Advisory Board Notes: Stephen Ross on French Soccer and TV Rights

Jul 23 2004
Publications

The following column was originally published on www.sportcal.com

'Myopic' Ruling Focuses on Broadcasters at Expense of Fans

Soccer - 23 July 2004

By Stephen Ross and Stefan Szymanski

The recent decision by France's Conseil de la Concurrence over the exclusive sale of the television rights for French league soccer is unfortunate for sports fans.

When viewed in comparison with American competition jurisprudence, it unfortunately confirms the stereotype that European competition law has on the west side of the Atlantic of greater concern with competitors and less concern with the process of competition and the protection of consumers.

The competition regulator earlier this week published advice stating that the exclusive acquisition by a broadcaster of the television rights for the top-tier Ligue 1 could be permissible under competition law.

The regulator’s advice stated that, 'the awarding of all [rights] packages to a single operator rather than to each [of the successful bidders] would not in itself constitute a prohibited practice.'

However, basic principles of European law, reflected in Article 81(1) of the EU Treaty, prohibit competitors from getting together to restrain trade when the effect will be to raise price or otherwise harm consumers. Indeed, the consumer-oriented focus of the EU Treaty is confirmed by Article 81(3), which allows firms to restrain trade if the result is efficiency, but only if a 'fair share' of the efficiency benefits consumers.

The EU decision in the British Sky Broadcasting deal with English soccer's Premier League, and the French agreement approved this week, harms consumers by permitting collective selling that allow teams to restrict the number of games shown, and raise the price of the games that are shown to consumers.

In 1984, the U.S. Supreme Court found that a similar collective sale by major college football programs (which are immensely popular in the U.S.) raised price, reduced output, and rendered output unresponsive to consumer demand (i.e. prohibited the telecasting of some very popular games), all of which constituted 'hallmarks' of competition law violations.

The European focus, instead, has been almost entirely on concerns that soccer's powerful attraction made it difficult for rivals to compete in the UK with BSkyB or in France with Canal Plus. Even the remedy that European competition officials sought - splitting up packages to invite other bidders - gave little short-term relief to soccer fans, who would still have to pay monopoly prices.

Ironically, American consumers benefit from a special exemption from competition law passed by the U.S. Congress in 1961 at the behest of the National Football League.

The law exempts from competition law any collective sale to a free-to-air network. Collective sales to pay networks remain subject to competition law, which means they would likely be struck down. In France and the UK, though, with no exemption and enforcement authorities' myopic focus on helping competitors to BSkyB and Canal Plus instead of fans throughout their nations, consumers pay more and get less.

Stephen Ross is Professor of Law, University of Illinois. Stefan Szymanski is Professor of Economics, Tanaka Business School, Imperial College.

This article is in response to one that appeared on the sports industry website Sportcal.com in which it was revealed that exclusive acquisition by a broadcaster of the television rights for French soccer’s top-tier Ligue 1 could be permissible under competition law, according to advice published by the country’s competition regulator, the Conseil de la Concurrence.