Sh. Surinder Singh Barmi vs Board For Control Of Cricket In India ... on 8 February, 2013

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Competition Commission of India

Sh. Surinder Singh Barmi vs Board For Control Of Cricket In India ... on 8 February, 2013

BEFORE

THE COMPETITION COMMISSION OF INDIA

CASE NO.61/2010

Date: 08.02. 2013

INFORMANT

Sh. Surinder Singh Barmi

OPPOSITE PARTY

Board for Control of Cricket in India (BCCI)

Order

1. This case was initiated on the basis of information filed by Sh. Surinder
Singh Barmi, a cricket fan from New Delhi against Board for Control of
Cricket in India (hereinafter "BCCI") to the Competition Commission
of India (hereinafter "Commission") under Section 19(1)(a) of The
Competition Act, 2002 (hereinafter "Act") on November 02, 2010. The
Commission, upon examination of the facts of the information, passed
an order under Section 26(1), on December 09, 2010 recording its
opinion that there exists a prima facie case, and directed the Director
General (hereinafter "DG") to investigate into the matter.

1.1 The DG submitted the investigation report on February 21, 2012. The
investigation report was sent to the parties seeking their response on
the same and further process of inquiry was undertaken in accordance
with the provisions of the Act and relevant regulations thereunder.
Full opportunity was given to both BCCI and the informant for perusal

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of all relevant records and making their submissions, both in writing
and orally before the Commission.

2. Factual Background

2.1 The Opposite Party(OP), BCCI, is a society registered under Tamil
Nadu Societies Registration Act, 1975 with the primary objectives as
stated in the Memorandum of Association (MoA) of controlling the
game of cricket in India, promoting the game in India, framing the
laws of cricket in India, selecting teams to represent India in Test
Matches, ODIs and Twenty 20 matches played in India or abroad. It is
a 'full member' of International Cricket Council ("ICC")

2.2 A party related to the OP is ICC. ICC is the global governing body for
international cricket. It is responsible for administration of men's and
women's cricket including the management of playing conditions and
officials for Test Match and One Day International (ODI) Cricket and
the staging of international cricket events for men, women and juniors.
It has three categories of members viz. Full Members, Associate
Members and Affiliate Members.

2.3 Full Members are the governing bodies for cricket of a country
recognised by the ICC, or nations associated for cricket purposes, or a
geographical area, from which representative teams are qualified to
play official Test matches (10 Members).

2.4 Associate Members are the governing bodies for cricket of a country
recognised by the ICC, or countries associated for cricket purposes, or a
geographical area, which does not qualify as a Full Member, but where
cricket is firmly established and organised (36 Members).

2.5 Affiliate Members are the governing bodies for cricket of a country
recognised by ICC, or countries associated for cricket purposes, or a
geographical area (which is not part of one of those already constituted
as a Full Member or Associate Member) where the ICC recognises that
cricket is played in accordance with the Laws of Cricket (60 Members).

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Allegations

2.6 The allegations levelled by the informant centre on the following three
dimensions of organization of Indian Premier League (IPL), a Twenty
20, professional cricket league tournament conducted by BCCI:

a. Irregularities in the grant of franchise rights for team ownership.
b. Irregularities in the grant of media rights for coverage of the
league.
c. Irregularities in the award of sponsorship rights and other local
contracts related to organization of IPL.

3. Summary of DG's findings and submissions of the OP

3.1 The DG investigated the matter with respect to the following issues:
i. Whether the Act is applicable to BCCI or not? and whether BCCI
is an 'enterprise' as defined u/s 2(h) of the Act.
ii. What would be the relevant market in the said case?
iii. Whether BCCI has a dominant position in the relevant market as
determined?
iv. If so, whether BCCI has abused its dominant position in the
relevant market in contravention of the provisions of Section 4
of the Act?

3.2 In order to examine the issues framed above, questionnaires were sent
by DG to the various parties to the case viz. all the successful and
unsuccessful bidders for franchise rights of IPL Teams, Essel Sports
Private Ltd.(the promoters of Indian Cricket League), media companies
involved in bidding for media rights and other parties related to the
case. DG also examined the concerned representatives of parties on
oath and obtained their statements and perused all the documents
related to bidding for franchise or media rights for IPL.

3.3 After examination of the replies/documents etc. received from the
parties, the submissions of the Informant, DG analysed the various
issues.

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Applicability of Competition Act on BCCI

BCCI's submissions

3.4 During the course of investigation, BCCI contended that it is a 'not-for-
profit' society for the promotion of sport of cricket and its activities is
outside the purview of the Act, especially Section 3 and 4. It also
submitted that its commitments are neither driven by nor conditional
upon commercial considerations. The revenue obtained by BCCI is
ploughed back into the game of cricket.

3.5 BCCI also cited a decision by Hon'ble Supreme Court of India in
Secretary, Ministry of Information and Broadcasting(MoI&B), Govt. of
India(GoI) and Others Vs. Cricket Association of Bengal and Others
reported as (1995 2 SCC 161). The SC in that case held,
"...It must further be remembered that sporting organizations such as
BCCI/CAB in the present case, have not been established only to
organize the sports events or to broadcast or telecast them. The
organization of sports events is only a part of their various objects, as
pointed out earlier and even when they organize the events, they are
primarily to educate the sportsmen, to promote and popularize the
sports and also to inform and entertain the viewers. The organization
of such events involves huge costs. Whatever surplus is left after
defraying all the expenses is ploughed back by them in the organization
itself. It will be taking a deliberately distorted view of the right claimed
by such organizations to telecast the sporting event to call it an
assertion of a commercial right. Yet the MIB has chosen to advance
such contention which can only be described as most unfortunate. It is
needless to say that we are, in the circumstances, unable to accept the
argument. The Ministry or the Government as a whole should not
denigrate the sporting organizations such as BCCI/CAB by placing
them at par with business organizations sponsoring sporting events for
profit and the access claimed by them to telecasting as an assertion of
commercial interest".

3.6 On the basis of aforesaid arguments and owing to the nature of its
activities, BCCI contended that it cannot be compared to a commercial
organization and it does not qualify to be an enterprise within the
meaning of Section 2(h) of the Act.

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DG's Findings

3.7 The DG concluded that though BCCI is a society and supposed to be a
non-profit organization, its activities related to IPL such as grant of
franchise rights, media rights and other sponsorship rights, where
huge revenue is involved, are different from so called non-profit
activities. These activities fall in the commercial sphere and the whole
tendering process for such rights is motivated by profits.

3.8 The DG also relied on findings of Income Tax Department as revealed
in the Income Tax Assessment Order u/s 143 (3) of the Income Tax Act
for Assessment Year 2008-09. Registration of BCCI granted u/s 12A of
the Income Tax Act was withdrawn by IT Authority (Director of
Income Tax - Exemptions) vide order dated 28.12.2009, considering the
changes in the status and memorandum of BCCI.

3.9 The DG also placed reliance over the EC decision in case of Abuse of
Dominance by FIFA (International Federation of Association Football).
EC in their decision, held that World Cup comprises of various
activities of economic nature like sale of entrance tickets, commercial
exploitation of FIFA emblems, conclusion of contracts for advertising
on panels within the grounds, conclusion of contracts related to
television broadcasting rights etc. and for all such purpose, FIFA is an
'undertaking'.

3.10 The DG also drew support from the decision of Hon'ble High Court in
WP(C) 5770/2011 in the case of Hemant Sharma and Others Vs. Union
of India and Others, where while disposing the writ petition, Hon'ble
High Court considered Chess Federation as an enterprise within the
meaning of provisions of Section 2(h) of the Act. DG considered
similarity in roles of BCCI and Chess Federation as National
Associations for sport of Cricket and Chess respectively and
accordingly based his findings.

3.11 In view of the activities of BCCI being in commercial sphere and legal
principles as laid down in the above decisions, DG concluded that
BCCI is an enterprise for the purpose of Section 2(h) of the Act.

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Relevant Market

BCCI's submissions

3.12 BCCI submitted that the market for various rights related to IPL such
as franchise rights, media rights etc. are separate markets as these
rights are not interchangeable..

3.13 BCCI also stated that each of the rights in relation to IPL is intrinsically
different, with different price, demand function and end users and
therefore cannot be considered as substitutable to each other

DG's Findings

3.14 The DG focussed on the fact that rights related to economic activities in
connection to IPL are exclusive in nature and cannot be awarded by
any other agency except BCCI as BCCI is the only agency approved by
ICC to organize Twenty 20 cricket in India.

