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Competition Appellate Tribunal sets aside CCI’s penalty order against BCCI

MUMBAI: The Competition Appellate Tribunal (COMPAT) has set aside a Competition Commission of India (CCI) order against cricket’s governing body Board of Control for Cricket in India (BCCI) for alleged abuse of dominance, saying the regulator relied on ‘legally unsustainable’ information downloaded from the internet for nailing the board.

In its order passed in February last year, the CCI had imposed a penalty of Rs 52.24 crore on the BCCI after finding it guilty of indulging in anti-competitive practices in organisation of the Indian Premier League (IPL).

Stating that the BCCI had abused its dominant position, the CCI had also directed it to ‘cease and desist’ from any practice in future that denies market access to potential competitors. The order had followed a complaint filed by an individual against the BCCI way back in November 2010.

The BCCI later challenged the CCI’s directive before COMPAT, which has now set aside this order and remitted the case to the Commission ‘for fresh disposal’.

“The finding recorded by the Commission on the issue of abuse of dominance is legally unsustainable and is liable to be set aside because the information downloaded from the net and similar other material do not have any evidentiary value and, in any case, the same could not have been relied upon by the Commission without giving an effective opportunity to the appellant (BCCI) to controvert the same,” COMPAT stated.

Earlier in its order, the CCI had said that “the abuse by the 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.”

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

The complaint against the BCCI was referred in December 2010 to the CCI’s director general, the investigating arm of the fair trade regulator.

During probe, the BCCI had contended that it was a ‘not-for-profit’ society for the promotion of sport of cricket and its activities are outside the purview of the Competition Act.

Rejecting the CCI’s findings, COMPAT has ruled that the regulator’s argument with regard to the media agreement was “also vitiated due to breach of principles of natural justice because the same was neither referred in the order passed by it nor the DG recorded any finding qua its validity or otherwise and on this count the appellant did not get an opportunity to defend the said clause”.

In a 46-page order passed yesterday, COMPAT observed that the CCI had relied upon TRP ratings from a website and on news reports relating to the price of advertisement slots during a screening of the movie ‘3 Idiots’ and general entertainment programmes such as ‘Saath Nibhana Saathiya’, compared to the advertisement slots during the IPL.

They had also depended on news reports showing an increase in revenue market share of SET Max from pre-IPL to post-IPL, an industry body report on media and entertainment in order to show that sports viewership needs increase in India, as well as TAM ratings to compare viewership of various sports events like the Cricket World Cup, Olympics, and FIFA World Cup.

“This question must be answered in negative and there are two reasons for doing so,” COMPAT said in a strongly worded order.

“In the first place, the Secretary of the Commission has virtually admitted that the Commission relied on the so-called information available in public domain without disclosing the same to the appellant.

“In my view, the Commission’s failure to disclose the information/material proposed to be used by it for arriving at a finding on the issue of abuse of dominance and give an opportunity to the appellant to explain/controvert the same has not only resulted in violation of the principles of natural justice but also occasioned failure of justice.

“Secondly, the so-called information available in the public domain could not have been used by the Commission because no one had appeared in the witness box to prove the same,” COMPAT chairman GS Singhvi said in his order.

“The information downloaded by the Commission from the internet and other similar sources can, at best, be compared with newspaper report and it has been consistently held by the Supreme Court that such reports have no evidentiary value without further proof,” he added.

The COMPAT also said that the CCI was “expected to hear the appellant in the context of objections/suggestions filed in the context of the findings recorded by the director general.

“If the Commission wanted to differ with the director general on the issue of ‘relevant market’, then it should have given notice spelling out its intention to do so and give an opportunity of hearing to the appellant [BCCI], which was admittedly not done.

“Therefore, there is no escape from the conclusion that the finding recorded by the Commission that Organisation of Private Professional Cricket League/Events in India is the ‘relevant market’ is vitiated due to violation of the rule of audi alteram partem [let the other side be heard as well].”