Volume: 16 Issue: 1
The German Federal Cartel Office (Bundeskartellamt) announced on 21 December 2017 that it is conducting an administrative proceeding against the German Olympic Sports Confederation (‘DOSB’) and the International Olympic Committee (‘IOC’) over concerns that the application of advertising rules under Rule 40 of the Olympic Charter restricts competition for athletes and sponsors in Germany, and that the DOSB and IOC are abusing their dominant position.
The specific provision of Rule 40 of the Olympic Charter that Germany’s competition regulator suspects to be in violation of competition law is Bye-law 3, which prevents any athlete competing in the Olympic Games from allowing their person, name, picture or sports performances to be used for advertising purposes, both during the Olympic Games and several days before and after. “Account has to be taken of the fact that the athletes as the performers in the Olympic Games do not benefit directly from the very high advertising revenues generated by the official Olympic sponsors,” stated Andreas Mundt, President of the Federal Cartel Office, in the accompanying press release.
“No doubt antitrust law is becoming increasingly important for the governance of sport, in Germany and in the EU,” said Alexander Engelhard and Dr Viktoria Varens, of Arnecke Sibeth. “Besides the recent European Commission (‘EC’) decision in the International Skating Union case, which could have a great impact on the governance of sport, we are also awaiting a decision by the EC in regard to the dispute between the International Basketball Federation Europe and Euroleague Commercial Assets. Rule 40, more precisely its application by the IOC and its implementation by the National Olympic Committees on the basis of respective guidelines issued by the IOC prior to the Olympic Games, is problematic from an antitrust law perspective, not only under German law but also according to EU law.”
In its announcement, the Federal Cartel Office acknowledges that in response to its concerns, the DOSB and the IOC have proposed to “loosen” the rules on advertising posing a set of commitments exclusively targeted at Germany, and notes that whilst it plans to present the revised rules to companies, associations and athletes for comment during the proceeding, in the meantime the proposed revisions will be applied at the Pyeongchang 2018 Winter Olympics, “as the revised rules are advantageous and less restrictive for athletes and sponsors.”
In the revised rules, the DOSB and the IOC have offered to apply the Olympic Protection Act as the standard for advertising measures, limiting the application of Rule 40 of the Olympic Charter, to significantly reduce the deadlines for the approval of advertising applications and remove a cut-off period, to define the term ‘Olympic’ and related terms “conclusively,” to permit generic advertising, greetings or congratulatory messages from sponsors during the ‘frozen period’ under certain conditions, and to permit athletes to share content from the IOC, the Organising Committee for the Olympic Games, the DOSB and Team Germany and link it to their sponsors. “It is a first step in the right direction, but I think that the DOSB and the IOC will still have to make more concessions,” comments Paul Lambertz, Senior Associate at DWF LLP. “For example, I do not think that it is legal that athletes still have to ask the DOSB for permission if their personal sponsor wants to advertise with them during the Olympics. As long as the athletes do not participate from the earnings the IOC and/or the DOSB make with the Olympics these federations should not have any sayings in how the athletes try to monetarise his/her sport.”
“Certainly Rule 40 will change, giving athletes more opportunity to promote themselves in the crucial time of the Olympic Games. For all athletes and non-Olympic sponsors, I hope that the proceedings will end with a so-called ‘Feststellungsentscheidung’ (determination decision, § 32 sect. 3 GWB) stating that the use of Rule 40 in the past was a violation of antitrust laws,” continues Lambertz. “This would make it considerably easier for them to assert damages as the cartel infringement would have been established.”
The potential for Rule 40 of the Olympic Charter to also be in violation of Articles 101 and 102 of the Treaty on the Functioning of the European Union has given rise to concerns that similar proceedings may arise in other jurisdictions besides Germany. “I do not think that this is an issue unique to Germany, Rule 40 applies for every country respectively for every athlete who wants to compete in the Olympics,” states Lambertz. “As competition law within the EU is more or less the same, it is quite likely that other EU countries will follow the lead of Germany. Other countries may even be waiting for the Bundeskartellamt to decide in this matter before they take to any matters themselves.”