3.15 The DG concluded the relevant market as the "underlying economic
activities which are ancillary for organizing the IPL Twenty 20 cricket
tournament being carried out under the aegis of BCCI".

Assessment of Dominance

BCCI's submissions

3.16 BCCI admitted that it holds a monopoly, but it should be treated on a
different footing owing to the unique nature of the market for
professional sports league and the pro-competitive effects of the
existence of single professional sports league. BCCI stated that this is
especially true in situations like that of BCCI where it is not acting for
profit, because that means the negative effects of monopoly, including
seeking economic rent from the activity, do not take place.

3.17 It also stated that the dominance of BCCI can additionally be attributed
to ICC, which typically recognizes one cricket board/authority from
each country as its member.

DG's Findings

3.18 The DG based its' findings on the following:

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a. BCCI is the national governing body for all types of cricket activities
in India. It is a member of ICC and has the authority to select
players, umpires and officials to participate in international events
and exercises total control over them. Without its' approval, no
recognized competitive cricket involving BCCI contracted players
can be hosted within or outside the country.

b. The relevant objects of BCCI as contained in their Memorandum
provide for controlling the game of cricket in India.

c. The DG considered the conduct of BCCI when a rival competing
league ICL was formed. The promoters of ICL stated that the
application of ICL for grant of recognition was rejected by ICC on
the influence of BCCI. They also stated that, right from the inception
of ICL, BCCI took steps to ensure that cricket stadiums are not made
available to ICL and also restrained players from participating in the
activities of ICL. As a consequence of actions of BCCI, ICL has at
present suspended its operations temporarily.

3.19 On the basis of above facts as analysed, DG held that BCCI is in a
position of strength, in the relevant market.

DG's findings on alleged Abuse of Dominance

Issue 1:Grant of franchise rights

4.1. The informant had alleged that there were irregularities in the process
of grant of franchise rights for teams such as agreement between the
IPL and bidders and bidders were advised about the amount of bid for
a particular team. This lack of transparency was alleged as an act of bid
rigging and leading to creation of entry barriers to new entrants in the
market.
4.2 DG examined in detail the process of grant of franchise rights as well
as the terms of franchise agreements.

4.3 As per the DG, there were attempts of bid rigging by using arm
twisting tactics by IPL Commissioner Sh. Lalit Modi. DG's findings on
this were based on the contents of the show cause notices issued by

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BCCI to Sh. Lalit Modi. BCCI defended by submitting that (i) the
agreement (if any) between the BCCI-IPL and the bidders does not
qualify as horizontal agreement envisaged under Section 3 of the
Act;(ii) Sh. Lalit Modi was acting outside the scope of his authority;(iii)
the Invitation to Tender (ITT) containing the onerous provisions was
cancelled and franchise rights for two additional teams was granted on
the basis of fresh ITT. The DG rejected the submissions of BCCI and
concluded that the decisions were not taken in the capacity of
Chairman and Commissioner, IPL, impliedly with the consent and
approval of IPL Committee. This was being reported to BCCI on
regular basis and ratified by the Governing Council. Therefore, for all
acts of commission and omission, BCCI cannot be absolved from its
responsibility in the process of tendering.

4.4 Another contravention was found by DG in respect of rights of
franchise teams been given till the IPL continues. According to DG, the
agreement so made will have the effect infinitum. BCCI has countered
the same by submitting that the agreement contains the termination
clause and secondly there is a clause which permits sale of franchise
rights after an initial lock in period of three years. The lock in condition
has also been dropped for the two new franchises created later. BCCI
also stated that the franchise agreement specifically contemplated
listing of the franchise on the stock exchange thereby providing an
opportunity to public at large to invest in such franchise.

4.5 The DG also found contravention in the fixation of franchise fee by
BCCI for grant of franchise rights. The minimum franchise fee was
fixed at USD 50 million, whichDG held to be a very high capital cost of
entry. BCCI submitted that the minimumfloor price pre requirement of
the bidders is not unreasonable and based oncommercial expedience. It
further submitted that bids were allowed by various companies as a
consortium.

4.6 The DG also found contravention to the fact that terms of the franchise
agreements were loaded in favour of BCCI and franchises had no say
in the terms of contract. BCCI on this issue submitted that providing
the draft franchise agreement with ITT is a globally accepted

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commercial practice. It further stated that theclarifications/further
information sought by the bidders in relation to ITT and Franchise
Agreement were satisfactorily answered by the BCCI. BCCI also stated
that as franchise rights were to be awarded to multiple successful
bidders,there was a need for non-discriminatory and consistent terms
and conditions to be applied on uniform basis to all the bidders,
thereby creating level playing fieldand maintaining integrity of IPL.

4.7 The DG also found Clause 5.5 of the Franchise Agreement to be unfair
and discriminatory, as it provides restrictive conditions on the
franchises for not selling the product of IPL without prior approval of
BCCI. BCCI submitted that the underlying product in Clause 5.5 is the
league marks of BCCI, which are its intellectual property and the
clause is not intended to act as an hindrance, but for protection of
intellectual property. Also, as the same condition is applicable to all the
franchises, it cannot be regarded as discriminatory.

4.8 On the issue of grant of franchise rights, DG found BCCI guilty of
contravention of Sections 4(2)(a)(i)), 4(2)(b)(i)) and 4(2)(c) of the Act.

Issue 2: Grant of media rights
5.1 On November 30, 2007, BCCI issued an ITT for IPL media rights for a
period of 10 years commencing 2008 and ending 2017 on a worldwide
basis. The media rights were to be granted for 5 IPL seasons with an
option to the successful bidder to renew for further 5 seasons. Also, it
was clarified by BCCI that bids for 10 year period would be
considered. The bids were to be submitted for the Global package,
India Package and International Package. The tender documents were
purchased by 6 companies namely Nimbus, Ten Sports, SET India,
ESPN Software India, World Sports Group (WSGI) and Providence
Equity.

5.2 Of the 6 companies above, Nimbus, Ten Sports and Providence Equity
did not submit the bids. The other 3 submitted the bids. During this
period, WSG approached MSM/Sony to explore whether it was willing
to be WSG's Indian broadcaster for IPL tender as the broadcasting
business was one of the requirements of IPL Global Package which
could not be satisfied by WSGI. On 10th January 2008, MSM's

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representative indicated to WSGI that they would support WSGI's bid
for IPL tender. On the date of opening of bids i.e. January 14, 2008,
there were 3 bidders present. The Chairman of IPL informed that Sony
had pulled out of their individual bid to partner in a consortium with
WSG. ESPN bid was declared not eligible. It implied that there was
only one party left in the bid that was WSG-Sony consortium.

5.3 WSGI-Sony won the bid with an offer of USD 1.026 billion for a period
of 10 years Global Package. The breakup of the bid amount was as
under:
a) USD 276 million - Rights for Indian subcontinent to Sony for first
5 years.
b) USD 550 million - Rights to WSGI for Indian subcontinent for
next 5 years
c) USD 92 million - Rights for RoW to WSGI for 10 years
d) USD 108 million - Committed promotional spending for IPL

Accordingly the following agreements were entered into:-
a) MSM (Sony) Media Rights (India Territory) Agreement dated 21
January 2008 (1st Indian Territory Agreement).
b) WSG India - Media Rights (Rest of the World) Agreement dated
21 January 2008 (1stRoW Agreement)

It was submitted that separate agreements were entered into to
accommodate the request of consortium partners. And this
necessitated insertion of Clause 29 of 1stRoW Agreement which
provided that

"If the Sony Agreement ends for whatever reason prior to end of the
rights period, the licensor will be required to meet with the licensee as
soon as practicable with a view to agreeing in good faith which of the
parties and on what basis the rights pursuant to the Sony Agreement
will be exploited within the Indian subcontinent. Licensor
acknowledges that a failure to comply with this clause may have a
material impact on the licensee's rights and obligations pursuant to
this agreement".

