Organisers of Rugby World Cup kick competition challenge on tender process into touch

The French Commercial Court has vindicated Rugby World Cup Limited’s tender process in relation to the award of broadcasting rights for the Men’s Rugby World Cup 2023 in France. The Court held that Rugby World Cup Limited did not have a dominant position within its relevant market for competition law purposes, and in any event, even if Rugby World Cup Limited were to have a dominant position, its tender process did not amount to abuse of a dominant position.

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Facts

World Rugby acts as tournament organiser for various international rugby tournaments, including the Rugby World Cup. World Rugby has established Rugby World Cup Limited (“RWCL”) as the commercial entity which holds the commercial rights to the Rugby World Cup.

On 28 June 2021 RLWC put out an invitation to tender for the rights to broadcast in France the 2021 Women’s and 2023 Men’s Rugby World Cup (the “Rights”). The invitation to tender was sent to, amongst other potential acquirers, Métropole Télévision (“M6 Group”), who regularly acquire sports broadcasting rights in France.

M6 Group refused to partake in the bidding process alleging that the rules within the tender were unfair and discriminatory and constituted an abuse of dominant position by RWCL. M6 Group requested that the rules be modified, but RWCL refused, and RWCL subsequently awarded the Rights to TF1.

The M6 Group thereafter petitioned the Commercial Court of France to cancel the tender and requested that the Court order RWCL to organise a new tender based on transparent and non-discriminatory criteria, on pain of penalties for non-compliance.

Judgment

The judgment considered three points of law:

  • what constituted the relevant market;
  • whether RWCL had a dominant position within the relevant market; and
  • whether RWCL abused its dominant position within the relevant market.

What was the relevant market?

M6 Group stated that the award of the Rights should constitute its own market for the purposes of French competition law. That is to say, the relevant market for the purposes of the competition law analysis should be the acquisition of the broadcasting rights to the Men’s Rugby World Cup in France.

Conversely RWCL argued that the definition of the market should be the default definition set out by the French Competition Authority, specifically, “the market for the purchase of rights to broadcast sports tournaments other than football and major events over pay-tv and free to air television services” and that the sale of the Rights did not constitute a separate relevant market, as alleged by M6 Group. In its submission, RWCL also claimed that the Rights did not constitute premium rights under the conditions previously set out by the French Competition Authority in particular because Rugby World Cup matches are not in the same level of popularity as top level football matches so as to constitute key subscription drivers for pay-tv channels.

The Court in its judgement sided with RWCL. Whilst acknowledging that the Competition Authority had in the past recognised that a market for the acquisition of premium sports rights could be considered as a relevant market in its own rights for the purposes of competition law, the Court pointed to M6 Group’s failure to demonstrate that the Rights were impossible to substitute, which the Court considered to be an essential requirement if deviating from the application of the default Competition Authority definition.

Did RWCL have a dominant position in the relevant market?

M6 Group claimed that RWCL had a dominant position in the relevant market as a result of being the exclusive holder of the broadcasting rights over the Men’s Rugby World Cup 2023. M6 Group further argued that RWCL’s power on the market was made greater because the broadcasting in question (allegedly) generated unmatched viewership figures for the channels involved relative to all other sports tournaments (with the exception of football).

RWCL countered stating that it could not possibly hold a dominant position on the market for the sale of the rights to broadcast sporting events (excluding football and major event)s, owing to the many other major players on the market, some of which control rights of a value far greater than that of the Rugby World Cup. In its submissions RWCL estimated that its own market share approximately 10%.

The Court, taking into account its earlier determination on what constituted the relevant market, found that RWCL could not possibly be considered to hold a dominant market share as other entities within the market  held a market share greater than that of RWCL. In its reasoning the Court further noted that M6 Group had not disputed RWCL’s claim that it only held a 10% market share, which could not be considered significant.

Did RWCL abuse its dominant position?

M6 Group put forward numerous arguments claiming that RWCL abused its dominant position as RWCL had imposed a set of bidding rules on the free to air channels that were “unfair and discriminatory” relative to those extended to pay-tv channels. M6 Group further claimed that such unfair and discriminatory trading conditions inevitably had an anti-competitive effect and the invitation to tender should be voided under French law.

RWCL, in rebutting M6 Group’s claims, pointed out that, contrary to certain football tournaments, the terms of negotiation and sale of broadcasting rights over rugby tournaments are not regulated. RWCL stated that it is thus able to negotiate freely, even bilaterally if it sees fit, subject to complying with the French law obligations around certain matches being shown on free to air television. Whilst RWCL had a history of awarding the Rights bilaterally, on this occasion, it decided to proceed with a tender process, with bidding conducted in lots to maximise competition. The final lots were as follows:

  • Lot no.1: 21 games of the Men’s Rugby World Cup and all of the Women’s Rugby World Cup games. Lot no.1 could only be bid on by free to air channels; and
  • Lot no.2: the right to broadcast the remaining 27 games of the Men’s Rugby World Cup. In the event this lot was won by a pay-tv channel, the pay-tv channel would also receive the non-exclusive right to broadcast the matches awarded in lot no.1, jointly with the winner of lot no.1.

RWCL argued that the difference in treatment between pay-tv and free to air channels with respect to lot 2 was not unfair and / or discriminatory. RWCL, amongst other arguments, stated that:

  • allocation of the rights was not discriminatory since pay-tv channels and free to air channels were not in the same position to begin with, due to the requirement to comply with France’s regulatory requirements as to what matches should be on free to air television, which justified a difference in the way they were treated, and such difference in treatment did not result in a disadvantage to the free to air channels;
  • the free to view channels were not discriminated against since the economic value of lot no. 2 was equivalent for free to air and pay-tv channels due to the different underlying audiences and methods of assessment of the bids. The Court noted that the audience size criterion was given a weighting of 80% when it came to assessing the bids, which, instead of discriminating against free to view channels, tended to favour bids from free to view channels;
  • the subdivision of the bidding process into packages did not constitute an abusive discrimination but an attempt to take into consideration the respective expectations of the pay-tv and free to air channels, as is typical within the industry when allocating the rights to broadcast sports tournaments.

The Court was not obliged to consider whether RWCL had abused its dominant position having already found that RWCL did not have a dominant position in the first place but chose to consider the merits of the parties’ arguments in any case. The Court sided with RWCL and stated that the terms governing the allocation of the rights were neither discriminatory, nor unfair, since the pay-tv and free to air channels were not placed in an equivalent position to begin with due to France’s regulatory requirements which necessitated the granting of different rights. The Court held this justified a difference in treatment in the tender process and such difference in treatment did not result in imposing a disadvantage on free to air channels, as the economic value of the lots were equivalent for the free to air and pay-tv channels.

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