CCI slaps Rs 52.24 cr penalty on BCCI

Watchdog says cricket board violated competitive laws on IPL rights issue

The competition watchdog, Competition Commission of India (CCI), has slapped a penalty of Rs 52.24 crore on the Board of Control for Cricket in India (BCCI) for irregularities in organisation of Indian Premier League (IPL).

CCI has found BCCI guilty of contravention of Section 4(2)(c) of the The Competition Act, 2002 and imposed the penalty of 6% of the average annual revenue of BCCI for past three years.

Pulling up BCCI for anti-competitive practices, CCI has asked the cricket board to delete the violative clause 9.1(c)(i) in its Media Rights Agreement, which says “BCCI represents and warrants that it shall not organise, sanction, recognise, or support during the Rights period another professional domestic Indian T20 competition that is competitive to the league”.

When contacted, a top BCCI official said that they will appeal against the order.

In its order, passed today, CCI has directed BCCI to cease and desist from any practice in future denying market access to potential competitors, including inclusion of similar clauses in any agreement in future.

It has also asked the cricket body to desist from using its regulatory powers in any way in the process of considering and deciding on any matters relating to its commercial activities. To ensure this, CCI said that BCCI will set up an effective internal control system to its own satisfaction, in good faith and after due diligence.

CCI observed that 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. “The Commission has to keep in mind the nature of barriers created and whether such barriers can be surmounted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers,” it said.

In strong words, CCI further stated that BCCI’s economic power is enormous as a regulator that enables it to pick winners. “BCCI has gained tremendously from IPL format of the cricket in financial terms. 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 policy of BCCI to keep out other competitors and to use their position as a de facto regulatory body has prevented many players who could have opted for the competitive league.”

CCI had directed its director general (DG) to investigate in to the complaint filed by a cricket fan on December 9, 2010. The informant, Surinder Singh Barmi, had levelled allegations that in organising the IPL, there were irregularities in the grant of franchise rights; grant of media rights; and award of sponsorship rights and other local contracts.

CCI has asked BCCI to comply by the order with in 90 days.