Amazon and Flipkart found violating Competition law in India-DG investigation report out
At the outset let me apologize to my readers for the long gap as I am still travelling and currently in the beautiful and picturesque State of Oregon, in the Northwest United States of America. I will try to be more regular henceforth!
Inspite of India having enacted a modern competition law in sync with the best international standards since last 13 years, unfortunately, we continue to notice ignorance of the law by some national sport bodies in India. The present order passed against the Baseball Federation illustrates this not so healthy state of competition in sports in India.
The Competition Commission of India (“CCI/Commission”) vide its order dated 03.06.2022 has found the Amateur Baseball Federation of India (ABFI/ ‘Opposite Party’/ ‘OP’) guilty of abusing its dominant position in the “market for organization of Baseball leagues/events/ tournaments in India” but refrained from imposing any monetary penalty on ABFI.
The information was filed by Confederation of Professional Baseball Softball Clubs (“CPBSC/ ‘the Informant”) against ABFI which is recognized as National Sports Federation by Ministry of Youth Affairs and Sports, Government of India and is primarily working for the general promotion of baseball and players.
It was alleged by the informant that ABFI had abused its dominant position by issuing letter dated 07.01.2021 sent to the Presidents/ Secretaries of State Baseball Associations throughout the country prohibiting them from dealing with bodies and leagues not recognized by it and threatened a disciplinary action if any of the players took part in the leagues and tournaments not recognized by it. Further vide second letter dated 01.03.2021 it was announced to conduct the 34th Senior National Baseball Championship from 29.03.2021- 03.04.2021 at Nandyal, Kurnool in Andhra Pradesh.
It was averred by the informant that it had scheduled to organize ‘Club National 2021’ Championship in Hyderabad, India during 16.02.2021-21.02.2021 but due to the directions issued by the ABFI vide its letter dated 07.01.2021, eight clubs who were shortlisted out of the fourteen clubs who had registered for the event started withdrawing their participation due to the fear of getting banned and threats by the ABFI. Resultantly, the Informant had to cancel the ground, transportation, accommodation bookings made for the event leading to severe financial distress to it.
Further it was alleged that the motive of ABFI behind organizing this event was to sabotage the event of the Informant by scheduling it during 29.03.2021-03.04.2021 i.e. starting it just one day prior to the beginning of the Club Nationals 2021 and closing one day prior to the closing of the same.
Prima facie Opinion
Based on the above sets of facts CCI, after giving an opportunity to the ABFI to file the para-wise response to the information, vide its order dated 03.06.2021 formed its prima facie opinion that there exists a prima-facie case of contravention of the provisions of Section 4 of the Act, and accordingly directed the Director General (“DG”) to cause an investigation into the matter.
DG Investigation
For the purpose of the investigation DG delineated the relevant market as s ‘market for organization of Baseball leagues/events/ tournaments in India and noted that ABFI is the apex body for Baseball activities in India in the pyramidal structure also governing all the activities in relation to the Baseball events undertaken in India and for representation of India in any international Baseball event. Therefore, in terms of Explanation (a) to Section 4, ABFI is in dominant position in the relevant market.
Further DG held that the letter dated 07.01.2021 was not justifiable and ABFI had misused its regulatory powers by imposing such unfair and discriminatory condition on the Baseball Players which is in contravention of the provisions of Section 4 (2)(a)(i) of the Act.
Further it was also noted that restrictions placed on players from participating in the events/tournaments not recognized by ABFI/its affiliated units, limited /restricted the services of players for the organizers of other tournaments such as the Informant and such restrictive anti-competitive conditions by ABFI tantamount to contravention of the provisions of Section 4 (2) (b) (i) of the Act.
Lastly the DG held that the ABFI letter dated 07.01.2021, disrupted the growth of every stakeholder of the sports of Baseball and most importantly of the players who are the key to this entire ecosystem and such conduct is foreclosing the market of organization of Baseball tournaments/events/leagues in violation of the provisions of Section 4 (2) (c) of the Act.
CCI Findings
CCI firstly dealing with the preliminary objection raised by the ABFI that it is not an “enterprise” within the meaning of Section 2(h) of the Act held that
Thrust of the definition of the term ‘enterprise’ is on the economic nature of the activities discharged by the entities concerned. It is immaterial whether such economic activities were undertaken for profit making/ commercial purpose or for philanthropic purpose. Thus, even non-commercial economic activities would be subject to the discipline of the Act as the Act does not distinguish economic activities based on commercial or non-commercial nature thereof. In ascertaining as to whether an entity qualifies to be an ‘enterprise’, the Commission examines this aspect from a functional than a formal approach.