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5.4 On March14 2009, as submitted by BCCI, due to certain irremediable
breaches of the 1st India Territory Agreement by Sony, the agreement
was terminated. On 15th March 2009, the 1stRoW Agreement was also
terminated by a deed of mutual agreed termination made between
BCCI, WSGI and WSG Mauritius (not a party to original
agreement).Pursuant to termination of 1st India Territory Agreement
with Sony, as required under Clause 29 (as above), BCCI entered into
2nd India Territory Agreement with WSG Mauritius granting the rights
till 31st December 2017. This agreement contained Clause 13.5 which
provided that WSG Mauritius shall sub licence rights under the said
agreement within 72 hours of the signing. In the event of failure to sub-
licence, the agreement shall stand automatically terminated. WSGI
failed to sub- licence even during extended time provided by BCCI and
as a result, a termination letter dated 25th March 2009 was issued to
WSG Mauritius, duly acknowledged by WSG Mauritius. For RoW, the
2ndRoW agreement was entered into again with WSGI for the period
ending December 31, 2017. The rights for Indian subcontinent for the
period 2009-2016 were again licensed to Sony by 3rd India Territory
Agreement. The 2ndRoW Agreement contained a clause that Sony was
to pay USD 80 Million in accordance with Deed for facilitation fee
entered into between Sony and WSG Mauritius. In the absence of such
payment, BCCI would have the option of terminating 3rd India
Territory Agreement or paying WSG, the money or the bank
guarantee.

5.5 The 2ndRoW agreement between WSGI and BCCI was terminated on
28th June 2010 on the grounds that the same was vitiated by fraud. The
provision relating to bank guarantee/payment in case of Sony's default
was inserted by Sh. Lalit Modi without any authority of BCCI. Also the
basis of 3rd India Territory agreement was challenged. These are still
under litigation in Bombay High Court. After setting aside the 2ndRoW
agreement, the 3rd India Territory agreement was modified to increase
the amount of media rights fee by Rs.300 Crores (USD 80 Million as
reduced by Rs.125 Crore apparently paid by Sony to WSG).

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5.6 In 2011, ITT was called for RoW rights again and this time the rights
were granted to Times Internet and Nimbus consortium through
Agreement dated March 20 2011.

5.7 The DG made the following observations:
i. The first meeting of tender committee was postponed from 11
am to 1 pm in order to facilitate and allow WSG and Sony to
form a consortium.
ii. Though Sony and WSGI had submitted the bids separately,
they were facilitated to form a consortium and bid was
entertained in the capacity of consortium.
iii. The period of media rights i.e 10 years is very long and creates
foreclosure of market.
iv. The subsequent agreement (3rd India territory agreement) was
entered into with the same party i.e. Sony whose agreement
was terminated on very serious irremediable breaches within
11 days without following any tender process. Similar
approach was followed for RoW tender also.
On the basis of these submissions, DG concluded contravention of
Section 4(2)(a) andSection4(2)(b) of the Act.

5.8 BCCI maintained that market for media rights is a different relevant
market in which BCCI has no dominance. However, it still made
submission on the allegations of abuse of dominance. It attributed the
non-calling of fresh tenders after termination of 1st India and RoW
Agreement to the unilateral conduct of Sh. Modi. In fact, BCCI stated
that a show cause notice dated April 26, 2010 to Sh. Modi had been
given on this issue. The period was attributed to nascent stage of IPL
and consequent revenue assurance for both the parties.

Issue 3: Grant of Other Rights

6.1 Global Title sponsorship rights were awarded to DLF pursuant to open
tender process. Associate Sponsorship rights were awarded to various
companies for different period and amount without any tender
process, based on discussions, negotiations and proposals. The size of
the agreement was Rs.444 crores. On the award of contracts for
transport, event management, catering, tickets etc. BCCI, stated that

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based on operational requirement, they suggested
hotels/airlines/vendors to franchisees who in turn entered into an
agreement. Almost all the franchisees also admitted that BCCI has
'facilitated' the award of contracts to various vendors. Based on this
testimony of BCCI and its franchisees the DG concluded contravention
of Section 4(2)(c).

6.2 BCCI submitted that the contracts for associate sponsorship rights did
not involve substantial consideration vis a vis, consideration paid for
franchise rights. It was aware that the market for associate sponsorship
rights was thin and the cost of tendering and inviting bids would have
been a cost and time intensive process. Thus, it was a prudent decision
on part of BCCI to award rights on private placement basis. Also, the
contracts were of short duration, which implies open market to other
interested parties to approach BCCI. On other rights, BCCI submitted
that it was merely a facilitator, who recommended name of the
vendors, the decision to award contract was vested with franchises
themselves.

Analysis and findings of the Commission
7.1 On examination of the depositions and the DGs investigation report
the Commission observes that the allegations levelled by the informant
centre around the organization of IPL and irregularities in the sale of
various rights associated with IPL viz. Franchise Rights, Media Rights
and Other Sponsorship Rights. In its submissions to the DG, BCCI
while refuting the allegations also claimed that its actions do not come
under the purview of the Competition Act as it is a not for profit
making body involved in promotion and development of the sport of
cricket in India. DG however concluded that BCCI is an enterprise for
the purpose of the Competition Act and cannot claim any immunity
from the Act.
The Commission noted that the issues required to be addressed at the
outsetas under:
a. Whether BCCI is an enterprise for the purpose of the
Competition Act?
b. Whether the actions of BCCI associated with organization of
IPL contravene any of the provisions of the Act?

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7.2 The case relates to sports and the allegations pertain to irregularities in
the organisation of cricket events, the Commission felt it necessary to
look into the specificities of the sports activities to understand the
differences with other business activities. During the course of analysis,
an important observation was made relating to lack of clarity on the
actual status of BCCI. It appearedthat BCCI was acting as a regulator
of the sport of cricket i.e. it had the status of a National Sports
Federation but the same was not a result of any statutory provision. At
the same time, BCCI was acting as an organizer of cricket events and
was thus a commercial beneficiary of the sport. The dual roles of BCCI
indicated the need to look further into the possibility of overlaps in the
two roles in functioning of BCCI leading to competition concern.

7.3 Thus in addition to the issues as pointed out above, the Commission
examined the dual role of BCCI for anti-competitive practices.
Therefore the issues for determination in this case are:
i. What is the defacto status of BCCI?
ii. Whether BCCI has abused its dominant position in the relevant
market in contravention of Section 4 of the Act? This involves
the following steps:-
a. Defining the relevant market
b. Assessment of dominance of BCCI in the relevant market as
defined
c. Analysis of conduct of BCCI for contravention of Section 4
of the Act.

7.4 As stated above, sports activities are considered to have specificities
that make them distinct businesses. This aspect has been emphasised
by the opposite party. Thus, before examining the above issues, a
review of sports sector is necessary to understand the specificities of
sport, cricket in particular.

Review of Sports Sector

Sports Organizational Structure: A pyramid

8.1 Major sports are invariably organised within a pyramidal structure.
Pyramid structure means a single national sport association per sport
and Member State, which operates under the umbrella of a single
continental/ national federation and a single worldwide federation.

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Cricket, which is the subject matter of the case, also follows the well-
established "pyramid structure" of sport governance. At the top of
pyramid is the International Cricket Council (ICC), which is
incorporated as a Company limited by guarantee and not having share
capital. It has three categories of members viz. Full Members,
Associate Members and Affiliate Members. BCCI is a full member of
ICC and is thus recognized as 'custodian' of cricket in India vested with
the requisite powers of framing rules, organising events, selections of
teams etc. owing to its affiliation to ICC. All state cricket associations
in India in turn are the members of BCCI and in turn various cricket
clubs are affiliated to their respective State Federation.

8.2 The pyramid structure is considered important for ensuring the
freedom of internal organization of sports associations, and
indispensable to the performance of essential regulatory task of sports
associations which includes, setting the rules of the game, uniformity
in application of rules of the sport, maintaining the integrity of the
game, orderly promotion of the game and maintaining the fairness of
the game (anti-doping regulations) etc.In this structure, three kinds of
sports rules can be identified: the "rules of the game"; "club rules" and
"competition rules".
- The "rules of the game" are the technical rules according to
which a game is played.
- The "club rules or statutes" are those adopted by each sports
organisation to regulate its own functioning.
- The "competition rules" are all the rules that govern competitive
events organised for a given sport over a given period.

Cricket in India

8.3 After understanding the pyramid structure, the Commission
considered the cricket events organized by BCCI in India. Cricket
events in India now (with the entry of IPL) get classified into two
broader categories:
i) First Class Cricket and International Cricket
ii) Private Professional League Cricket.

