Joint selling of French Rugby's TV rights: A review of the recent competition law cases

The ability of a sport competition to attract a high number of viewers and pay TV subscribers can change over time and see a significant improvement. This is of course a good thing for rights holders but it may also oblige them to change the way they sell their media rights to comply with the competition law rules. Two recent cases before the French competition authority regarding domestic rugby union TV rights illustrate this dynamic.

The competition law rules prohibit agreements that restrict competition (Article 101 Treaty on the Functioning of the European Union (TFEU)) and behaviour that amounts to an abuse of an undertaking’s dominant position. Both prohibitions can be relevant to the sale of media rights to sports events, as described below.

Joint selling refers to the situation where clubs do not sell media rights to the matches they play in individually, but through a single point of sale, generally the national federation or the league/tournament organiser.

In three decisions regarding football (UEFA Champions League,¹ Bundesliga², FA Premier League³) the European Commission took the view that joint selling constituted a breach of Article 101 TFEU since it prevents clubs from competing in terms of prices, innovation and products offered. In addition, the conclusion by rights holders of exclusive contracts for a long period of time may create a situation where a single buyer of content would be able to prevent its rivals from maintaining a competitive offer in the downstream TV markets on which they compete for subscribers/viewers.

However, joint selling also creates efficiencies as, among other things, it reduces the transaction costs associated with the sale of media rights and allows the creation of uniform league products. Anyone wanting to replicate such products under a scenario where each of the clubs sells their rights individually would have to conduct multiple negotiations/contracts etc. Joint selling arrangements were consequently accepted by the Commission in these cases but subject to certain binding “commitments” aimed at reducing their negative effects, notably so that: the rights must be sold through a non-discriminatory and transparent tender procedure, in several packages and for a limited period of time. In the FA Premier League case, it also gave a commitment that no one buyer would acquire all of the live TV rights packages on offer. These remedies are designed therefore to ensure that broadcasters are able to compete on a regular basis for the acquisition of rights.

These concerns are relevant and these remedies must be applied insofar as sports competitions that are key drivers for audiences and subscriptions (for pay-TV) are concerned. They are called premium rights. Football is clearly a premium content but for other sports the level of viewers’ interest may change over time. This raises a question: when does a sport competition become premium so that rights holders should apply the remedies designed by the European Commission to avoid competition law difficulties? This question arose in two decisions of the French competition authority⁴ (the “Authority”) regarding rugby TV rights (dated July 2014⁵ and March 2016⁶).

The French rules regarding the ownership and joint selling of sports media rights

In France, the Code du Sport (sport law code) provides that sports federations are the owners of the media rights for their sport.⁷ However they can decide to transfer the ownership of these rights to the clubs.⁸ In this case, the professional league must sell the media rights through an open and transparent tendering process; they must be packaged and sold for a maximum period of four years.⁹ In other words, the remedies imposed by the European commission in its decisional practice for the joint selling of football media rights have been broadly incorporated in the provisions of the Code du Sport. However, the application of these provisions is not determined by the qualification of a sport competition as premium content, but by the transfer of the ownership of the media rights to the clubs and the existence of a professional league.

As of today, the French football federation is the only federation in France that has transferred the ownership of its rights to clubs for the 1^st and 2^nd men divisions (Ligue 1 and Ligue 2). The other federations in France that have created a professional league for a major sport (rugby, basketball, handball, volleyball) have decided to retain ownership of their media rights. Therefore the professional leagues sell the media rights on behalf of these federations. This is the case of the French Rugby Federation who delegated the commercialization of the media rights for the 1^st (TOP 14) and 2^nd (ProD2) men divisions to the league (“LNR”).