- By Chirag Saxena and Bhumi Vashisht, 2nd Year student at NLIU, Bhopal
Introduction
The muddied waters of National Sports Federations (‘NSFs’) and Competition Law are not often delved into by many. At the centre of this discussion lies the NSFs’ power to restrict the entry of other sports associations and their ability to prevent players from participating in unapproved competitions organized by rival bodies. Historically, the Competition Commission of India (‘CCI’) had approached such cases cautiously, primarily examining communications, emails, and correspondence between NSFs, players, and associations without delving directly into the standard structural policies and frameworks of these federations. This limited intervention often left deeper systemic issues unchecked.
However, in a recent landmark order, the CCI has seemingly shifted its approach by implicitly considering the broader industrial practices of NSFs. The decision significantly departs from the CCI’s earlier stance by moving beyond surface-level communications to assess the underlying Memorandum of Association (‘MoA’) policies. This development may have profound implications for the autonomy of NSFs and the rights of players, potentially setting a precedent for future cases involving anti-competitive conduct in India's sporting ecosystem.
CCI's Jurisdiction: Are Sports Federations Enterprises?
To invoke the jurisdiction of the Competition Commission of India, the entity must qualify as an enterprise under Sec 2(h) of the Competition Act, 2002. The term ‘enterprise’ is defined as a person or a government department engaged in any economic activity pertaining to production, storage, supply, distribution, control or provision of services, etc.
The definition does not focus much on the entity’s nature but rather on the activities performed. It places private individuals and government departments on the same footing, provided they engage in economic functions. Thus, the provision adopts a functional approach rather than a formalistic one, focusing on the economic nature of the activities rather than the legal personality of an entity.
Whenever the CCI initiates an investigation against a sports body, these organizations often contend that they do not fall under the definition of ‘enterprise’ and, therefore, are beyond the commission’s jurisdiction. This point has been fairly settled by the commission in various cases.
In Sh. Surinder Singh Barmi v Board of Control for Cricket (“BCCI Case”) and in Dhanraj Pillai v Hockey India, the CCI held that the nature of the activity is the key factor in determining whether an entity qualifies as an ‘enterprise’ under the Act. The CCI observed that all sports associations are enterprises if their activities lie within the realm of commerce, regardless of whether they operate on a non-profit or altruistic basis.
In the TT Friendly Super League Association v Table Tennis Federation of India and Ors (“TT Federation Case”), the Federation argued that it did not qualify as an ‘enterprise’ under the Act and thus fell out of the purview of the jurisdiction of the CCI. However, the CCI, relying on its previous rulings, observed that it is an established practice to classify sports federations as ‘enterprise’. Consequently, it is now clearly established that all NSFs can be considered enterprises.
Landmark Precedent: The TT Federation Case Unpacked
TT Friendly Super League Association (‘Informant’) first brought up the issue before the Director General (‘DG’) of the CCI by submitting information regarding the communications of the General Secretary of The Suburban Table Tennis Association (“TSTT”) to the “Notices only Master Veterans” WhatsApp group, which included players, parents, coaches, and others. The Informant also alleged that the MoA of the Table Tennis Federation of India (“TTFI”), the National Sports Federation (“NSF”) recognized by the Ministry of Youth Affairs & Sports (“MYA&S”), contained certain anti-competitive clauses.
In its order dated 12th December 2024, the CCI analysed and considered the policies and communications of the TTFI, the Suburban Table Tennis Association, etc, thereby initiating a comprehensive review of the practices in question.
TTFI was considered to be in a dominant position due to its recognition by MYA&S and the fact that other organizations are affiliated with it, further consolidating its dominance in the market.
Specifically, Clauses 24C(e), (f), (h) and 27 (a) of the MoA of TTFI restrict the organization of TT tournaments to only those conducted by an affiliated association, while Clauses 28 (a) and (b) restrict the participation of players in unapproved events. The DG found these clauses to be violative of Section 4(2)(a)(i), Section 4(2)(b)(i), and Section 4(2)(c) of the Competition Act of India.
In its objections to the Investigation Report, TTFI argued that the alleged clauses of the MoA were not anti-competitive but rather represented “standard industrial practice”. TTFI further submitted that similar practices were employed by other NSFs, such as the Board of Control for Cricket in India, All India Tennis Association, Boxing Federation of India, National Rifle Association of India, etc.