CCI held that looking from the functional approach it is evidently clear from the communication dated 07.01.2021 that ABFI is inter alia involved in controlling the provision of services and held that ABFI is an ‘enterprise’ within the meaning of Section 2(h) of the Act.
On the issue of the relevant market CCI noted that sport of Baseball is not substitutable by any other sport in all aspects and agreed with the DG and delineated the relevant market as “market for organization of Baseball leagues/events/ tournaments in India”.
On the issue of the dominance, CCI agreed with the finding of the DG and noted that ABFI is the Apex body responsible for nurturing the sports of baseball in India for national and international events and is also responsible for organizing the National Championships, training programs, selection in the National, International, Asian& Olympic etc. in various age categories. It also engages in supervision and assistance to the state units in their activities and sets up coaching camps for the grass root level.
Further CCI also noted that ABFI is a part of the pyramidal structure and is affiliated to World Baseball Softball Confederation (WBSC) and through WBSC to Baseball Federation of Asia (BFA). ABFI recognizes, accepts, applies observes and abides by the constitution, rules and regulations of WBSC and BFA. Regulatory powers enjoyed by ABFI including sanctioning/ disapproving proposals for organization of baseball events and subjecting players to disciplinary action, make it predominant controller of the services provided by baseball players who have less bargaining power. Additionally, there are high regulatory barriers in the sport of baseball since ABFI is the only body recognized by Ministry of Youth Affairs & Sports, Government of India, International Baseball Federation and Indian Olympic Association. Based on the above factors CCI concluded that ABFI is dominant in the relevant market.
Further in response to the plea raised by the ABFI that the communication dated 07.01.2021 was not given effect to “CCI held that once an entity is found to be dominant, it is immaterial whether the impugned restrictions were given effect to or not, as the very fact of imposition of such unfair and restrictive condition by a dominant undertaking, stands captured within the framework of Section 4 of the Act which proscribes abuse of dominant position.”
On the merits of the case CCI held that:
- ABFI by issuing communication dated 07.01.2021 to its affiliated State Baseball Associations requesting them not to entertain the unrecognized bodies and further requesting them not to allow their respective State players to participate in any of the tournaments organized by such unrecognized bodies, had violated the provisions of Section 4(2)(c) of the Act as it results in denial of market access to other associations who wish to conduct such tournaments.
- Such conduct also results in limiting and restricting the provision of services and market therefor, in contravention of the provisions of Section 4(2)(b)(i) of the Act.
- The Communication dated 07.02.2021 had further warned of strict action against the players who participate in the tournaments organized by bodies which are not ‘recognized’ by ABFI. Such conduct imposes an unfair condition upon the players and thereby falls foul of the provisions of Section 4(2)(a)(i) of the Act besides stultifying the very objective of promoting the cause of baseball in India, which a National Sports Federation is obligated to discharge.
Accordingly, CCI directed ABFI to cease and desist from indulging in future in the conduct which has been found to violate the provisions of the Act. Further on the issue of monetary penalty the Commission noted that ABFI had already withdrawn the impugned letter and to that extent the necessary market correction has already taken place. Further CCI noted the submission of the informant that it has successfully organized the 1st Edition of the tournament titled Club Nationals 2021, in Hyderabad during 08.02.2022 – 13.02.2022. 37. Hence, considering these aspects, the Commission refrained from imposing any monetary penalty upon ABFI.
COMMENT: The present order is in sync with the jurisprudence on monitoring of competition in sports bodies at National level by the CCI as in the past CCI has passed similar orders against National Sport bodies regulating Hockey, Cricket, Volleyball & Baseline, Chess. What is intriguing is that despite the plethora of such orders passed by the Commission in the past, such cases of national sport bodies, duly recognized by the Central Government, continue to arise as if theses National bodies are still ignorant of the competition law in India . In my view, there is an urgent need for CCI to organize an advocacy program with the Ministry of Youth Affairs and Sports and for the line Ministry to issue Gazette Notification prohibiting imposition of such restrictions by National sport bodies in any sport in India .
#Competition #CCI #Baseball #Exclusivity #Abuseofdominance
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