Joint selling of French Rugby's TV rights: A review of the recent competition law cases

Published 07 June 2016 By: Grégory Basnier


The ability of a sport competition to attract a high number of viewers and pay TV subscribers can change over time and see a significant improvement. This is of course a good thing for rights holders but it may also oblige them to change the way they sell their media rights to comply with the competition law rules. Two recent cases before the French competition authority regarding domestic rugby union TV rights illustrate this dynamic.

The competition law rules prohibit agreements that restrict competition (Article 101 Treaty on the Functioning of the European Union (TFEU)) and behaviour that amounts to an abuse of an undertaking’s dominant position. Both prohibitions can be relevant to the sale of media rights to sports events, as described below.

Joint selling refers to the situation where clubs do not sell media rights to the matches they play in individually, but through a single point of sale, generally the national federation or the league/tournament organiser.

In three decisions regarding football (UEFA Champions League,1 Bundesliga2, FA Premier League3) the European Commission took the view that joint selling constituted a breach of Article 101 TFEU since it prevents clubs from competing in terms of prices, innovation and products offered. In addition, the conclusion by rights holders of exclusive contracts for a long period of time may create a situation where a single buyer of content would be able to prevent its rivals from maintaining a competitive offer in the downstream TV markets on which they compete for subscribers/viewers.

However, joint selling also creates efficiencies as, among other things, it reduces the transaction costs associated with the sale of media rights and allows the creation of uniform league products. Anyone wanting to replicate such products under a scenario where each of the clubs sells their rights individually would have to conduct multiple negotiations/contracts etc. Joint selling arrangements were consequently accepted by the Commission in these cases but subject to certain binding “commitments” aimed at reducing their negative effects, notably so that: the rights must be sold through a non-discriminatory and transparent tender procedure, in several packages and for a limited period of time. In the FA Premier League case, it also gave a commitment that no one buyer would acquire all of the live TV rights packages on offer. These remedies are designed therefore to ensure that broadcasters are able to compete on a regular basis for the acquisition of rights.

These concerns are relevant and these remedies must be applied insofar as sports competitions that are key drivers for audiences and subscriptions (for pay-TV) are concerned. They are called premium rights. Football is clearly a premium content but for other sports the level of viewers’ interest may change over time. This raises a question: when does a sport competition become premium so that rights holders should apply the remedies designed by the European Commission to avoid competition law difficulties? This question arose in two decisions of the French competition authority4 (the “Authority”) regarding rugby TV rights (dated July 20145 and March 20166).


The French rules regarding the ownership and joint selling of sports media rights

In France, the Code du Sport (sport law code) provides that sports federations are the owners of the media rights for their sport.7 However they can decide to transfer the ownership of these rights to the clubs.8 In this case, the professional league must sell the media rights through an open and transparent tendering process; they must be packaged and sold for a maximum period of four years.9 In other words, the remedies imposed by the European commission in its decisional practice for the joint selling of football media rights have been broadly incorporated in the provisions of the Code du Sport. However, the application of these provisions is not determined by the qualification of a sport competition as premium content, but by the transfer of the ownership of the media rights to the clubs and the existence of a professional league.

As of today, the French football federation is the only federation in France that has transferred the ownership of its rights to clubs for the 1st and 2nd men divisions (Ligue 1 and Ligue 2). The other federations in France that have created a professional league for a major sport (rugby, basketball, handball, volleyball) have decided to retain ownership of their media rights. Therefore the professional leagues sell the media rights on behalf of these federations. This is the case of the French Rugby Federation who delegated the commercialization of the media rights for the 1st (TOP 14) and 2nd (ProD2) men divisions to the league (“LNR”).

The French competition authority’s past decisional practice regarding rugby TV rights

Before the two decisions described below, the Authority distinguished in its decisional practice six different relevant product markets for sport media rights acquisitions:

  1. the national football first division market (Ligue 1);
  2. the market for annual football championships involving French teams (Ligue, UEFA Champions League and UEFA Europa League);
  3. the market for the most attractive foreign football championships;
  4. the market for other football competitions;
  5. the market for events of major importance other than football; and
  6. the market for sport competitions other than football and events of major importance (or “other rights”).

The latter consists of all non-premium rights. The non-premium rights market thus brings together a heterogeneous set of rights in attractiveness and value. Rugby media rights formed part, with other sports, of this market and thus were considered as non-premium.

To sum up the background before the two decisions described below: the mandatory provisions of the French Code du Sport did not apply to the LNR, and French rugby TV rights had never been qualified by any competition authority as being premium. Therefore the LNR probably did not expect to have any legal obligation to sell either the TOP 14 or the ProD2 media rights through a specific process.


The decision regarding the TOP 14 TV rights (July 2014)

In December 2013, after the failure of negotiations with Canal Plus on the upgrading of the Top 14 TV rights, the LNR decided to withdraw from the contract with Canal Plus before its date of termination. This contract was signed on 18 December 2011 for five seasons (2011/2012 until 2015/2016) and included an early termination option at the end of the third season (2013/2014).

Consequently, it announced the launch of a call to tender for the award of the rights for the following four seasons (2014/2015 to 2017/2018). In reaction, Canal Plus filed several law suits and, in particular, applied to the presiding judge of the Tribunal de Grande instance de Paris for a motion to issue an interim injunction requiring a suspension of the call to tender.

The LNR interrupted the call to tender on 10 January 2014, without awaiting the court judgement. Then, on 14 January 2014, it granted entire and exclusive rights for five seasons (2014/2015 to 2018/2019) to Canal Plus, after negotiating a private agreement. In March 2014, beIN Sports, a new but powerful entrant on the market for the acquisition of sports TV rights, complained about the conditions under which these rights had been granted.

