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Competition Commission fines penalty on BCCI for market abuse

Competition Commission fines penalty on BCCI for market abuse

The BCCI has been slapped with a penalty of Rs 52.24 crore © Getty Images

New Delhi: Feb 8, 2013

Fair trade regulator Competition Commission on Friday said held that the Indian cricket board (BCCI) indulged in anti-competitive practices and slapped a penalty of Rs 52.24 crore on it.

Observing that BCCI abused its dominant position, the Competition Commission of India directed it to “cease and desist” from any practice in future denying market access to potential competitors, including inclusion of similar clauses in any future agreement.

“…the abuse by BCCI was of a grave nature and the quantum of penalty that needs to be levied should be commensurate with the gravity of the violation,” CCI said in an order on Friday.

The fair trade regulator has imposed a penalty of Rs 52.24 crore on BCCI.

The complaint was filed by a city-based individual, Surinder Singh Barmi against BCCI in November 2010. His allegations were based on issues related to the Indian Premier League (IPL) and a professional cricket league tournament conducted by BCCI.

Among others, the complainant had alleged irregularities in the grant of franchise rights for team ownership, media rights for coverage of the league and award of sponsorship rights.

Noting that BCCI’s economic power is enormous “as a regulator that enables it to pick winners”, the regulator said the cricket board has gained tremendously in financial terms from the Indian Premier League (IPL) cricket format.

“Virtually, there is no other competitor in the market nor was anyone allowed to emerge due to BCCI’s strategy of monopolising the entire market,” the order said.

The policy of BCCI to keep out other competitors and to use their position as a defacto regulatory body has prevented many players who could have opted for the competitive league, it added.

“The dependence of competitors on BCCI for sanctioning of the events and dependence of players and consumers for the same reason has been total. BCCI knowing this had foreclosed the competition by openly declaring that it was not going to sanction any other event,” CCI said.

The Commission observed that BCCI undermined the moral responsibility of a custodian and defacto regulator.

However, it said that BCCI in their submissions have claimed that the funds of IPL have been re-ploughed in developing the game. On account of this, the regulator said that it considers “appropriate that the penalty of six per cent of average annual revenue of BCCI for past three years”.

Thus, the penalty amount works out to Rs 52.24 crore, which is to be deposited within a period of 90 days from the date of receipt of this order.

The complaint against BCCI was referred to the Commission’s Director General (DG) in December 2010. DG is the investigating arm of the fair trade regulator.

During investigation, BCCI contended that it is a ‘not-for profit’ society for the promotion of sport of cricket and its activities is outside the purview of the Competition Act, according to the order.

Besides, BCCI had submitted that its commitments are neither driven by nor conditional upon commercial considerations.

However, the DG concluded that though BCCI is a society and supposed to be a non-profit organisation, “its activities related to IPL such as grant of franchise rights, media rights and other sponsorship rights, where huge revenue is involved, are different from so called non-profit activities.

“These activities fall in the commercial sphere and the whole tendering process for such rights is motivated by profits”.

The DG submitted the report to the Commission in February 2012. According to the regulator, full opportunity was given to both BCCI and the complainant for perusal.

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