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8.4 First Class Cricket/International Cricket events are structured in a format
where the participating teams represent their respective states/nation
by donning the state/national colours. The success of teams bestows
the honour to the team and respective state/nation. Playing for honour
is the essence of the sport in this format. This structure forming part of
pyramid goes right down to grass root level targeting development of
talent pool of players and preparing them for rigours of International
Cricket. There are several levels/rounds of cricket matches and based
on the performance in these matches players are eventually selected for
representing the country.

The various events forming part of First Class Cricket/ International
Cricket in India incude:

i. Ranji Trophy: The Ranji Trophy is a domestic first-class
cricket championship played in India between different city and state
sides, equivalent to the County Championship in England and
the Sheffield Shield in Australia. Most of the teams playing in the
Ranji Trophy represent states of India; there are three teams that
represent individual cities (Mumbai, Baroda and Hyderabad) and two
teams based in Delhi but with no regional affiliations
(Railways and Services). Moreover, teams representing regions within
a state also participate (Saurashtra and Vidarbha).
ii. Duleep Trophy: The Duleep Trophy is a domestic first-class
cricket competition played in India between teams representing
geographical zones of India. Five Indian zonal teams regularly take
part in the Duleep Trophy - North Zone, South Zone, East Zone, West
Zone and Central Zone. The original format was that the five teams
played each other on a knock-out basis. From the 1993-94 season, the
competition converted to a league format.
iii. Irani Trophy: The Irani Cup (also called Irani Trophy)
tournament was conceived during the 1959-60 season to mark the
completion of 25 years of the Ranji Trophy championship and was
named after the late Z.R. Irani, who was associated with the Board of
Control for Cricket in India (BCCI) from its inception in 1928, till his
death in 1970. The fixture is always played between the previous
year's Ranji Trophy winners and the Rest of India Team. Leading

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players take part in the game which has often been a sort of selection
trial to pick the Indian team for foreign tours.
iv. International Cricket:According to ICC definition, 'First Class
Cricket' also includes; (a) any Test Match, One Day International Match
or Twenty20 International Match; (b) any Match played as part of an
ICC Event; or (c) any other Match organised or sanctioned by the ICC
from time to time to which the ICCdeems it appropriate that the
Regulations should apply such as ICC Standard Twenty 20
International Playing Conditions.

8.5 Private Professional Leagues are structured on private franchise based
ownership model and the franchise owners obvious objective is
ensuring commercial gains by providing competitive cricket with an
added entertainment factor. IPL and temporarily suspended ICL
belong to this genre of cricket in India. The objective is maximization of
revenue through commercial exploitation of the popularity of the
game. The players can be from any country apart from Indian players
and there is no concept of playing for the country or donning the
national colours.
8.6 Against the brief review of the sports sector including the specificities
of pyramid structure, and classification of various cricket events
organized in India, we examine the issues stated above.

i)What is the defacto status of BCCI?

8.7 This question is of prime importance as the role of BCCI has never
been clearly articulated. During the deposition, in clarification to a
question raised by the Commission as to the exact nature of BCCI,
whether it is a regulator (defacto or dejure) or an enterprise or a
completely different body that needs defining, BCCI stated that it is not
a regulator. BCCI further elaborated that the team which participates in
International events is representative of BCCI and not India. Despite
these assertions, the Commission notes that BCCI both in their written
and oral submissions refer alternatively to their role either as custodian
of cricket or organizer of events depending on the role considered
appropriate for the circumstances. For instance, in the submissions
BCCI has referred to its role in setting the rules and regulations of the
game which are considered as regulatory activities. DG in his report

17
also refers to the regulatory activities of BCCI. In the case of IPL,
BCCIhowever, has assumed the role of organiser of events. Donning
two hats by BCCI without clarity on roles merits an examination on
whether BCCI is a regulator and whether in its capacity as custodian of
cricket it extends its role to organising of events.

8.8 At the outset it is to be noted that BCCI has no 'statutory status', but
their actions in terms of laying down the rules of the game and team
selection fall within the ambit of a regulatory role. This status arises on
account of theinstitutional form of BCCI and its inter-linkages with
ICC. The approach of Government of India on this matter also needs to
be considered. The background and historical evolution of BCCI will
enable to discern the issue.

Background of BCCI
8.9 The historical background of BCCI is very important to understand the
present form of BCCI. The Commission considered the details available
on BCCI's website www.bcci.tv and following facts were
noted.Though the history of Cricket in India dates back to the
Eighteenth Century, it was only after the World War I ended in the
year 1918 that it was thought upon to constitute an administrative
body for management of sport in the country. Thereafter, 2 members
of the Calcutta Cricket Club were allowed by the Imperial Cricket
Conference to attend the ICC meeting at Lord's on 31st of May and
28th of July 1926. Initially permission was granted contingent upon a
condition that an administrative body for the control of Cricket in India
would soon be formed.

8.10 After the directive had been passed by the ICC, a number of Cricket
bodies in India started interacting and discussing about the formation
of a central Cricket body in the nation. All the Cricket associations of
India agreed upon the belief that a central administrative organization
for the control of Cricket in India was very essential for improvement
of the sport in the country.

8.11 On November 27 1927, a group of 45 people representing the Cricket
associations located in different parts of India got together at the

18
Roshnara Club in Delhi to take some concrete initiatives towards the
formation of such an association. There was consensus that a Board of
Cricket Control was essential to ensure the following:

• Arrange and control inter-territorial, foreign and other cricket
matches.
• Make arrangements incidental to visits of teams to India, and to
manage and control all-India representatives playing within and
outside India.
• If necessary, to control and arrange all or any inter-territorial
disputes.
• To settle disputes or differences between Associations affiliated to
the Board and appeals referred to it by any such Associations.
• To adopt if desirable, all rules or amendments passed by the
Marylebone Cricket Club as soon as eight territorial cricket
associations were created. Representatives of the eight associations
would then come together to constitute the Board. In late 1928, only
six associations - Southern Punjab Cricket Association, Cricket
Association of Bengal, Assam Cricket Association, Madras Cricket
Association and Northern India Cricket Association - had been
formed.

8.12 The Provisional Board met in Mumbai in December 1928 during the
Quadrangular tournament to discuss the next course of action. It was
at this meeting that decision to form a proper board for control of
cricket in India was taken and BCCI was established. Five months
later, the ICC admitted BCCI as a Full Member representing India.

Institutional Form of BCCI

8.13 At present, BCCI is registered under Tamil Nadu Societies Registration
Act, 1975 as a private society. In its institutional form, BCCI is an
autonomous body, administration of which does not seem to be
controlled by any other authority including Government of India. It is
also noted that presently BCCI does not take any financial assistance
from GoI and it is not expressly recognized by GOI as the National
Association for the sport of cricket in India.

19
8.14 Despite the fact that BCCI is not recognized by GOI as the regulator of
cricket in India, the examination of object clause of Memorandum of
Association of BCCI reveals that in substance, BCCI considers it as the
regulator of cricket in India. Some relevant clauses are as under:

Clause 2(a): 'To control the game of cricket in India and give its
decision on all matters including women's cricket which may be
referred to it by any member association in India'.

Clause 2(d): ' To arrange, control, regulate and finance visits of an
Indian Cricket Team to tour countries that are members of ICC or
elsewhere in conjunction with the bodies governing cricket in the
countries to be visited'.

Clause 2(s): 'To select teams to represent India in Test Matches, One
Day Internationals and Twenty/20 matches played in India or abroad,
and to select such other teams as the Board may decide from time to
time'.

Clause 2(v): To appoint India's representative or representatives on
the ICC and other Conferences, Seminars, connected with the game of
cricket'.

Linkages with ICC

8.15 BCCI is a full member of ICC and as such BCCI follows the rules/bye
laws made by ICC. Specifically, attention is drawn to Section 32 of ICC
Regulations which prescribes the definition of 'disapproved cricket; the
authority of the members of ICC to 'approve' cricket leagues; and the
course of action to deal with 'disapproved cricket'.

