Monti’s goal is a level playing field in sporting arena

Date: 19/10/00

By Peter Chapman

THERE was a time when the most pressing issues facing the sports world were the complexities of football's intricate offside rules or cricket's baffling 'leg before wicket' laws.

But the revolution which has transformed sport into a multi-billion-euro leisure industry has changed all that for good. Nowadays, the well-informed soccer titan or Formula One racing executive would do well to carry a copy of the EU's anti-trust rules in his back pocket. The chances are he is going to need it.

For two years, a catalogue of sports cases has clogged the in-trays of European Commission competition chief Mario Monti and his predecessor Karel van Miert. Monti's latest brush with the sporting establishment - sparked by his announcement that he intended to outlaw the current soccer transfer fee system - caused uproar.

But it is the increasing importance of television to the world of sport, not just for fans but also for executives chasing TV ratings and advertising revenue, which has become a major concern for EU anti-trust watchdogs. "The growing interdependence of sports and television is undeniable," said Monti in a recent speech. "The Commission must ensure that there are no unjustified restrictions of competition."

Monti added that his officials were especially interested in the way sports rights were sold exclusively to one broadcaster, effectively shutting out rivals. "Exclusivity lasting for one year, or for one competition, is not a problem. Exclusivity of a longer duration must, however, be examined on a case-by-case basis," he insisted.

However, he tactfully resisted the temptation to mention one key case: that of litigious Formula One supremo Bernie Ecclestone, whose sale of TV rights to the sport are under investigation.

Things get even trickier for broadcasters, the sports industry and competition watchdogs alike when a group of clubs sell rights to matches to the media collectively in order to extract more cash. The two highest-profile cases involve central marketing arrangements set up by the German Football Association (DFB) for national competitions and by UEFA for the Champions League.

"If rights are being sold collectively, then this reduces the availability of rights on the broadcasting market. The sellers are no longer competing individually to sell their rights to the broadcasters. This obviously raises potential difficulties under the competition rules," said Monti. "However, when the criteria for possible exemption are examined, the Commission can take account of the characteristics of sport, such as the need for solidarity."

In practice, this means that the Commissioner must decide whether collective selling deals are justified by the amount of cash the organisers allow to trickle down to poorer clubs - not always an easy assessment to make. But it is not just collective selling of rights which can cause competition headaches, as the issue cuts both ways. The Commission also has to step in when TV firms join forces to buy sports rights.

Problems have arisen in the Spanish market, where the rights to top local soccer leagues are a highly sought-after commodity.

Telecoms giants Telefónica and Sogecable entered an agreement on the common exploitation of football rights and notified their plans to the Commission. But Monti intervened, voicing fears that the deal would close off the pay-TV and related markets to competition from new cable and digital terrestrial operators. "I decided to take action in order to ensure that the cable and digital terrestrial competitors of Tele-fónica and Sogecable were not prevented from successfully penetrating the pay-TV market," he said.

If Monti was the manager of a top Spanish soccer club - where results matter most - he would be in no danger of losing his job. The two rival channels withdrew their complaints in July 2000 after Telefónica and Sogecable agreed to sub-licence their pay-per-view football rights to these competitors.

Telefónica and Sogecable then agreed to modify their 'audio-visual sport' agreement to put an end to the price-fixing in the broadcasting of football matches, allowing competition at the retail level.

Article forms part of a survey 'EU and the media'.