The BCCI’s fight to prove that the IPL is entertainment comparable to a soap opera, not a distinct form of cricket

By Sagar | 22 June 2018

Since 2010, the Board of Control for Cricket in India has been fighting to prove that the Indian Premier League is comparable to a soap opera. The board has been attempting to show the Competition Commission of India that the IPL is not primarily a “unique format of cricket,” but rather an entertainment programme. The BCCI contends that the IPL is just another sporting event “designed for commercial purposes and to attract television broadcasters.” In fact, the cricketing body has argued that the IPL is an entertainment programme that competes with, among other shows, the talent show “India’s Got Talent” and the drama “Yeh Rishta Kya Kehlata Hai.”

In 2010, Surinder Singh Barmi, a cricket fan and resident of Delhi, filed a complaint against the BCCI before the competition commission, alleging irregularities in the grant of media, franchise and other rights related to the IPL. In a judgment pronounced three years later, the commission said that the BCCI had created a monopoly over the organisation of professional cricket leagues in India, and abused this dominant position. The BCCI appealed this decision, before the Competition Appellate Tribunal, or COMPAT—the appellate body established under the Competition Act. In 2015, the COMPAT set aside the verdict on procedural grounds, and sent the case back to the CCI. In November last year, the CCI reiterated a verdict similar to its previous judgment, which the cricketing body has again challenged in an ongoing appeal. The case reveals the different ways in which the BCCI has exploited its position and reaped the benefits as the apex regulatory body of cricket in India.

The CCI is a national statutory body established under the Competition Act of 2002 to prevent practices such as the abuse of dominant position in a market. According to the Competition Act, to decide whether an entity is abusing its position, the CCI must determine four issues: first, it must rule on whether the respective entity—in this case the BCCI—is an “enterprise” and therefore subject to India’s competition law. Then, the commission must adjudicate on the “relevant market” of the product—in this case, the IPL. It has to then decide whether the BCCI holds a dominant position within its market, and finally, whether it is abusing this dominant position.

While in its annual report for 2015–16, the BCCI described the IPL as the “biggest brand in cricket history,” boasting a viewership of 102 crore people and a value of Rs 27,000 crore, it sang a different tune before the competition commission. During the first proceedings before the competition commission, the director general—the office of the investigative wing of the CCI—submitted a report, in February 2012, stating that the BCCI had abused its dominant position in the market. The report defining 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 the BCCI”—these include the media and sponsorship rights of the IPL. To examine the allegations, the director general sent questions to successful and unsuccessful bidders for the franchise rights of IPL teams, and the media companies who bid for the media rights.

On the issue of franchise rights, the director general found that “there were attempts of bid rigging by using arm twisting by IPL commissioner Sh. Lalit Modi.” One of the BCCI’s claimed that Lalit Modi was acting outside the scope of his authority. But the director general rejected this assertion, and wrote that Modi’s decisions were “being reported to BCCI on regular basis and ratified by its Governing Council”—the cricketing body’s top decision-making body. The report added, “BCCI cannot be absolved from its responsibility in the process of tendering.”

For the grant of media rights, the BCCI floated a tender in November 2007 for the period from 2008 to 2017. Six television networks purchased the BCCI’s tender documents, three of which finally submitted bids—Sony Entertainment Television, or SET India, ESPN Software India, World Sports Group (WSGI). Upon examination, the director general concluded that the BCCI’s tender committee created a situation for WSGI and Sony to form a consortium, and declared ESPN’s bid as ineligible, which implied that the WSGI-Sony consortium remained the only bidder in the fray. Thus, the WSGI-Sony consortium was awarded the IPL media rights agreement for the period 2008–2017.

While studying the director general’s report, the competition commission opened a Pandora’s box of concerns and examined the BCCI’s functioning based not on the report, but on information publicly available online. The CCI’s judgment considered questions pertaining to the body’s dual role as both a regulatory authority and as an enterprise exercising a dominant position among private professional cricket leagues.

