Cricket Authority Fined for Misusing Power in Professional League Deals.

The Competition Commission determined that the BCCI qualifies as an enterprise under the Competition Act due to its commercial activities related to the IPL. It defined the relevant market as the organization of private professional cricket leagues in India and found BCCI to hold a dominant position in this market. The Commission concluded that BCCI abused its dominance by imposing restrictive clauses in agreements, thereby denying market access to competitors. Consequently, the Commission ordered BCCI to cease such practices, imposed a penalty of 6% of its average annual revenue, amounting to Rs. 52.24 crore, and mandated the removal of specific restrictive clauses in its media rights agreements. Compliance with these directives is required within 90 days.

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Issues Involved:
1. Applicability of the Competition Act to BCCI and whether BCCI is an 'enterprise' under Section 2(h) of the Act.
2. Determination of the relevant market.
3. Assessment of BCCI's dominant position in the relevant market.
4. Alleged abuse of BCCI's dominant position in contravention of Section 4 of the Act.

Issue-wise Analysis:

1. Applicability of Competition Act on BCCI:

BCCI's Submissions:
- BCCI argued it is a 'not-for-profit' society promoting cricket and its activities fall outside the purview of the Act, especially Sections 3 and 4.
- Cited the Supreme Court's decision in Secretary, Ministry of Information and Broadcasting, Govt. of India v. Cricket Association of Bengal, emphasizing that BCCI's activities are not commercially driven and any surplus is reinvested in cricket.

DG's Findings:
- Despite being a society, BCCI's activities related to IPL, such as granting franchise and media rights, are commercial.
- Relied on findings from the Income Tax Department and the EC's decision on FIFA, concluding that BCCI's activities fall within the commercial sphere, making it an enterprise under Section 2(h) of the Act.

Commission's Conclusion:
- BCCI, despite its not-for-profit status, engages in commercial activities, thus qualifying as an enterprise under the Act.

2. Relevant Market Determination:

BCCI's Submissions:
- Argued that markets for various IPL rights (franchise, media, etc.) are separate and not interchangeable.

DG's Findings:
- Concluded that the relevant market is the "underlying economic activities ancillary to organizing the IPL Twenty 20 cricket tournament" under BCCI's aegis.

Commission's Conclusion:
- Defined the relevant market as the organization of Private Professional Cricket Leagues/Events in India, distinguishing it from other forms of entertainment and sports based on its unique characteristics and consumer demand.

3. Assessment of Dominance:

BCCI's Submissions:
- Acknowledged its monopoly but argued that it should be treated differently due to the unique nature of the sports market and its non-profit status.

DG's Findings:
- BCCI controls all cricket activities in India, including player selection and event organization.
- BCCI's actions against the rival ICL demonstrated its dominance and influence over the market.

Commission's Conclusion:
- BCCI holds a dominant position in the relevant market due to its regulatory powers, control over infrastructure, and influence over players and events.

4. Alleged Abuse of Dominant Position:

Grant of Franchise Rights:
- DG found irregularities and lack of transparency in the franchise rights process, including bid rigging and unfair contract terms favoring BCCI.
- BCCI's defense included claims of acting outside the scope of authority by individuals and commercial expedience.

Grant of Media Rights:
- DG observed that the media rights agreements were manipulated to favor certain entities, with long-term contracts creating market foreclosure.
- BCCI attributed these issues to unilateral actions by individuals and the nascent stage of IPL.

Grant of Other Rights:
- DG found that associate sponsorship and other local contracts were awarded without tender processes, favoring certain vendors.
- BCCI argued that these contracts were based on operational requirements and short durations, allowing market access to others.

Commission's Conclusion:
- BCCI abused its dominant position by including restrictive clauses in agreements, denying market access to potential competitors and leveraging its regulatory powers for commercial benefits.

Order under Section 27 of the Act:
- Directed BCCI to cease and desist from practices denying market access and using regulatory powers in commercial matters.
- Imposed a penalty of 6% of BCCI's average annual revenue for the past three years, amounting to Rs. 52.24 crore.
- Ordered deletion of the violative clause 9.1(c)(i) in the Media Rights Agreement.

The Commission's directions must be complied with within 90 days of receipt of the order, including the deposit of the penalty amount.

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