August 2012 – The Turkish Competition Board recently published its decision on the match-fixing activities of some of Turkey’s football clubs, a scandal that has gripped the Turkish public over the past year. According to the Board, match-fixing is not subject to competition legislation.
The Turkish Competition Board (the “Board”) recently (on 21 June 2012) made public its reasoned decision (the “Decision”) on the match-fixing activities of some of Turkey’s football clubs, a scandal that has gripped the Turkish public since last year. In contradiction of the claims of the third party that brought the case before the Board, the Board has decided by a majority that these activities do not fall within the scope of Law no. 4054 on Protection of Competition (the “Law”). The Board followed an interesting approach in reaching this ruling. It first made a distinction between activities with and without a direct economic aspect; it then decided that purely sporting activities (such as football matches) constitute an example of the latter type of activities. Under this approach, the Board concluded that match-fixing could not be regarded as an agreement restricting competition at the economic level, but rather, would only violate the sport’s ethical rules. Therefore, match-fixing, according to the Board, should not be the subject of evaluation under competition legislation. Two Board members opposed the decision with a long dissenting opinion (which is almost three times longer than the actual decision) that clearly emphasises the economic aspects and value of the football sector.
Background
In 2011, Turkish football fans and media were shaken by match-fixing accusations against prominent directors and players from major football clubs in Turkey. Since then, many of these directors and players have been tried before the criminal courts and some have been found guilty. The alleged activities included match-fixing agreements and incentive payments between football clubs and/or football players in order arrange the fixing of the football matches, to their own or a third party’s advantage. The issue was brought before the Board for evaluation according to competition legislation. The party that brought the case claimed that the match-fixing activities constituted agreements restricting competition within the scope of Article 4 (Agreements, Concerted Practices and Decisions Limiting Competition) of the Law.
The Board’s assessment
The Board bases its assessment of the case on whether the football clubs could be regarded as “undertakings” (which have to comply with competition law). The Law defines “undertakings” as “[n]atural and legal persons who produce, market and sell goods or services in the market, and units which can decide independently and constitute an economic whole”. Although the Board acknowledges that it has identified sports clubs as undertakings in various precedents, it argues that whether or not an entity constitutes and undertaking should be evaluated within the scope of its subject matter activities. In other words, an entity may be regarded as an undertaking to the extent that it carries out economic activities. In this respect, football clubs may be regarded as undertakings only within the scope of their economic activities (such as the marketing of broadcasting or sponsorship rights, match ticket sales, and football player transfer agreements). Following this approach, the Board argues that football clubs cannot be regarded as undertakings within the scope of their football match activities due to the lack of a direct economic aspect.
The Board bases its argument on the grounds that sporting activities do not involve the production, sale or marketing of a product and therefore do not have any direct economic impact. The Board supports its arguments by referring to its own precedents1 as well as a number of EU decisions and judg ments2 concerning the football sector. The subject matter of these precedents include the transfer of broadcasting rights to football matches, player transfers and match ticket sale arrangements. The Board emphasises that these decisions all dealt with activities which directly affected the relevant undertakings’ economic activities. On the other hand, the Board also acknowledges the impact of success in football matches on ticket sales, player transfers, and the sale of advertising and sponsorship rights.
However, it states that, unlike in the above-mentioned precedents, the economic success brought by success in football matches is indirect. In other words, the indirect economic expectations of sports players and clubs attached to the football matches and the indirect economic impact of these football matches do not suffice to classify the football clubs as undertakings within the scope of competition legislation. The Board concludes its arguments by stating that applying competition law processes to purely sporting activities which are the subject matter of sports competitions and sports ethics would conflict with the scope and purpose of the Law.
In giving the Decision, the Board has therefore decided that match-fixing activities should not be the subject of evaluation within the Law.
