2021 (12) TMI 1517 - CCI - Law of Competition

Sports organizations deemed enterprises under Competition Act despite non-commercial nature, WhatsApp restrictions on players violate Section 4(2)

CCI found sports organizations qualified as enterprises under Competition Act, 2002, regardless of non-commercial nature, applying functional rather than ... Alleged contravention of Sections 3 and 4 of the Competition Act, 2002 - restricting market access and abuse of dominant position - Determination of whether the Opposite Parties qualify as an 'enterprise' under the Competition Act, 2002. Determination of whether the Opposite Parties qualify as an 'enterprise' under the Competition Act, 2002 - HELD THAT:- The thrust of the definition of the term ‘enterprise’ is on the economic nature of the activities discharged by the entities concerned. It is immaterial whether such economic activities were undertaken for profit making/ commercial purposes or for philanthropic purposes. Thus, even non-commercial economic activities would be subject to the discipline of the Act as the Act does not distinguish economic activities based on commercial or non-commercial nature thereof. In ascertaining as to whether an entity qualifies to be an ‘enterprise’, the Commission examines this from a functional rather than a formal approach - In view of statutory framework defining ‘enterprise’ and keeping in view the nature of functions performed by OPs, OPs were prima facie held to be an ‘enterprise’ within the meaning of the term as defined in Section 2(h) of the Act. Abuse of dominant position by undertakings in the relevant market - HELD THAT:- The Commission observed that WhatsApp message posted by the General Secretary of OP-1 on 30.10.2020, addressed to players/coaches/clubs/academies, appeared to restrict them from joining/playing the non-affiliated clubs/organizations and further stated consequences flowing from non-adherence thereof by way of suspension/non-acceptance of their entries in TT Tournament. Such conduct was prima facie noted as violating the provisions of Section 4(2)(c) of the Act - The Commission also noted that the impugned clauses of MoA of OP-3 prima facie appeared to be unfair being restrictive in nature and in contravention of the provisions of Section 4(2)(a)(i) of the Act. Impugned clauses were also noted as prima facie limiting or otherwise restricting the provisions of services or markets therefore, and thereby found to have contravened the provisions of Section 4(2)(b)(i) of the Act besides violating the provisions of Section 4(2)(c) thereof, as the restrictions also denied market access to players as well as organisers - the Commission directed the DG to cause an investigation to be made into the matter, as stated previously. The Commission is of the considered opinion that the present case is fit for grant of interim injunction and accordingly OP-1 is hereby restrained from issuing any communication to players/parents/coaches/clubs, restricting or dissuading them, in any manner whatsoever, from joining or participating in tournaments organised by Associations/ Federations/ Confederations which are not purportedly ‘recognised’ by OP-1. OP-1 is further directed not to threaten players who want to participate in such events - The Secretary is directed to communicate to the Parties and the Office of the DG, accordingly. Issues Involved:1. Alleged contravention of Sections 3 and 4 of the Competition Act, 2002 by the Opposite Parties (OPs).2. Determination of whether the Opposite Parties qualify as an 'enterprise' under the Competition Act, 2002.3. Examination of alleged anti-competitive conduct and abuse of dominant position by the Opposite Parties.4. Consideration of interim relief to the Informant.Detailed Analysis:1. Alleged Contravention of Sections 3 and 4 of the Competition Act, 2002:The Informant, TT Friendly Super League Association, alleged that the Opposite Parties, namely The Suburban Table Tennis Association, Maharashtra State Table Tennis Association, and Table Tennis Federation of India, engaged in anti-competitive practices violating Sections 3 and 4 of the Competition Act, 2002. The Commission observed that the Opposite Parties were involved in activities that prima facie appeared to restrict players from participating in non-affiliated tournaments, thereby denying market access to players and organizers. Such conduct was noted as potentially violating Section 4(2)(c) of the Act.2. Determination of Whether the Opposite Parties Qualify as an 'Enterprise':The Commission addressed the preliminary objection raised by OP-1, claiming it was not an 'enterprise' under Section 2(h) of the Act. The Commission clarified that the definition of 'enterprise' includes entities engaged in economic activities, regardless of profit motives. The activities of the Opposite Parties, such as organizing tournaments and generating revenue through sponsorships and fees, brought them within the purview of an 'enterprise' under the Act.3. Examination of Alleged Anti-Competitive Conduct and Abuse of Dominant Position:The Commission assessed the relevant market as the 'market for organization of table tennis leagues/events/tournaments in India' and noted the pyramidal structure of the Opposite Parties governing the sport from district to national levels. The WhatsApp message from OP-1's General Secretary restricting players from participating in non-affiliated tournaments was considered an abuse of dominant position under Section 4(2)(c). Additionally, certain clauses of OP-3's Memorandum of Association were found to be restrictive and unfair, potentially violating Sections 4(2)(a)(i) and 4(2)(b)(i) of the Act.4. Consideration of Interim Relief to the Informant:The Informant sought interim relief to prevent the Opposite Parties from restricting players from participating in its friendly events. The Commission, applying the principles for granting interim relief, found that the conditions for such relief were met. The Commission restrained OP-1 from issuing communications that dissuade players from joining non-affiliated tournaments and directed OP-1 to comply with these instructions until further orders. The Commission emphasized that this interim order does not reflect a final opinion on the case's merits and directed the Director General to conduct an unbiased investigation.In conclusion, the Commission identified prima facie evidence of anti-competitive conduct by the Opposite Parties, necessitating an investigation and interim measures to protect the interests of players and maintain competitive practices in the sport of table tennis.