8.16 The explanatory notes to Section 32 of ICC Regulations were also
examined.

Section 32 provided;
"A cricket match will be deemed to be "Disapproved Cricket", and the terms
of section 32.4 will apply to it, if:
32.1.1 it has not been approved by the Member in whose territory it is played;
or

20
32.1.2 it is the subject of a Disapproval Notice issued by the ICC pursuant to
Section 32.2.
For these purposes, "Member" means any member board recognised as such
by the ICC from time to time."

8.17 It is very clear from the reading of the clause that the members of ICC
are authorised to permit/deny the entry of competing leagues. Thus by
virtue of Section 32 of ICC rules, the 'right of approval' is vested with
BCCI. This 'right of approval' is clearly a regulatory role.

8.18 ICC also vests the rights of deciding on any factor related to cricket
with its members and declares the members as 'custodian' of sport as
stated in Explanatory note to Section 32.3.

"...Any other factor that the Member, as the custodian of the sport in its
territory, considers to be relevant".

8.19 ICC very clearly declares that the members of ICC are the custodian of
sport of cricket. The word 'custodian' clearly highlights the intent of
ICC and its members to regulate/control the sport of cricket in their
respective jurisdictions.

8.20 Another evidence of BCCI as being a de facto regulator and the team
participating in International events being Indian team and not a
representative of BCCI is found in the ICC guidelines specifying full
member criteria. It expressly states the performance of 'national team'
as one of the parameters.

8.21 Some of the important statements from the ICC Player Eligibility
Regulations are quoted as under;
"The ICC is the international federation responsible for the global governance
of the sport of cricket and the Player Eligibility Regulations (the
"Regulations") are adopted and implemented in order to: (a) clarify the
criteria relating to the eligibility of Players to represent National Cricket
Federations in International Matches and ICC Events; and (b) provide
guidance as to the procedures that need to be followed and documents that
need to be produced when applying the qualification criteria set out herein".
"It is acknowledged that certain National Cricket Federations may promulgate
other rules that govern the eligibility of Players to represent

21
their national representative teams and that particular circumstances may
implicate not only the Regulations but also such other rules that may apply".

8.22 The combined reading of the text suggests;
a) BCCI is considered as a National Cricket Federation by ICC for
India
b) The teams are addressed as National Teams/National
Representative Teams
c) The definition of Test Matches as given in ICC manual also
clearly states that the teams playing are representing the
countries of Full Members such as BCCI.

Approach of Government of India

8.23 The GoI had filed an affidavit in the Supreme Court case against BCCI
stating that Board was always subject to de facto control of Ministry of
Youth Affairs and Sports in regard to international matches played
domestically and internationally. In the said affidavit, it is also stated
that the Government of India has granted de-facto recognition to the
Board and continues to so recognise the Board as the Apex National
Body for regulating the game of Cricket in India. In the said affidavit it
is also stated that it is because of such recognition granted by the
Government of India that the team selected by the Board is able to
represent itself as the Indian cricket team and if there had not been
such recognition the team could not have represented the country as
the Indian cricket team in the international cricket arena. It is also
stated that Board has to seek prior permission and approval from the
Government of India whenever it has to travel outside the country to
represent the country. Even in regard to Board's invitation to the
foreign teams to visit India the Board has to take prior permission of
the Government of India and the Board is bound by any decision taken
by the Government of India in this regard. It is further stated that in
the year 2002 the Government had refused permission to the Board to
play cricket in Pakistan. It is also submitted that the Government of
India accepts the recommendation of the Board in regard to awarding
"Arjuna Awards" as the National Sports Federation representing
cricket. In the said affidavit the Government of India has stated before

22
this Court that the activities of the Board are like that of a public body
and not that of a private club.

8.24 The following conclusions can be drawn from the aforementioned
facts:
a) The historical evolution of BCCI enabled it to attain a monopoly
status, a first-mover advantage, in the organization of cricket
events in India. But the position that BCCI has attained today
could not have come without the support of Government of
India. BCCI has been a beneficiary on account of provision of
land for stadiums at subsidized rates, tax exemptions in the past
even if no specific earmarked grants by GoI have beengiven. In
substance the 'first mover' advantage and the implicit
recognition by GoI as the national association for cricket,
havecontributed to the present status of BCCI.
b) The institutional form of a society is not of much relevance to
the analysis of the case as generally all National Sports
Associations are registered as a society eg. Hockey India or All
India Chess Federation etc. What is important is the conduct of
the organization and not the form in which it operates. The
Object Clauses of BCCI's Memorandum of Association
contradicts the BCCI's stand that it is not a regulator and the
team is representing the Board and not India.
c) The linkages with ICC and the mandate/rules/bye laws of ICC
make it very clear that BCCI is the regulator/custodian of sport
of cricket in India. The ICC bye laws also makes it very clear
that the team is Indian National team and that BCCI is the
National Sports Federation.
d) The submission of GoI to the SC as detailed above and the
recent attempts made by GoI to bring BCCI within the ambit of
Right to Information makes the Government intent clear, even if
there is absence of any documentary evidence to suggest that
BCCI is explicitly declared as a National Association for the
sport of cricket in India.

The Commission from the above evidence concludes that BCCI is a
de facto regulator of sport of cricket in India.

23
(ii) Whether BCCI is an enterprise for the purpose of the Act?

8.25 BCCI during the course of investigation has stated that it is a 'not for
profit' organisation and the objectives of BCCI as clearly stated in their
Memorandum of Association (MoA) are for encouraging and
promoting the game of cricket. The DG however contended that BCCI
although a ''not-for-profit'' registered society, its activities fall in the
commercial sphere.

According to the Act,
"enterprise" means a person or a department of the Government, who
or which is, or has been, engaged in any activity, relating to the
production, storage, supply, distribution, acquisition or control of
articles or goods, or the provision of services, of any kind, or in
investment, or in the business of acquiring, holding, underwriting or
dealing with shares, debentures or other securities of any other body
corporate, either directly or through one or more of its units or
divisions or subsidiaries, whether such unit or division or subsidiary is
located at the same place where the enterprise is located or at a different
place or at different places, but does not include any activity of the
Government relatable to the sovereign functions of the Government
including all activities carried on by the departments of the Central
Government dealing with atomic energy, currency, defence and
space". (Section 2(h))

8.26 The Act focuses on the functional aspects of an entity rather than
institutional aspects. The scope of the definition on the institutional
front has been kept broad enough to include virtually all the entities as
it includes 'person' as well as departments of the government. The
specific exception has been provided only to the activities related to the
sovereign functions of the government. It is in substance the nature of
activity that would decide whether the entity is an enterprise for the
purpose of the Act or not. Thus, from the discussion, it suffices that the
'not-for-profit' society form as claimed by the OP does not take BCCI
out of the definition of the enterprise and the activities of BCCI would
be tested for its status as an enterprise.

8.27 The same view has been held internationally in a number of cases
related to sports bodies. The Grand Chamber of ECJ observed in a

24
similar case against ELPA (the authority participating in authorisation
by a public body of motor cycling events and also responsible for
organising motor sports competitions in Greece):

"..The fact that MOTOE, the applicant in the main proceedings, is
itself a non-profit-making association has, from that point of view, no
effect on the classification as an undertaking of a legal person such as
ELPA. First, it is not inconceivable that, in Greece, there exist, in
addition to the associations whose activities consist in organising and
commercially exploiting motorcycling events without seeking to
make a profit, associations which are engaged in that activity and do
seek to make a profit and which are thus in competition with ELPA.
Second, non-profit-making associations which offer goods or services
on a given market may find themselves in competition with one
another. The success or economic survival of such associations
depends ultimately on their being able to impose, on the relevant
market, their services to the detriment of those offered by the other
operators..."[ Case No: C-49/07, REFERENCE for a preliminary
ruling under Article 234 EC, from the Diikitiko Efetio Athinon
(Greece), made by decision of 21 November 2006, received at
the Court on 5 February 2007, in the proceedings,
Motosykletistiki Omospondia Ellados NPID (MOTOE) v
Elliniko Dimosio, THE COURT (Grand Chamber) ]

8.28 The activities of BCCI centre both on 'custodian and 'organiser'
role, as already detailed. In this broad based objective, BCCI is
involved in selection of Team India to represent India in
international events, to work for development of cricket by
arranging training camps etc. as well as organizing the game.
These activities fall under the custodian function of BCCI,
however, the aspect of 'organization' brings in activities
contributing to the revenues of BCCI such as grant of media
rights, sale of tickets etc. The activities of 'organising events' are
definitely economic activities as there is revenue dimension to
the organizational activities of BCCI.The Grand Chamber of ECJ
on the case against ELPA had also observed on the question of
whether sports constitute economic activity:

"......It should be borne in mind in this regard that any activity
consisting in offering goods or services on a given market is an
economic activity (see, in particular, Case

25
C-35/96Commission v Italy [1998] ECR I-3851, paragraph 36, and
Joined Cases C-180/98 to C-184/98 Pavlov and Others [2000] ECR
I-6451, paragraph 75). Provided that that condition is satisfied, the
fact that an activity has a connection with sport does not hinder the
application of the rules of the Treaty (Case 36/74 Walrave and
Koch [1974] ECR 1405, paragraph 4, and Case
C-415/93 Bosman [1995] ECR I-4921, paragraph 73) including
those governing competition law (see, to that effect, Case
C-519/04 P Meca-Medina and Majcen v Commission [2006] ECR
I-6991, paragraphs 22 and 28)..."[Source C-49/07, REFERENCE
ibid.)

