition Commission of India (CCI) over Hockey India (HI) and the International Hockey Federation (FIH).2. Definition of the relevant market.3. Assessment of dominance in the relevant market.4. Allegations of abuse of dominance by HI and FIH.5. Allegations of anti-competitive agreements under Section 3 of the Competition Act.Summary:1. Jurisdiction of the Competition Commission of India (CCI) over HI and FIH:The CCI determined that both HI and FIH qualify as 'enterprises' u/s 2(h) of the Competition Act, 2002, despite their non-profit status. The economic activities carried out by HI and FIH, such as granting franchisee rights, media rights, and sponsorship rights, involve revenue generation and thus fall within the scope of the Act. The CCI also asserted its extra-territorial jurisdiction u/s 32 over FIH, which is based outside India, as its activities have an appreciable adverse effect on competition in India.2. Definition of the Relevant Market:The CCI defined two relevant markets: - The market for the organization of private professional hockey leagues in India.- The market for services of hockey players.The CCI disagreed with the informants' and DG's definitions, emphasizing that governing activities cannot be part of market definition but can be a source of dominance.3. Assessment of Dominance in the Relevant Market:The CCI concluded that HI is dominant in both relevant markets due to its regulatory powers, monopoly position in team selection, and control over players through the Code of Conduct (CoC) Agreement. HI's dominance is also supported by the pyramid structure of sports governance, which creates entry barriers for other leagues and organizers.4. Allegations of Abuse of Dominance by HI and FIH:The CCI examined allegations of abuse of dominance, including:- Foreclosure of market to rival leagues through regulations on sanctioned and unsanctioned events.- Restrictive conditions in the CoC Agreement, such as requiring players to obtain NOCs and prohibiting participation in unsanctioned events.The CCI found that the regulations and CoC Agreement are inherent and proportionate to the objectives of sports governance and do not constitute abuse of dominance per se. However, the manner of application of these regulations raised concerns about potential anti-competitive practices.5. Allegations of Anti-Competitive Agreements under Section 3 of the Competition Act:The CCI found that the CoC Agreement between HI and players is a vertical agreement but does not cause an appreciable adverse effect on competition. The CCI also concluded that the decision of FIH and HI regarding sanctioned and unsanctioned events does not violate Section 3(3)(b) of the Act, as it does not constitute a horizontal agreement.Order:The CCI did not find any contravention of Sections 3(3)(b), 3(4), 4(2)(a), 4(2)(c), and 4(2)(e) of the Act. However, it highlighted the potential conflict of interest between HI's regulatory and commercial roles and recommended that HI put in place an effective internal control system to ensure fair and transparent issuance of NOCs and avoid using regulatory powers for commercial gain. Separate Judgment by R. Prasad (Dissenting):R. Prasad dissented, finding that HI and FIH had indeed abused their dominant position and violated Sections 4(2)(a)(i), 4(2)(c), and 4(2)(e) of the Act. He recommended modifications to the CoC Agreement and FIH's byelaws to remove restrictions on players participating in unsanctioned events and imposed a penalty on HI and FIH.