Hockey or Hookey? Case Review: Dhanraj Pillai & Ors v. M/S Hockey India (Case No. 73/2011)
By Nihal Zachariah
On May 31, 2013, the Competition Commission of India (the “Commission”) passed an order in the case of Dhanraj Pillay & Ors v. M/S Hockey India (Case No. 73/2011), and cleared Hockey India (“HI”) and the International Hockey Federation (“FIH”) from allegations of abuse of dominant position and anti-competitive practices. However, the Commission made note of the possible conflict of interest between the ‘regulatory’ and ‘organising of events’ roles of HI, and directed it to establish an effective internal control system to separate these two roles.
The informants in this case were a group of former Olympians and professional Indian hockey players including the likes of Dhanraj Pillay, Gurbax Singh Grewal and V. Baskaran (the “Informants”).
The opposite party, HI, was formed in May 2009, and is the apex governing body for the sports of men’s and women’s hockey in India and has the sole mandate to govern and conduct all related activities. HI is also the national sports federation for the sport of hockey in India and is affiliated to the Indian Olympic Association (“IOA”), Asian Hockey Federation (“AHF”) and the FIH. The FIH is the international governing body for the sport of hockey recognized by the International Olympic Committee. The Indian Hockey Federation (“IHF”), a related party in this case, was previously the governing body of the sport of hockey in India, but is no longer recognised by the FIH or the AHF.
Nimbus Sport, a subsidiary of Nimbus Communications Ltd., is a sports rights management and marketing company. In 2010, Nimbus Sport and the IHF envisioned the birth of a professional hockey league in India, featuring eight city based teams with Indian and overseas players. The proposed league was given the name World Series Hockey (“WSH”) League and the first tournament was scheduled to be organized from November 2011 to February 2012.
Soon after the announcement of the WSH, the organisers, Nimbus Sport, started negotiating with players to sign them up for the league. In 2011, the FIH notified The Regulations on Sanctioned and Unsanctioned events (the “FIH Regulations”) and communicated the same to all affiliated National Associations through a letter dated March 11, 2011. The FIH also provided that the regulations would apply prospectively from March 31, 2011 and would not apply to any participation commitments made prior to that date.
HI adopted these regulations and consequently modified its Code of Conduct Agreement (“CoC Agreement”) with the players to include clauses related to disciplinary action in case of participation in any unsanctioned events. The disciplinary action for any player participating in any unsanctioned event was disqualification from selection to the Indian national team. HI soon announced plans for starting their own professional hockey league along the lines of the proposed WSH.
It was against this backdrop, before the scheduled start of the WSH, that information was filed before the Commission on November 15, 2011, by a group of former Olympians led by former India captain, Dhanraj Pillay, for inquiring into alleged anti-competitive activities of HI.
Arguments advanced by the Informants
The Informants first submitted that the Commission had jurisdiction over HI, since HI was a society registered under the Society’s Registration Act, 1860, and was thus a ‘person’ under S.2(1)(v) of the Competition Act (the “Act”). The Informants also put forward the fact that HI is engaged in activities related to conducting and governing of international hockey tournaments in India, obtaining sponsorship for the team, and since these activities are commercial, HI is an enterprise under S. 2(h) of the Act.
When dealing with abuse of dominant position under competition law, it is an accepted principle that the concept of the relevant market must be defined. The Informants defined the relevant market in this case as “the market for conducting and governing international hockey activities for both men and women in India”. The Informants contended that HI was in a dominant position because of its monopoly position as a regulatory body for hockey in India and that it had endorsement from the FIH as the sole body empowered to select the Indian national team. It was further contended that the players could not exert any kind of countervailing pressure on HI, given the sole mandate of selection of the national team being vested with HI.
The allegations made by the Informants may be summarised as follows:
(1) HI was misusing its regulatory powers to promote its own hockey league to the exclusion of the WSH, and was thus engaging in practices resulting in denial of market access to rivals, which was an abuse of dominant position under S. 4(2)(c) of the Act.
(2) HI was using its dominance in conducting international events in India to enter into the market of conducting a domestic event in India, a contravention under S. 4(2)(e) of the Act.
(3) The CoC Agreement entered by HI with the players is an exclusive supply agreement and imposes restrictive conditions on participation in unsanctioned private professional leagues resulting in undue restrictions on mobility of players. The Informants alleged that the CoC Agreement was an anti-competitive agreement under S. 3(4) of the Act.
Arguments advanced by Hockey India
The first argument of HI was to dispute the jurisdiction of the Commission. HI stated that it was acting as the custodian of sport, which is a public good, and its organizational, governance and regulatory roles are not an economic activity. HI contended that it did not provide any product or service as defined in the Act, that the hockey players cannot be considered as consumers and hence no relevant market could be identified.
HI placed reliance on the pyramid structure for governing international sport, which is mandated by the Olympic movement, to defend its monopoly position with regard to the regulation of hockey in India. Pyramid structure of governance refers to a single national sport association per sport and member state, which operates under the umbrella of a single continental federation and a single worldwide federation, which is at the top of the pyramid. The HI contended that such a structure ensures the integrity of the sport, and helps in ensuring the primacy of international competitions through adequate regulation of the sporting calendar.
HI also contended that it would be unable to sanction the WSH, as an event such as the WSH involved players from different continents, and permission was required to be sought from the respective continental federations of these players as well as the FIH.