Thus, it is conclusive that all Sports Associations are to be
regarded as an enterprise in so far as their entrepreneurial conduct is
concerned and treated at par with other business establishments.

8.29 In India also in a recent decision, Delhi High Court held All
India Chess Federation (which performs similar functions as
BCCI for the game of Chess) to be an enterprise for the purpose
of the Act.
(Source: Hemant Sharma & Others Vs Union of India, Delhi High Court,
WP(C) 5770/2011, date of decision 04/11/2011).

8.30 In line with the provisions of the Act, international
jurisprudence, and Delhi High Court decision in case of Chess
Federation, it is concluded that BCCI is an enterprise for the
purpose of the Act, and therefore, within the jurisdiction of
the Commission.

(iii) Whether BCCI has abused its dominant position in the relevant
market in contravention of Section 4 of the Act?

(a) Determining the relevant market

8.31 The pivotal inquiry in a case of alleged abuse of dominance is
whether the OP is in a dominant position in the relevant market.
As per explanation to Section 4 of the Act," dominant position
means a position of strength, enjoyed by an enterprise in the
relevant market..." Therefore, assessment of dominance is to be
preceded by delineation of the correct relevant market in which

26
dominance of the enterprise under consideration is to be
assessed.

8.32 There are three components that make a market, viz. the
producer on the supply side, the consumer on the demand side
and the underlying product or service. The Act considers
relevant market as the market of various goods or services that
are regarded as interchangeable by consumer with reference to
product characteristics, intended use and price. The objective of
this definition is for precise understanding of the competitive
constraints the market forces are subjected to.

8.33 The Act emphasises that definition of relevant market needs to
be viewed from the demand perspective and based on
characteristics of the product, price and intended use. The
Commission considered the definition in accordance with the
parameters laid down under the Act.

8.34 Every sports event is unique in itself and commands its own fan
following. Cricket also has its own characteristics that
differentiate it from other sporting events or other entertainment
events. A cricket match cannot be perceived as substitutable by
any other sports/entertainment event based on characteristics.
It can also be argued that the intention of the ultimate viewer is
entertainment and therefore, there is a case for broadening the
definition and including other sports and entertainment forms.
This argument however does not hold if we consider the
demand substitutability of the various forms of entertainment.

8.35 The Commission noted the viewership data related to TRP
ratings available on website www.indiantelevision.com and the
revenue impact of cricket as a sport vis a vis other sports and
other forms of entertainment as an indicator of demand
preferences of the ultimate viewer of the sport. The data is as
under:

Revenue from Cricket data:

27
a) As per information in public domain, the total
advertisement revenue for the year 2009-10 was Rs.9000 crore.
An amount of Rs.700 crore was made by Sony Max in 45 days of
IPL. Doordarshan was expected to earn only Rs.110 Crore from
the Commonwealth Games telecast (Source:
http://business.rediff.com/report/2010/oct/11/dd-set-to-cross-
games-revenue-target.htm).

b) '3 Idiots', was described in Economic Times as the most
expensive movie on TV was telecasted in July 2010 and
advertisement slots were offered at Rs.2.2 lakh for 10 seconds,
while the general rate for 45 day long IPL event for that year
was around Rs.4-5 lakh per 10 seconds, which subsequently
increased to Rs.10 lakh for 10 seconds. This evidences that
cricket is not comparable to the general entertainment programs
in terms of ad revenue.
(Source: http://articles.economictimes.indiatimes.com/2010-07-
08/news/28479684_1_idiots-advertisers-broadcaster and
http://www.livemint.com/Consumer/ZvAVAktNggpvLMVuyWA1QL/SET-
Max-quotes-Rs-10-lakh-per-10-sec-for-IPL-final.html).

c) The general entertainment programs such as Saath
Nibhana Saathiya which have consistent TRP of 4, don't earn
more that 1.5-2 lakhs for prime time slot.
(Source: http://business.outlookindia.com/article.aspx?281725)

d) The channel's revenue market share (Set Max) increased
from a pre IPL level of 5.7% to 28.8%. Its share of prime time
viewership went up to 29%, higher than the cumulative market
share of top 9 Hindi General Entertainment Channels. The
channel's Ad revenue from IPL alone is likely to be around 7%
of total ad revenue of the industry for the year.
(Source: ttp://www.daijiworld.com/news/printer.asp?nid=47095)

Viewership data:
a) KPMG-FICCI Report on media and entertainment
industry notes

28
" Sports are one of the few things that still have people
tuning in by the million. As the number of channels have
multiplied, large audiences have become much harder to
find, but Sports has retained its ability to generate
eyeballs for the broadcasters. In fact, the average time
spent watching sports channels in C&S households has
been increasing steadily. With the growth in sports
viewership, the number of advertisers have also risen
steadily......", "As a result of growth in advertising
revenues from sports, the scramble for sports broadcasts
rights has also been getting frantic... ", "In India Sports
and cricket are almost synonymous".
Among the three mega sports events in recent years in India, TV
viewership of Cricket World Cup 2007 was highest (113 mn)
followed by Olympics 2004 (65 mn) and FIFA World Cup 2006
(39 mn). The latest entrant to the sports leagues was the WSH
league. It attracted the cumulative TV viewership of 10.43
million (Source - TAM, CS 4+). The tennis viewership (Grand
slam events) was 42.4 million in 2007 as per KPMG- FICCI
report on Media and entertainment industry. In comparison, the
IPL 5 which was plagued with controversies and talk of
excessive cricket attracted a viewership of 122.44 million. Thus,
it is very clear that the other sports are not in same market as a
cricket league event.

b) Before going into analysis of TAM ratings, it is stated that
the TRP rating of 4 is considered as extremely good in the age of
so many channels and consumer choices. The analysis of TAM
Top 100 Programs of the week as available on
Indiantelevision.com reveal that:

i) Set Max before and after the IPL remain on around 9th
position with around 4 programs making to the list of Top 100
with all of them having TRP of less than 1.

ii) During IPL, Set Max jumps to the 1st or 2nd position with
around 13-15 programs making to Top 100 and the TRP's
generally being in excess of 4 and even 5 or 6. For matches such
as IPL semi-final or final, the TRP exceeds 10.

29
iii) The analysis of Top 10 programs of the week reveal that
Set Max does not make to the Top 10 category without IPL and
with IPL, it has around 5 to 7 programs in Top 10.

The changes in TRP suggest that the regular soaps such as
Sathiya...are not preferred once the IPL is on, which emphasises
the attractiveness and uniqueness of the cricket events.

8.36 Considering the basic test of non-transitory relative price rise of
5% to 10% also known as SNNIP test for a cricket event and
considering the consumer behaviour, it seems quite
unreasonable to believe that a consumer would substitute
cricket event with any other form of entertainment viz. Films,
TV shows etc. or any other sporting event. There is enough
behavioural evidence to suggest the same is reflected in data
regarding viewership above.

8.37 The price of cricket event be it the price of tickets for live
audience or the prices for advertisement slots for broadcasts also
points to a truly distinct market. The uniqueness of cricket
events from the view point of the stakeholders as well as the
ultimate viewers is reflected in revenues associated with sport
vis a vis other sports/entertainment forms and viewership data
analysis. These are discussed at length in the section related to
media rights market.