After concluding that the BCCI was the “de facto regulator of the sport of cricket in India,” the first question that the CCI examined was whether the cricketing body was an “enterprise” subject to the India’s competition law. The BCCI had argued that its memorandum of association clearly states that it is a “not-for-profit” organisation seeking to encourage and promote the sport of cricket, and therefore not an enterprise subject to the Competition Act. In its report, the director general had noted that in December 2009, the income tax department withdrew the certification necessary for the BCCI to qualify as a non-profit. Additionally, the CCI held that it is “the nature of activity that would decide whether the entity is an enterprise.” It noted that the BCCI was earning revenue through economic activities such as organising events, and as a result, qualified as an enterprise under the act.

For its determination of the relevant market, the CCI studied public information about the revenue and viewership data of television programmes, including data on the pricing of advertisement slots. For instance, the commission noted that a ten-second slot during a telecast of the movie 3 Idiots in July 2010 cost Rs 2.2 lakh, whereas a similar slot during the 45 days of IPL cost Rs 4–5 lakh, which was subsequently increased to Rs 10 lakh. It concluded that the IPL existed within a distinct category that was not substitutable with entertainment programmes, other sports, or other forms of cricket. On this basis, the CCI defined the relevant market as “the Organization of Private Professional Cricket Leagues/Events in India.” The commission held that BCCI was in a dominant position owing to its “regulatory role, monopoly status, control over infrastructure, control over players, ability to control entry of other leagues.”

The commission found the BCCI guilty of anti-competitive abuse of dominance on the basis of a clause in the IPL media rights agreement, which states that the “BCCI … shall not organize, sanction, recognize or support … another professional domestic Indian T20 competition that is competitive to the league.” Accordingly, it directed the BCCI to “cease and desist” from “denying market access to potential competitors,” to delete the relevant clause from the agreement, and imposed a penalty of Rs 52 crore on the cricketing body. (The penalty was determined by calculating 10 percent of the BCCI’s average turnover from the IPL matches in the preceding three years.)

The BCCI appealed against the competition commission’s order before the COMPAT The appellate tribunal set aside the CCI judgment in February 2015. It observed that the CCI had gone beyond the scope of the director general’s report and relied on information taken from the internet without giving “an effective opportunity” to the BCCI to respond to the same. The COMPAT then returned the case to the CCI for a fresh disposal of the matter, which in turn directed the director general to conduct further investigation.

The director general submitted a supplementary investigation report in March 2016, which reiterated aspects of the CCI’s 2013 judgment, and concluded that provisions in the BCCI rules were anti-competitive. In its preliminary submissions, the BCCI reiterated that it was a not-for-profit society and not subject to the Competition Act, even while the director general’s report noted that the body’s regulatory activities did “not alter its status as an enterprise if it is pursuing income generating economic activities.” Upholding this argument, the commission again concluded that the BCCI was subject to India’s competition law.

The next task before the CCI was to determine whether the director general had accurately defined the market as the “organization of professional domestic cricket leagues/events in India.” The BCCI argued that the IPL, like other sports and entertainment channels, competed for viewership and therefore all television content should be considered as the relevant market. It further submitted that the IPL had distinct characteristics that were comparable to entertainment programme such as soap operas—in support, it relied upon articles describing the IPL as an “action-packed reality show” and “compared with Bollywood movies.”

The cricketing body further argued, “The DG has given undue significance to the IPL being a unique format of cricket … the telecast of IPL during prime time affirms that IPL is an entertainment programme for consumers.” The BCCI relied on a study published in the business daily Mint, which noted, “Viewership data for ‘India’s Got Talent’ and ‘2016 Summer Olympics Final badminton match’ shows that they garnered more viewership than IPL.” It added, “Thus, the DG erred in its finding that in terms of consumer preference, cricket cannot be replaced by any other sport event.”

The competition commission, however, rejected the BCCI’s contentions, ruling that “such argument is misconceived as it lacks appreciation of consumer preferences and characteristics of cricket, other sports and general television programmes.” The CCI noted that the definition of a relevant market “must capture the economic realities so as to appreciate the competitive constraints prevailing in the market.” In this context, the judgment noted, “Cricket, as a product, is completely different and not comparable with general entertainment television programmes.”