On a prima facie basis, CCI considered it reasonable for TTFI to implement certain policies and regulations to safeguard the interest of the game. However, it considered the position of an entity that was simultaneously exercising regulatory authority and commercially exploiting a sport to be in a conflict of interest and predisposed to the entity increasing its own profits. CCI observed that the MoA clauses restricted open participation by the players, reduced their opportunity for professional growth, and restricted the entry of new organizers and competitors in the market cornered by the TTFI. Therefore, CCI considered the “standard industrial practice” of adopting these clauses to be inherently anti-competitive and in violation of Section 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Act.
Setting the Standard: Analysis, Trends, and International Comparisons
In the TT Federation case, TTFI contended that the alleged clauses were a “standard industrial practice” and were not ipso facto violative of the Competition Act. In its order, the CCI refuted the contention and held such clauses as inherently anti-competitive.
Previously, in the BCCI case, the CCI took cognizance of such MoA clauses. In that case, Clause 28(b) of the BCCI MoA, which barred non-members from conducting any tournament, was held to be anti-competitive. Although the CCI considered Clause 29 as foreclosing the market, its final order did not find the clause in violation of the Competition Act. However, in the TT Federation case, the CCI shifted gears and declared that the standard industrial practice of including such clauses in their MoA violates the Competition Act.
Examining the MoA of various national sports federations, including bodies like the Boxing Federation of India (“BFI”) reveals a concerning similarity in clauses governing unaffiliated players and organizations, reflecting the issues identified in the TT Federation case.
A clear parallel can be drawn between Clause 28(a) and (b) of TTFI and Rule Y(4) of BFI, both of which prevent players from participating in unapproved tournaments i.e., tournaments organised by unaffiliated clubs or associations. Another correlation can be observed in Clauses 24C(e),(f),(h) and Clause 27 of TFFI and Rule Y(6) of the BFI, where permission to conduct tournaments is only given to those who are members of the Board and fall under its rules and regulations. The same pattern can be discerned in the MoA of National Sports Federations such as the Bowling Federation of India, the National Rifle Association of India (“NRAI”), etc.
It is an industry practice for NSFs to adopt and modify the rules and regulations of internationally recognized sports federations for their own purposes. Consequently, to gain a comprehensive understanding of the clauses in their MoA’s, it is pertinent to examine the international standards governing unaffiliated players and associations.
Considering the example of, The International Table Tennis Federation (“ITTF”) in its Division 7 of the Statutes aims for regulation and not prevention of play between affiliated and unaffiliated Athletes. As per article 1.36.3, ITTF allows the athlete to take part in competitions organized by unaffiliated associations with the prior permission of the ITTF. Furthermore, Article 1.36.6 allows unaffiliated associations to organise tournaments without actually becoming members of the ITTF with merely the consent and compliance of the ITTF Statutes. While there are certainly rules and regulations which must be complied with by these organizations, there is however no absolute ban over such activities nor is there any sort of punishment towards the players for indulging in such competitions.
NSFs such as BCCI, TTFI, BFI, NRAI, etc should similarly draft their clauses to regulate the participation of players in tournaments organized by unaffiliated associations instead of imposing outright prohibitions. By refraining from absolute bans or punitive actions, NSFs can maintain a framework that prioritizes the promotion and development of the sport over commercial exploitation.
Conclusion
The CCI, in its order in the TT Federation case, has taken a clear stand against clauses that restrict unaffiliated associations from organizing tournaments and ban players from participating in championships organized by such associations. Going away from its previous practice of merely examining the communications and notices and merely specific clauses issued by NSFs, CCI has now held the standard industrial practice to be inherently restrictive and anti-competitive. This ruling is expected to have a deeper implication for the other NSFs that have similar clauses in their MoA’s.
Associations such as BFI, which have clauses similar to those of the TTFI, would have to either modify their clauses or remove them to avoid scrutiny and potential action by the CCI in the near future. Therefore, it is suggested that these associations take inspiration from ITTF, whose regulations are drafted to ensure proper oversight but are not restrictive and anti-competitive in nature.
This order by CCI has significantly altered the legal landscape of competition law in the sports industry. NSFs must formulate their policies in a way that prioritises the promotion and development of sports without limiting the growth opportunities of players and other associations. Moving forward, the NSFs need to keep abreast of these changes and proactively revise their policies to ensure compliance with competition laws.
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