CCI again slams penalty of ₹52.24 crores on BCCI for abusive conduct*

In case of Surinder Singh Barmi v. Board of Control for Cricket in India (‘BCCI’) decided on November 29, 2017, CCI reaffirmed its decision taken in the earlier order dated February 8, 2013, whereby CCI had issued a penalty of ₹52.24 crores (approx. US$ 8.2 million) on BCCI for abusing its dominance. The CCI order dated February 8, 2013 was set aside by the erstwhile Competition Appellate Tribunal (‘COMPAT’) vide order dated February 23, 2015 in an appeal filed by BCCI on grounds of violation of principles of natural justice, thereby remitting the matter to CCI for fresh disposal.

While dismissing BCCI’s argument that it is not an enterprise under Section 2(h) of the Act, CCI observed that BCCI by organizing matches and tournaments, granting media rights to broadcasters, entering into franchisee arrangements with business houses, raising sponsorship, etc. engages in economic activity and motive to earn profit is irrelevant for defining an entity as an enterprise.

CCI then defined the relevant market to be the market for organisation of professional domestic cricket leagues/events in India and held it to be not substitutable with other formats of cricket, other sports, and general entertainment programmes telecasted on television. While limiting the relevant market to be so, CCI noted a number of factors, inter alia: (i) that there  is no evidence of price competition and cross elasticity of demand between domestic cricket leagues like Indian Premier League (‘IPL’) and the alternatives suggested by BCCI; (ii) that other formats of cricket like international and domestic cricket differed on account of selection of the team; (iii) that the different formats of cricket have different objectives and commercial exploitation; and (iv) BCCI’s own understanding about the different formats. CCI also stated that applying the ‘small but significant non-transitory increase in price’ test conceptually, given the characteristics and consumer preferences for cricket/IPL in India, not significant consumers would substitute IPL with any other form of entertainment e.g., films, television shows, or any other sporting event, thereby making a five to ten percent increase in price unprofitable. Within the relevant market, CCI found BCCI to be dominant because of its status as a de facto regulator of cricket in India having the exclusive right to sanction or approve cricket events in India by virtue of its endorsement by the International Cricket Council.

The CCI then examined whether the alleged abusive representation and warranty given by BCCI under Clause 9.1(c)(i) in the IPL Media Rights Agreement entered with the broadcasters of IPL that ‘it shall not organize, sanction, recognize, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league [IPL]’ for a period of 10 years is in contravention of Section 4(2)(c) of the Act. CCI observed that viewed in light of Rules 28(b) and 28(d) of BCCI Rules and Regulations, the representation and warranty created insurmountable entry barriers and left no scope for conducting any kind of professional domestic cricket other than by BCCI or its members. CCI further stated that BCCI has not provided any reasonable or regulatory justification, as also failed to substantiate its claims of nascency, limited time for recoupment, and the need for the self-imposed restriction running for a sustained period of 10 years. CCI thus held that BCCI had foreclosed the market for organization of professional domestic cricket leagues/events in India under Section 4(2)(c) of the Act. Accordingly, CCI directed BCCI to cease and desist from the abusive conduct, precluded it from placing blanket restrictions on organisation of professional domestic cricket league/ events by non-

members, and imposed a penalty of ₹52.24 crores (approx. US$ 8.2 million), which was about 4.48% of BCCI’s average revenue from organisation of professional domestic cricket leagues in India during the last three preceding financial years.

*Case No. 61 of 2010.

Published In:Inter Alia - Special Edition Competition Law January 2018 [ English
Date: January 10, 2018