Events

The Office of Fair Trading and Horse-racing: Lessons for Other Sports

The Office of Fair Trading and Horse-racing: Lessons for Other Sports

Room G01 – Clore Management Centre,
Birkbeck College,
Torrington Square,
London WC1 7HX

Wednesday 29th June, 6pm-8pm

Given by:

David Elliott, Tom Hoehn and Eric Morrison

PricewaterhouseCoopers LLP

Synopsis

In the last decade the football industry has been the subject of a number of high profile legal actions focusing on various aspects of competition policy; notably the Office of Fair Trading’s (OFT) investigation into the collective-selling deal for television broadcasting rights between the Premier League and its members clubs, and BSkyB and the BBC. The collective selling arrangements were upheld by the Restrictive Practices Court in a 1999 judgement. Such investigations and legal actions can have very far-reaching consequences, even beyond the immediate sporting industry on which the particular investigation focused. In this seminar speakers from PricewaterhouseCoopers focus on a more recent case with equally profound implications.

For the last five years the OFT have been considering the Orders and Rules under which horse racing takes place in the UK. Final commitments are hopefully soon to be agreed. It has been the longest investigation to date under the 1998 Competition Act yet the OFT have arguably achieved nothing. Nevertheless other sports’ industries should take no comfort in this.

The OFT challenged the Orders and Rules in respect of:

  1. The right of the governing body of racing (British Horseracing Board, BHB) to organise fixtures;
  2. The right of the BHB to fix the level of prize money associated with given race qualities and types; and
  3. The right of the BHB to be the sole supplier of race and runners data to bookmakers (effectively an allegation that the BHB charged an excessive “monopoly” price to bookmakers for the right to take bets on UK racing).

In pursuing the case the OFT sought to challenge the right of horseracing to organise itself. In the view of the speakers, the OFT took a very naïve view of competition, arguing that venues were the producers, and as such should be free to set their own prices and level of output. In the OFT’s view this meant that the governing body of the sport should not be permitted to organise fixtures or determine the level of prize money.

However, the notion of who is the producer and who is the consumer in sport is much more complex. For example, in horseracing, owners, both contribute to the production of the sport, whilst comprising the largest consumer group. The key to understanding the nature of competition is to identify the “product” that is actually being consumed. Only then is it possible to determine who is the producer and who is the consumer, and whether apparent restrictions on competition imposed by a governing body are justified.

Throughout the OFT pursued the case as if it were litigation rather than an objective assessment of the merits of the Rules and Orders. Were it not for the vigorous defence mounted by the BHB and its economic, legal and public relations advisors the OFT would, in the opinion of the speakers, have destroyed racing in the UK.

In this seminar, the speakers outline why other sports should seek to draw upon the arguments made by the BHB to inform their own policies on competition policy; this being particularly important as “sport” remains very much top of the OFT agenda for “reform”.

Reading

For further details contact:

http://www.football-research.org/seminars.htm

or

Sean Hamil, Football Governance Research Centre

Email: s.hamil@bbk.ac.uk or Tel: 020-7631 6763

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