The Dissenting Opinion
Two Board members opposed the Decision and appended their dissenting opinion (the “Dissenting Opinion”) to the end of the Decision. The Dissenting Opinion not only sets forth counter-arguments to the Board’s position but also provides a detailed insight into the football market and its economic aspects. The Dissenting Opinion aims to reveal the direct link between football matches and their economic value in the football sector.
The Dissenting Opinion first presents a general economic outlook on the football sector. It dwells upon the industrialisation of the football sector and corporatisation of the football clubs. It highlights the fact that shares in many major Turkish football clubs have been listed on the Istanbul Stock Exchange, which clearly shows that the main objectives of the football clubs is to maximise profits and income. The Dissenting Opinion also lays down the basic rule that the football clubs’ earnings depends on their sporting success, and defines this as the “success cycle of football”. In order to illustrate the economic value of the sector, the Dissenting Opinion also emphasises the size of the football market both in Turkey and in Europe. The Dissenting Opinion adds that given the high economic value of today’s football market, it can be regarded as an industry.
In light of the foregoing, the Dissenting Opinion emphasises the direct link argument between the football games and their economic aspect by referring to the “success cycle of football”. It further argues that since a football club cannot generate revenue without football matches, the direct link between sporting success and economic success has been disregarded by the Board. The Dissenting Opinion also acknowledges that match-fixing activities can deny some football clubs the chance of moving to higher leagues and generating more income from advertisement, TV and Internet broadcasting and other related activities.
The Dissenting Opinion concludes that sporting activities should be regarded as economic activities. Sports clubs competing in sporting activities are actually competing at the economic level. In this regard, the Dissenting Opinion refers to the European Court of Justice’s Christelle Deliége decision3. This decision required that the concept of economic activity should be interpreted broadly in order to include even amateur sports players, as long as they create revenue by sporting activities. Therefore, such sporting activities should be regarded as economic activity. Contrary to the Decision, the Dissenting Opinion concludes that the subject matter of match-fixing activities should fall within the scope of the Law.
Conclusion
There is no doubt that football matches provide a certain platform on which to engage in economic activities in various ways. The never-ending interest in football makes this market more lucrative each day, which makes it harder to deny its economic aspects. It seems that the Board has very carefully drawn a line stipulating those activities which would fall within its scope of review. It further seems that it has done this in order to avoid the controversy that an investigation into the matter would bring.
However, we believe that this thin line fades away in the light of the arguments within the Dissenting Opinion. Furthermore, the bill of indictment prepared by the Istanbul Chief Public Prosecutor’s Office4 on the match-fixing activities includes reference to the financial losses incurred by some teams and the financial gain accrued to certain football clubs as a result of these activities ‑ this appears to refute the Board’s “no direct link” argument.
The Decision has been criticised in the press. Some observers have also drawn attention to the contradiction between the Decision (which finds no economic aspect in the subject matter activities) and the bill of indictment (which implies otherwise). The reasoning of the Law stipulates that competition rules should be applicable to all undertakings engaged in economic activities and to all economic areas. As mentioned in the Dissenting Opinion, this requires a broad interpretation of the scope of the Law. Within this framework, we are of the view that the football market (given its high economic value) ought to fall within the parameters of Turkey’s competition legislation.
For more information please contact Halide Çetinkaya Yılmaz, Partner, at .
Source: e-Competitions, N°48240, www.concurrences.com
1 Teleon decision, no. 05-61/900-243 of 26.9.2005; TFF decision, no. 02-44/525-218 of 18.7.2002.
2 UEFA Champions League case, COMP/37.398; Bundesliga case, COMP/37.214; FAPL case, COMP/C-2/38.173; UEFA v. Jean Marc Bosman case, C-415/93;C-519/04P David Meca Medina and Igor Majcen v. Commission [2006] ECR I-6991.
3 C-51/96 and C-191/97, Deliège v. Ligue de Judo [2000] ECR I-2549.
4 Bill of indictment dated 2.12.2011 and numbered 2011/598.