8.38 After concluding that cricket is not substitutable with other
sports or other entertainment events, the Commission considers
it necessary to examine whether there are inherent differences
between the two broad categories of events also viz. First
Class/International events and Private Professional League
Cricket events as noted in review of sports sector above which
merit examination for determination of relevant market. The
important fundamental differences noted are as under:

a. In case of First Class/International Cricket, the teams
represent states/nation and comprises of players who are

30
Indian nationals while in case of Private Professional
Leagues the teams represent private clubs and can also
have foreign players.
b. Revenue generation becomes incidental to the main
objective of development and promotion of sport in case
of First Class/International events while revenue is the
primary consideration in Private Professional Leagues.

This distinction as we noted earlier arose from the fact that entry
of private professional leaguessaw the merger of media and
entertainment to raise the level of cricket to a different height
altogether, contributing to the commercialization of the game.A
new genre of cricket emerged with a market distinct from
existing cricket events. The Commission, therefore,opines that
the relevant market is the Organization of Private Professional
Cricket Leagues/Events in India.

(b) Assessment of Dominance of BCCI in market for
Organization of Private Professional League Cricket events

8.40 Undoubtedly the most significant source of dominance is the
regulatory powers of BCCI. BCCI is a monopoly in
organization of cricket is axiomatic as BCCI is the de-facto
regulator of the game. But the assessment of dominance of
BCCI in the market for Organisation of Private Professional
Leagues needs examination. The Commission takes cognizance
of the pyramid structure and notes that monopoly of sports
federations is a natural outcome of the structure. The merits of
pyramid structure in sports permits uniformity in application of
rules of the sport, orderly development of the sport,' keeping
the sport free from the taints of doping and corruption etc. as
has been discussed.It is equally important to note that a
number of matters that are dealt with under the pyramid
structure may not necessarily be inherent and proportionate to
the achievements of purely sporting objectives; rather they
contain a strong commercial dimension, especially related to
club rules or the statutes. There are concerns that the sports
federations may go beyond what is required for the proper

31
organization of sport. With a phenomenal increase in
commercial dimensions of the sport, there is a great incentive
for Sports Federations to use their regulatory powers for
protecting their own commercial interests. The situation where
the regulator is also the economic beneficiary leading to role
overlap is definitely a competition concern. The Commission,
while it appreciates the regulation of the sport,is mandated to
examine if the system of regulation falls foul of the Act, in its
organisational roleespecially where, commercial dimension of
the sport is involved.

8.41 In the given case, BCCI was already the monopoly organizer of
First Class Cricket leagues and matches in India.With the advent
of the 'private professional league', BCCI extended its monopoly
to the new genre of cricket in the establishment of Indian
Premier League, IPL. In their justification of venturing to IPL,
BCCI refers to re-ploughing of funds generated in the
development of game as a primary objective in addition to other
objectives of IPL such as: i) to identify and nurture Indian talent
and provide a platform for them to perform; ii) to promote the
game of cricket with a sense of competition at the domestic
level, and provide opportunity and international exposure to
players playing at domestic level; and iii) to bring in newer
audiences to the sport especially women and children.

8.42 It is already noted that BCCI is a defacto regulator within the
pyramid and in this capacity is vested with certain rights by
ICC. BCCI has assumed the right to sanction/approve cricket
events in India. This right vests BCCI from the conditions laid
down in Section 32 under the heading "Disapproved Cricket",
with the onerous task of ensuring a free and transparent
sanctioning of competing private professional leagues.

8.43 This right to approve leagues has significant impact on any
private professional league which might be proposed to be
organized.The significance of seeking approval for rival leagues

32
can be made out by a reading of Section 32.4 of ICC bye laws. As
per Section 32.4,
"A Member shall, to the greatest extent permitted by applicable
law:
32.4.1 not participate in any way in any form of disapproved
cricket;
32.4.2 not release or permit any players, match officials,
coaching or management staff contracted to the member to
participate in any way in any form of disapproved cricket;
32.4.3 prohibit the participation by organizations and
individuals under its jurisdiction in any form of Disapproved
Cricket;
32.4.4 prohibit organizations under its jurisdiction from
releasing or permitting any players, match officials, coaching or
management staff contracted to them to participate in any form
of Disapproved Cricket;
32.4.5 impose appropriate disciplinary sanctions on any
organization or individual under its jurisdiction who breaches
the foregoing prohibitions;
32.4.6 recognize and enforce within its own jurisdiction any
sanction, restriction or exclusion imposed on a player or
organization by another Member breach(es) of the foregoing
prohibitions;
32.4.7 make it a condition of eligibility to participate in cricket
matches/events played under its jurisdiction that the individual
or organization in question has not participated in any form of
Disapproved Cricket for a specified period."

8.44 Thus, considering the ICC bye laws as above, the Commission
notes that BCCI approval is required by any prospective private
professional leagues and binding for access to the vital inputs
(stadium, list players) required to ensure successful conduct of
the league. Thus, the approval of BCCI is critical to the
organization and success of any competing league and is a very
important source of dominance for BCCI.

33
8.45 The concern on regulatory powers being a potential source for
abuse of dominancewas also expressed in the decision of Grand
Chamber of the European Court of Justice in MOTOE case. The
Court insisted that, "...a system of undistorted competition, such as
that provided for by the treaty, can be guaranteed only if equality of
opportunity is secured between the various economic operators. To
entrust a legal person such as ELPA, the National Association for
Motorcycling in Greece, which itself organizes and commercially
exploits motorcycling events, the task of giving the competent
administration its consent to applications for authorization to organize
such events, is tantamount de facto to conferring upon it the power to
designate the persons authorized to organize those events and to set the
conditions in which those events are organized, thereby placing that
entity at an obvious advantage over its competitors. Such a right may
therefore lead the undertaking which possesses it to deny other
operators access to the relevant market..."

[Source C-49/07, REFERENCE for a preliminary ruling under Article 234
EC, from the Diikitiko Efetio Athinon (Greece), made by decision of 21
November 2006, received at the Court on 5 February 2007, in the
proceedings, Motosykletistiki Omospondia Ellados NPID (MOTOE) v
Elliniko Dimosio, THE COURT (Grand Chamber)]

8.46 Similar concern was also expressed in a 'Statement of Good
Governance Principles' issued in a conference held in Europe on
governance of sport on 26th and 27th February 2001 to guide the
sports bodies. The report states"Governing bodies occasionally
become involved in commercial aspects of sport. However, the wider
interests of sport may not always coincide with specific commercial
objectives. Therefore, it is acknowledged that there should be a clear
demarcation between the governing body's governance function and
any commercial activities. It is acknowledged that this demarcation
may be achieved by the allocation of the various roles to different
committees or bodies. In such a case each committee or body should
have clearly defined responsibilities and reporting lines. The committee
or body with commercial responsibilities shall, where appropriate,
consider the possibility of open tenders for any commercial contracts

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and any contracts. Such contracts should be no longer in duration and
no more exclusive or restrictive than is demonstrably essential".

8.47 It emerges from above that internationally too there has been
concern that role overlap may lead to competition concern. In
the present case, it is strengthened by the powers vested with
BCCI to give consent to application for authorisation to organise
cricket events. The concern deepens if this power is not
subjected to restrictions, obligations and review, sports
associations such as BCCI in the present case, to thwart
competition by favouring events which it organises or those in
whose organisation it participates.

8.48 The other significant factor is the infrastructure owned and
controlled by BCCI. Over a period of time, BCCI or its member
sports federations were allotted land by GoI at subsidized rates
for construction of stadiums to help the cause of development of
the sport and was also granted tax exemptions. With the
changed paradigm in cricket this emerged as a tool of significant
commercial advantage for BCCI.

8.49 Dominance also stems from the role of BCCI as an organizer of
First Class/International Cricket events. With this role, BCCI
controls a pool of cricketers under contract with BCCI for First
Class/International events. The sentiments of Indian fans are
reflected in the slogan seen at many matches which reads,
"Cricket is my religion and Sachin is my God". Thus to an
Indian cricket fan, these players are icons and their participation
can make any league a success. BCCI's ability to control an input
which is indispensable to the success of cricket events is also a
source of dominance for it.

