In two recent instances the Competition Authority intervened against exclusivity agreements relating to the organisation of sporting events. The first case involved two competing communications network operators and concerned the exclusive rights granted to one operator to broadcast a package of cyclo-cross events, which are highly popular in Belgium. The second case related to an exclusivity clause regarding equestrian events imposed by the Swiss-based Fédération Equestre Internationale(FEI). Pending decisions on the merits, the authority imposed interim measures and penalties in both cases.
The first case relates to Telenet's exclusive broadcasting rights for the Superprestige cyclo-cross races. Telenet is a major Belgian communications network operator, already found in previous decisions to hold a dominant position in the retail transmission of TV programmes. Telenet already held the exclusive broadcasting rights for the cyclo-cross World Cup organised by the Union Cycliste Internationale (UCI). Telenet also recently acquired exclusive broadcasting rights for the Superprestige (a season-long cyclo-cross competition) for five seasons (2015 to 2020). The rights had been granted to Telenet without a preliminary tender procedure. Further, while cyclo-cross events could previously be watched freely, Telenet intended to make the live broadcasting of most of the World Cup and Superprestige events accessible only to its subscribers. Cyclo-cross is a popular sport in Belgium and there is consequently a high demand for live broadcasting.
Proximus, a competing network operator, objected to the grant of the exclusive broadcasting rights and filed a complaint with the Competition Authority. It also sought interim relief.
From its prima facie assessment of the exclusivity, the authority concluded that the acquisition of the Superprestige broadcasting rights could constitute an abuse of Telenet's dominant position. In that context, the authority also referred to a dominant player's special responsibility not to restrict market competition. The authority also concluded that the agreement between the organiser of the Superprestige events and Telenet could be anti-competitive. Decisive factors in the authority's reasoning included:
- the duration of the exclusivity agreements;
- the absence of any prior open and transparent tender procedure; and
- the fact that only Telenet subscribers would be able to watch most of the cyclo-cross events live.
The authority further held that the exclusive broadcasting rights were likely to cause a serious and immediate disadvantage to Proximus, which would be difficult to redress.
On this basis, the authority imposed interim measures in a November 5 2015 decision. When determining the nature of the interim measures, the authority considered that while it was examining the matter, the 2015-2016 season had already started. The authority gave Telenet and the organiser of the Superprestige events two options. The first was to suspend the exclusivity clause with immediate effect until a final decision is adopted. During this period, the organiser would be obliged to grant broadcasting rights to any interested party on reasonable and non-discriminatory terms. The second option was for the organiser to suspend the cooperation agreement with Telenet from the end of the 2015-2016 season until a final decision is adopted and to launch an open, transparent and non-discriminatory tender procedure for the following seasons. The decision also imposed reporting obligations and penalties for non-compliance with the reporting obligations.
This case relates to an exclusivity clause contained in the FEI's general regulations under which athletes and horses that participate in unsanctioned events cannot participate in any FEI-approved event for the following six months. An 'unsanctioned' event refers to any event or competition that is not published in the official FEI calendar or authorised by a national federation. It also covers national events authorised or organised by national federations that have been suspended by the FEI. In practice, the clause requires organisers of equestrian events to obtain official FEI approval.
As an international federation, the FEI combines regulatory and commercial functions. In the context of the latter role, it organises and commercialises equestrian events and is therefore in direct competition with other event organisers for sponsors, participants, spectators and television and internet viewers. This dual role can clearly lead to conflicts of interest.
The background to the case is a complaint filed by a Belgian group which planned to organise a new equestrian event called the Global Champions League. The organiser of this new event contested the FEI exclusivity clause on the basis of competition law and filed a complaint accompanied by a request for interim measures with the Competition Authority.
The authority established a prima facie case of an abuse of dominance based on EU and national precedents. It concluded on a prima facie basis that the FEI holds a dominant position – particularly given its double role of regulator and commercial operator. The authority further held that the exclusivity clause could have foreclosure effects on competing equestrian event organisers. It also considered the exclusivity clause to be disproportionate regarding the general interest objectives that the FEI invoked (eg, the wellbeing of horses and the integrity of the sport) and held that less intrusive measures could be equally sufficient to meet these objectives. The authority therefore concluded that the exclusivity clause could constitute infringement of competition law. The authority also found that the applicant was likely to suffer a serious and immediate disadvantage which would be difficult to redress as a result of the exclusivity clause.
The authority consequently ordered the FEI to suspend the exclusivity clause until adoption of a final decision. It further prohibited the FEI from suspending or sanctioning athletes or horses taking part in an event organised within the framework of the Global Champions League during the period of this obligation, and ordered the FEI to communicate these measures on the news section of its website and to indicate unambiguously that no athlete or horse could be suspended or sanctioned for participating in a Global Champions League-organised event.
The interim measures decision dates from July 27 2015. In a November 24 2015 follow-up decision, the authority found that the FEI had not complied with the publication obligation. The communication that the FEI was obliged to publish as a result of the initial decision had not been published via the correct channel and the message did not indicate unambiguously that no athlete or horse could be suspended or sanctioned for participating in a Global Champions League organised event. The authority therefore tightened the previously imposed interim measures and imposed a penalty of €100 per calendar day of non-compliance.
For further information on this topic please contact Koen Platteau at Simmons & Simmons LLP by telephone (+32 2 542 0960) or email (firstname.lastname@example.org). The Simmons & Simmons LLP website can be accessed at www.simmons-simmons.com.
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