Competition law bites into Spanish football broadcastingKevin Carpenter
Increasing intervention by competition regulators and courts around the world in the sports industry means there is little doubt that competition law has a significant role to play in shaping sport policy and the sporting legal landscape in the future. Nowhere has this been felt more keenly than in Spain with football broadcasting rights.
Back in 1995 football clubs began to negotiate and sell their games independently from the Spanish La Liga (first division). This meant that wholesalers could begin to pool TV rights before selling them on. Spain's National Competition Commission ('CNC') first became interested in this practice in 2006 following a pooling agreement between two wholesalers which was notified as a merger. Having looked into it the CNC believed it was a horizontal agreement that could hinder competition and constitute an infringement of Article 1 of the Spanish Competition Act, (based on Article 101 Treaty on the Functioning of the European Union which prohibits anti-competitive behaviour).
A formal investigation followed in 2008 looking at other similar agreements between various wholesalers and the clubs that had agreed to these exclusive contracts. The CNC concluded by a Resolution of 14 April 2010 that the pooling agreements led to market sharing agreements between the parties that allocated the supply of both the pay and free TV markets amongst themselves. As a consequence fines were handed down to wholesalers ranging from €25,000-€150,000. Also, following the decision of the European Commission in Case 37.398, Joint selling of the commercial rights of the UEFA Champions League (OJ 2003 L 291/25), the CNC said that future agreements to pool broadcast rights for resale would be considered automatically anti-competitive if the terms exceeded three years as this restricted competition in the content acquisition market and in the downstream resale and exploitation markets.
A further aspect of the CNC’s Resolution required undertakings that had participated in the banned agreements, both wholesalers and clubs, to cease their conduct and refrain from repeating it in the future. However, following an investigation into compliance with these requirements, on 3 May 2012 the CNC handed down a further Resolution finding that Mediapro (a wholesaler) and three La Liga clubs, including FC Barcelona, had failed to comply by subsequently signing contracts for the acquisition of football broadcasting rights which kept the rights out of the market for more than three seasons. Formal proceeding were brought on 10 May 2012 instructing a six month investigation before the end of which the CNC will make its decision.
This on-going case is set against the backdrop of a wider political and sporting debate about the financial health of Spanish football. The majority of clubs, other than Barcelona and Real Madrid, are in financial dire straits primarily due to this system of individual negotiation of TV rights which means that Real and Barca currently take about half the total revenues paid of around €641m. This is justified on the basis of the worldwide popularity of the two clubs but does of course has a severe adverse effect on the on-field competitiveness of the league. The other clubs have approached the European Parliament for help, and they are considering a motion to pressure La Liga to move to a system of collective bargaining, in line with other major leagues including the Premier League, which would mean the money was distributed more fairly.
And I thought the Premier League was unfair and becoming dull, I should be thankful I don't support Real Zaragoza...
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About the Author
Kevin is a advisor and member of the editorial board for LawInSport, having previously acted as editor. In his day-to-day work he has two roles: as the Principal for his own consultancy business Captivate Legal & Sports Solutions, and Special Counsel for Sports Integrity at leading global sports technology and data company Genius Sports.