8.50 If historical evidences are considered, we have the case of ICL
which is now temporarily suspended. The reasons for the failure
of the league were lack of infrastructure facilities, BCCI/ICC's
refusal to approve the league and provide infrastructural
support, among other reasons that might be relevant (Source:

35
DG's Report). Thus, while it cannot be conclusively said that
ICL's failure was solely attributable to BCCI's dominance, it can
be said that BCCI's dominance was definitely a factor in ICL's
failure.

8.51 Thus, owing to regulatory role, monopoly status, control over
infrastructure, control over players, ability to control entry of
other leagues, historical evidences, BCCI is concluded to be in a
dominant position in the market for organizing private
professional league cricket events in India.

8.52 Having determined that BCCI is dominant in the relevant
market, the Commission proceeded to examine the next issue as
to whether BCCI has abused its dominance in contravention of
Section 4 of the Act.

The Commission noted that Organizing Private Professional
League Cricket events is a relatively new concept, which was
propagated in India when ICL was organized in the year 2005.
The effort, however, did not succeed. On the issue of ICL DG
considered the submissions of ICL and referred to the minutes
of meeting of IPL held at Jaipur on 17th November 2007 and
noted:-

"This clearly indicates that BCCI had a concern over the
organization of ICL and the allegations made by ICL shows that
BCCI owing to its dominant position has tried to sabotage the
ICL tournament through various ways and means and
subsequently the ICL tournament was not organized"

8.53 Opposing reasons have been advanced to explain the failure of
this initiative. On the one hand the arguments were made that
BCCI's decision of not granting approval to ICL was responsible
for ICL failure. On the other hand, BCCI in its submissions
attributed ICL failure to factors such as lack of transparency for
award of media rights, low television viewership, failure to

36
attract crowds, underinvestment, and lack of fan appeal. All of
BCCI's submissions lead to questions being raised regarding the
overall viability of the business model of ICL.

8.54 ICL, the first attempt to create a private professional league
cricket event relates to the period when the provisions of Section
3 and 4 of the Act were not notified and, is therefore, not being
factored into the decision of the Commission.

8.55 The Commission examined all the related issues, including the
procedures followed and the agreements entered into, to
determine whether there was any anti-competitive conduct on
the part of BCCI. On examination of the IPL media rights
agreement, the Commission noted Clause 9.1(c)(i), which reads
as follows:

"BCCI represents and warrants 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".

This agreement as noted earlier,has been entered between BCCI
and MSM for a period of 10 years. Thus, BCCI has clearly bound
itself not to organize, sanction, recognize any other private
professional domestic league/event which could compete with
IPL. Clause 9.1(c)(i) clearly and unambiguously amounts to a
practice through a contractually binding agreement resulting in
denial of market access to any potential competitor, and is
decidedly a violation of Section 4(2)(c) of the Act.

8.56 The Commission examined the above clause further considering
the provisions in ICC bye laws Section 32 regarding
"Disapproved Cricket". The insistence on rival leagues to get
approval from National Sports Federation defended on the
grounds of the same being inherent and proportionate remedy
to preserve the integrity of the sport, orderly development and
consistency in application of technical rules of the sport may
have certain merit.But the creation of monopoly by a regulatory

37
power is an overreach to protect the market and the regulatory
power to approve an event should not be used for this purpose.

8.57 The Commission notes that ICC in Section 32 of ICC Rules
provide;
"...As for the reference to "agreements to which the ICC and/or one or more
Members is a party", it is common for a sport's commercial partners to
require certain commitments to protect their respective investments in the
sport. For example, a commercial partner investing significant sums in a
Member or the ICC may require assurances that Members and/or the ICC
will not thereafter establish (or permit the establishment of) competing
events. Members ought not to put themselves or the ICC in breach of their
respective commitments to those commercial partners, as this would threaten
the generation of commercial income for distribution throughout the sport".

Examination of Section 32 reveals that the intentbehind
thisregulation introduced by the international regulator at the
top of pyramid ICC is not so much in preserving the specificities
of sport, rather of assuring revenue for Cricket Sports
Federations under the guise of pyramid structure.

8.58 The role and functioning of BCCI have already been examined
in detail earlier in this order. An analysis of the position clearly
brings out that there is an overlap between the way BCCI is
discharging its regulatory and commercial roles respectively,
and the modus operandi/decision making process does not
clearly separate the two roles. The conduct of BCCI in
incorporating the clause (Clause 9.1(c)(i)) mentioned above in its
agreement conclusively indicates that BCCI has also used its
regulatory power in the process of arriving at a commercial
agreement. It is to be noted that regulatory power of BCCI
enables it to make a commitment not to recognize or sanction
any competing event to other parties, who, in turn would not
have given any credence to such a commitment but for the
regulatory power exercised by BCCI. The Commission notes
that by explicitly agreeing not to sanction any competitive
league during the currency of media rights agreement BCCI has
used its regulatory powers in arriving at a commercial
agreement, which is at the root of a violation of Section 4(2)(c).

38
8.59 The Commission has noted that, BCCI by virtue of its role as the
custodian of cricket vested with the rights to sanction a cricket
event thereby facilitating the success of the event took unto itself
the right of restricting economic competition in sporting event.
The Commission however, strongly holds the view that
competition is essentially for benefits to be widespread. The
game of cricket and the monetary benefits of playing
professional league matches must be spread out and not
concentrated in a few hands, in a few franchisees. In a country
of large young population more private professional leagues
opens up more venues for youngsters to play cricket, to earn a
livelihood and to find champions where least expected. BCCI in
its dual role of custodian of cricket and organizer of events has
on account of role overlap restricted competition and the
benefits of competition. The objective of BCCI to promote and
develop the game of cricket has been compromised.

The Commission, therefore, concludes that BCCI has abused
its dominant position in contravention of Section 4(2)(c) of the
Act.

Order under Section 27 of the Act

The Commission finds BCCI guilty of contravention of Section 4(2)(c) of the Act. In view of the above and in exercise of powers under Section 27 of the Act, the Commission directs BCCI:-

i) to cease and desist from any practice in future denying market access to potential competitors, including inclusion of similar clauses in any agreement in future.

ii) to cease and desist from using its regulatory powers in any way in the process of considering and deciding on any matters relating to its commercial activities. To 39 ensure this, BCCI will set up an effective internal control system to its own satisfaction, in good faith and after due diligence.

iii) To delete the violative clause 9.1(c)(i) in the Media Rights Agreement.

iv) The Commission considers that the abuse by BCCI was of a grave nature and the quantum of penalty that needs to be levied should be commensurate with the gravity of the violation. The Commission has to keep in mind the nature of barriers created and whether such barriers can be surmounted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers.

BCCI's economic power is enormous as a regulator that enables it to pick winners. BCCI has gained tremendously from IPL format of the cricket in financial terms. Virtually, there is no other competitor in the market nor was anyone allowed to emerge due to BCCI's strategy of monopolizing the entire market. The policy of BCCI to keep out other competitors and to use their position as a defacto regulatory body has prevented many players who could have opted for the competitive league. The dependence of competitors on BCCI for sanctioning of the events and dependence of players and consumers for the same reason has been total. BCCI knowing this had foreclosed the competition by openly declaring that it was not going to sanction any other event. BCCI undermined the moral responsibility of a custodian and defacto regulator. The Commission however, notes that BCCI in their submissions have claimed that the funds of 40 IPL have been re-ploughed in developing the game and considers it appropriate that the penalty of 6% of the average annual revenue of BCCI for past three years be imposed under Section 27(b) of the Act as under:

Name Gross Gross Gross Average Penalty @ Turnover Turnover Turnover Turnover 6% of for 2007- for 2008- for 2009- for 3 Average 2008 2009 2010 Years* Turnover (Rs. Crore) (Rs. Crore) (Rs. Crore) ( Rs. Crore) (Rs. Crore) BCCI 1000.41 725.83 886.11 870.78 52.24 * Data as available from DG's Report The Commission decides accordingly. The directions of the Commission must be complied within 90 days of receipt of this Order. The amount of penalty determined of Rs.52.24 Crore must also be deposited within a period of 90 days from the date of receipt of this Order.

The Secretary is directed to communicate this order as per regulations to the party.

  Sd/-                                                           Sd/-
Member(G)                                                   Member(GG)




   Sd/-                                                              Sd/-
Member(AG)                                                     Member(D)



                                     Sd/-
                                 Chairperson




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Sh. Surinder Singh Barmi vs Board For Control Of Cricket In India ... on 8 February, 2013