The CCI’s 2017 judgment noted, “The comparison of IPL with India’s Got Talent and Khatron Ke Khiladi is of no relevance as the concerned viewership details across genres do not reflect inter-se consumer preference, substitutability and the constraints, if any, exerted by these programmes on each other.” It upheld the director general’s conclusion that “domestic cricket leagues like IPL is unique and not substitutable with other forms of cricket, other sports and general entertainment programmes telecasted on television.”

On the question of dominance, the BCCI claimed that its “economic strength” cannot be considered a factor because its profits were used for the “development of cricket.” It also argued that there was no prohibition against others organising professional domestic cricket events in India. The director general, on the other hand, relied on the pyramid structure governing international cricket, the rules of the International Cricket Council—the supervening international authority within this structure—and the BCCI rules, to establish that the body “assumes the role of de facto regulator of cricket in India.”

The director general’s supplementary investigation report placed emphasis on Section 32 of the ICC Manual, which effectively grants the BCCI the exclusive right to approve cricketing events in India, and provides that any match without such approval would be “Disapproved Cricket.” The report also emphasised on the BCCI’s “undisputable market share” and “economic power.” As per the BCCI’s audited accounts, the report observed, the body’s “financial surplus ranged between Rs 53.77 crore in 2008–09 and Rs 525.95 crore in 2013–14.” As such, the commission concluded that the BCCI “enjoys a dominant position in the relevant market.”

On the final question of abuse of dominance, the director general relied on provisions in the IPL Media Rights Agreement and the BCCI’s rules. The report reiterated the issue raised by the CCI in its 2013 judgment—that a clause in the agreement prohibited the BCCI from organising a league competitive to the IPL. Additionally, the director general brought attention to Rule 28 of the BCCI rules and regulations, which, the commission noted, “stipulates that the permission for conducting cricket match or tournament will be accorded only to its members and their affiliates.”

In its defence, the BCCI reiterated that the IPL was substitutable with other forms of cricket, and argued that the clause in the media-rights agreement was “narrow and limited to Twenty-20 competitions.” The cricketing body did not respond to the argument that the clause constituted an abuse of dominance within Twenty-20 competitions. It further submitted that the clause was “inserted at the behest of bidders” for the reason that, among others, it was necessary for “recouping investment.” The commission, however, held that the claims of recoupment of investment were unsubstantiated and “no more than vague assertions.”

With respect to Section 28 of the BCCI’s rules, the cricketing body claimed that there was no restriction on private organisers to conduct a professional domestic league or event. The CCI rejected this argument as well, noting that “there appears no merit in such contention as any cricket tournament or match conducted without the approval of BCCI will be deemed to be Disapproved Cricket.” Accordingly, the CCI ruled that Rule 28 of the BCCI “amounts to denial of market access for organization of professional domestic cricket leagues/events in India” and as such, was anti-competitive and an abuse of dominance.

The commission imposed the same penalty of Rs 52 crore, and directed that the BCCI “shall not place blanket restrictions” on organising domestic Twenty-20 leagues or events in India. Once again, the BCCI appealed the decision before the National Company Law Appellate Tribunal—which assumed all of COMPAT’s appellate functions when the tribunals merged in May last year.

As per the first order passed in the appeal, in February this year, the limited question for consideration before the appellate tribunal is whether the CCI could have relied on its previous order dated 8 February 2013 after it was set aside by the COMPAT. But according to Akanksha Kaul, one of the CCI’s lawyers in the proceedings, another issue arose during the hearing. She said that the NCLAT wanted to determine whether “the CCI can have jurisdiction since the Supreme Court has set up a committee to run BCCI.” The appeal is listed for its next hearing on 4 July.

Meanwhile, the IPL Media Rights Agreement between Sony Max and BCCI ended last year. In September 2017, Star India won the global media rights of the IPL for a period of five years and for a sum of Rs 16,347.50 crore. Star India won the bid against other bidders, which included Reliance Jio, Bharti Airtel and Sony. At present, it is not known whether the new media rights agreement contains similar clauses that were challenged in the proceedings before the competition commission.

Sagar is a web reporter at The Caravan.

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