The Commission first considered the issue of its jurisdiction over HI, and analysed the structures of sports governance as well as some cases dealing with the application of competition law to sports federations. Reference was made to the Commission’s order in Surinder Singh Barmi v. Board of Control for Cricket in India (Case No.61/2010), and it was noted that for the purposes of the Act, the functional rather than the institutional aspects of an entity are to be given importance. Thus, while a national sports federation may be an institution for regulating the sport, it also manages and oversees various organizational activities in relation to the sport such as sale of tickets, grant of media rights, etc., which are all considered to be economic activities. Thus, the Commission held that national sports federations such as HI have no immunity from the application of the Act.
(b) Abuse of dominance
In considering the question of abuse of dominance, the Commission disagreed with the definition of relevant market provided by the Informants. As per the Commission, the relevant product market, with regard to the allegation of foreclosure of rival leagues was, “the market for organization of private professional hockey leagues in India”. The Commission held that in the defined market, the most significant source of dominance is the regulatory powers of HI. HI is vested with certain rights by the FIH, prime among which is the right of HI to sanction/approve hockey events in India. HI’s regulatory role empowers it, along with the FIH to create entry barriers for private professional leagues in the form of requiring sanctions for their tournament and requiring players to obtain No Objection Certificates (“NOCs”) from HI to participate in such tournaments. The aspects of granting sanctions for a league and giving NOCs for participation are regulatory in nature, but are in a clear position to impact the market for organising events and are a vital source of dominance.
With regard to the allegations of restrictions on player movements, the Commission defined the relevant market as “the market for services of hockey players”. The Commission held that HI is dominant in this market, due to its position as a ‘monopsony’ buyer. A monopsony buyer is a single buyer who has the option of many sellers. In this case, HI is the sole buyer of the services of hockey players for the national team, and it can choose these services from a vast pool of players. In this role and with instruments such as the CoC Agreement with the players, it can restrict their freedom of movement and is thus in a dominant position.
While analysing the alleged abuse of dominance, the Commission concluded that the informant’s grievances stemmed from two issues, namely, (i) the FIH Regulations on Sanctioned and Unsanctioned events; and (ii) conditions contained in the CoC Agreement signed between HI and the players.
The Commission scrutinised the FIH Regulations and appreciated factors such as maintaining the integrity of the sport, ensuring the primacy of international competition and preventing free riding on the investments of national associations. Crucially, the Commission found that no approval had been sought by the WSH as per the FIH Regulations. Further, the punitive sanctions under the FIH Regulations were to apply prospectively, and in the case of the WSH it was found that such sanctions would not apply to the 160 plus players they had signed up before the FIH Regulations were notified. Thus, the Commission concluded that the allegation that HI/FIH was abusing their dominant position to deny market access under S. 4(2)(c) of the Act, was unsubstantiated.
With respect to the allegation under S. 4(2)(e), that HI was using its dominance in conducting international events in India to enter into the market of conducting a domestic event in India, the Commission defined the relevant market differently to the definition adopted by the Informants. It distinguished between representative events and private professional leagues, and was neutral to the definitions of domestic and international events in the FIH Regulations. Accordingly, the Commission found no validity in the allegations that HI was using its dominant position in one relevant market to enter into, or protect, another relevant market.
(c) Anti-competitive agreement
Looking into the allegation that the CoC Agreement was an anti-competitive agreement, the Commission held that the restrictive conditions in the agreement must be seen in the light of the specificities of the sport. The restrictions provided in the agreement were concerning participation in unsanctioned events, and players obtaining NOCs for participating in events involving foreign teams/clubs. At no stage does the CoC Agreement require non-participation in any events, all it provides is that the player should not participate in any unsanctioned event, and should obtain a NOC for participation in events with foreign teams/clubs. The Commission held that such conditions are inherent and proportionate to the objectives of HI, and the CoC Agreement cannot be considered an anti-competitive agreement under S. 3(4) of the Act.
Order of the Commission
In its order, the Commission exonerated HI from all allegations of entering into anti-competitive agreements and abuse of dominant position. The Commission held that HI had not contravened any of the provisions of the Act, but noted that there may be a possibility of conflict of interest between the ‘regulatory’ and ‘organising of events’ roles of HI. Therefore, it directed HI to put in place an effective internal control system to ensure that its regulatory powers are not used in any way in the process of considering and deciding on any matters relating to its commercial or economic activities. It also recommended the establishment of a streamlined and transparent system of issuing NOCs to the players for participating in events organized by foreign associations.
The interplay of competition law and sports raises many intricate issues which do not always have straight answers. The governing bodies of various sports face various competition law challenges, since they are both the supreme arbiters with regard to the regulation of a sport, as well as the organisers of commercial sporting events.
In the Indian context, one might wonder how HI got off lightly in this case, when in a similar case, the BCCI was levied a Rs. 52 crore fine. The Commission, while appreciating the dominant position of HI in the regulation and organization of events related to the sport of hockey in India, did not find any substantial evidence that HI had abused its dominant position.
Ultimately, the need is for sports bodies to maintain a line of distinction between their regulatory and commercial activities. In a country like India, where sports administration is often dominated by venal political interests, such a position would require maturity from the administrators, and freedom to sportsmen to form their own associations to protect their self-interests. A rap on the knuckles by the country’s market fair play regulator might just be the wake-up call that our sports governing bodies require in ensuring a level playing field for all of sports stakeholders.
© The Sports Law & Policy Centre