In a decision dated 30 July 2014, the Authority considered that in the current state of its investigations, the deal described above and the ways through which it was negotiated and subsequently entered into were liable to reveal an anti-competitive agreement between the LNR and Canal Plus and an abuse of dominant position by the LNR. The Top 14 rights had become particularly attractive due to the interest in this competition manifested by subscribers and the large audiences it attracts. Rugby was the third most popular sport, after football and tennis, in terms of TV viewers, Canal Plus accepted to pay an average of 71 million euros per season for the rights and the TOP 14 was the second most important driver of subscriptions for Canal Plus just after the Ligue 1 but before the UEFA Champions League.

According to the Authority, all these factors showed that rights to the championship were liable to be defined as premium rights and should be marketed under transparent and non-discriminatory conditions, in accordance with case law. Canal Plus’ competitors were unable to participate in the assignment of rights to the Top 14 and would not have had the option of access, in whole or in part, to these attractive rights for a period of five years.

The Authority decided to order interim measures, finding that there had been a serious and immediate attack on the pay television sector and on consumers' interests. Allocating the entirety of the rights to the TOP 14 for five years to Canal Plus would have had the effect of reserving the matches in this competition to viewers able to afford to subscribe to a service costing 40 euros per month and denying even partial access to rebroadcasts to interested consumers who were paying a mid-range subscription of about 12 euros per month (the subscription price offered by beIN Sports).

The Authority was also motivated by a concern that the situation could damage the development of beIN Sports, a new entrant, who could potentially drive competition in sports programmes on subscription television. Consequently, while awaiting a judgement on the substance of the case, the Authority enjoined Canal Plus and the LNR to suspend the agreement entered into on 14 January 2014 and to proceed as soon as possible with a new tender of broadcasting rights for the 2015/2016 and following seasons. Following the conclusion of this new bidding process in January 2015, the LNR announced that Canal Plus has retained the broadcast rights to the TOP 14 in a deal worth €74 annually for four years (2015/2016 until 2018/2019).10


The decision regarding the ProD2 TV rights (March 2016)

In December 2014, the LNR launched a call to tender for the acquisition of the TV rights for the second tier men’s rugby competition, Pro D2, for the 2015/2016 to 2019/2020 seasons. Following three rounds of negotiation, Canal Plus and Eurosport were awarded the rights for a total of 31 million euros.11

The third and rejected applicant, Ma Chaîne Sport (“MCS”) filed a complaint before the Authority. It claimed it was excluded on an unjustified basis from the selling process as a result of both a cartel between Eurosport, Canal Plus and the LNR, and an abuse of dominant position from the LNR on an alleged market for the acquisition of “semi-premium” sport TV rights. In particular, MCS claimed that the LNR choose the lowest financial offer: a “non-exclusive” option whereby the rights of the ProD2 were shared between two broadcasters having higher audiences than MCS.

The TV rights for the Pro D2 were also part of the sport “other rights” market before this decision. However, MCS claimed that these rights should belong to a new and different market of “semi-premium sport rights” that, without combining together all the criteria used to identify premium rights, are sufficiently attractive to be of interest to premium channels. This claim was mainly based on the fact that the ProD2 rights attracted a higher selling price than the average prices in the non-premium market, thus reflecting its higher capacity to attract viewers and subscribers.

In a dismissal decision dated 23 March 2016, the Authority considered that relying on a sole criterion, namely a higher selling price than the average prices in the non-premium market, was not sufficient to change the relevant market to a premium or even a semi-premium one. Rather, a robust analysis should be carried out to determine whether or not those non-premium rights are real substitutes from the broadcasters’ point of view. Since MCS had not provided any such analysis its complaint was unfounded and rejected.


How useful are these decisions for other sports rights holders?

The set of objective criteria developed by the Authority is not relevant for sports rights holders when:

  1. the legal framework of a country either already provide for a regulatory definition of what is a premium content or impose in all cases remedies such as those identified by the European commission in its past decisional practice; or
  2. their sport media content has already been the subject of a competition law investigation.

In these cases, there should be no doubt for sports rights holders as to whether they are in a situation where they must sell their rights through an open and transparent tendering process, with a packaging system and for a limited period of time to comply with the competition law rules

For other countries/sports, these criteria may be useful in helping the rights holders to determine how to sell their rights:

  • In the first decision, the Authority set four criteria to be met to decide on the premium qualification, using precise figures:
  1. key sales driver for TV subscription;
  2. high audiences;
  3. value over 10 million euros per season; and
  4. competition characteristics (level and regularity).

Therefore sports rights holders should carefully look at the subscription, viewers, market price figures and the characteristics of their competition before starting their negotiations with broadcasters. This being said, the appreciation may change from one national market to the other. In this regard, the figures taken into account in these decisions may perhaps serve as a reference but other figures may of course be more relevant in other countries given their specific context.

  • In the second decision, the Authority considered that a higher selling price than the average prices of all the non-premium rights was not sufficient to qualify the sport competition concerned as a semi-premium product.


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Grégory Basnier

Grégory Basnier

Grégory Basnier is a member of the Paris Bar (Avocat à la Cour). He provides legal advice and litigation assistance in a number of business law areas and in administrative law/regulatory issues, including in the sport sector. In relation with sport, he intervenes by providing legal assistance to players, agents, clubs and stakeholders at the federal level. He is also a member of sports federations’ disciplinary and regulations panels.

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