By Decision of April 24, 2019, the Italian Competition Authority (AGCM) has ascertained that three undertakings had rigged tenders for the Italian Football League (IFL) for the award of international broadcasting rights from 2008/2009 to 2016/2017. This finding, theoretically, could lead to huge claims for damages by the IFL to the benefit of the affiliated teams, taking advantage of the simplifications introduced by the EU Antitrust Damages Directive (2014/104/UE).
The findings of the AGCM.
In July 2017, based on documentation provided by the Milan Public Prosecutor’s Office, the AGCM started an investigation into the awarding of audiovisual rights for the foreign broadcasting of football matches (“International Broadcasting Rights“) held by the IFL for Serie A and B, as well as for the Italy Cup and the Italian Super Cup. The aim of the investigation was to discover whether companies operating in the market for the purchase of TV sports rights had infringed Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits agreements between undertakings having as object or effect the restriction or distortion of genuine competition on the market.
The AGCM’s investigation unveils that, since 2008, three groups of companies operating in the market for the purchase of TV sports rights ─ notably, MP Silva, IMG, and B4 ─ had orchestrated a single and continuous anti-competitive scheme relating to their participation and bidding in relation to tenders for the award of the IFL and affiliated football teams’ International Broadcasting Rights.
According to the AGCM’s decision, the bid-rigging cartel was implemented through secret and continuous coordination of the parties’ economic offers in the periodic tenders on the basis of previously concluded profit-sharing agreements, thus limiting or eliminating reciprocal competition in relation to the purchase price of the International Broadcasting Rights.
As a result, at the conclusion of the investigation, the AGCM imposed a fine of approximately EUR 67 million in aggregate on the companies participating in the cartel for a “by object” infringement of Article 101 of the TFEU. IMG benefitted from a 40% discount on the fine under the “leniency program” of the AGCM, because it admitted liability and provided the AGCM with relevant evidence which offered significant added value to the investigation.
The purported effects of the cartel, according to the AGCM
Notably, according to the applicable case-law, the finding that there was a restriction of competition “by object” (such as a bid-rigging cartel) would not require evidence of anti-competitive effects to substantiate and infringement of Article 101 TFEU. Nonetheless, the AGCM, in this decision, also carried out an analysis of the effects of the cartel on the relevant market.
First, it found that the average annual growth rate of the revenues generated by the sale of the Serie A TV rights in the period 2009/10-2017/18 (around 13.6%) has been little more than half the amount of the revenues generated in the same period in other Member States, where the value of the TV football rights may allegedly be deemed comparable (if not lower than, those in Italy, e.g., the Spanish Liga and the Bundesliga). This, according to the AGCM, is at least a strong indication that the cartel has caused the growth rate of the revenues for the sale of International Broadcasting Rights by the IFL to be materially reduced if compared to the counterfactual situation absent the cartel.
Second, the AGCM highlighted that after the cartel was ended following the initiation of these investigations, the overall purchase price for the IFL’s International Broadcasting Rights for the latest three-year round from 2018 to 2021 has increased significantly if compared with previous rounds, to the extent that the price paid to IFL for the rights for the last three seasons (in which the cartel was absent) is equal to the sum paid for the rights for the previous eight seasons during the cartel. Indeed, in the last round of tenders in Italy, the average annual value of the International Broadcasting Rights registered an increase of +93.73% if compared to payments made in 2010/2012.
Compensation for antitrust damage: a penalty kick for the Italian Football League?
The anti-competitive agreement described has presumably led to a reduction in the value of International Broadcasting Rights, damaging not only the IFL but, in turn, also the affiliated football teams, which are the co-owners of the TV rights pursuant to the law applicable to centralized sale via the IFL’s tenders (the Legge Melandri) and to whom the related revenues are passed on, based on repartition criteria agreed within the IFL.
Hence, the AGCM’s decision could pave the way for huge damages claims from the IFL (on its own behalf as well as on behalf of affiliated teams), especially in the light of EU Directive 2014/104/UE (“the Antitrust Damages Directive”), which introduced important simplifications across the EU for victims of antitrust infringements, in order that they can recover the economic loss caused by anti-competitive conducts, particularly in the case of cartels.
Indeed, Section 17 of the Directive establishes a rebuttable presumption that a cartel causes harm to either the direct or indirect customers or to the suppliers, (depending on the circumstances) of cartelized products/services. This provision thus discharges claimants from the burden to prove that damage has occurred, as this is presumed unless the infringers can prove otherwise. In this case, the parties harmed by the anti-competitive conduct can be indisputably identified in the IFL, as the seller and co-owner of the International Broadcasting Rights, together with the affiliated football teams, which are involved in the matches affected by the cartel. They are left with the burden of quantifying the harm. However, if an accurate estimate of the damage is impossible, or is excessively burdensome, the damage must be equitably determined by the competent national Courts, according to another provision of the same Directive.
In addition, the Antitrust Damage Directive has introduced novel evidentiary powers to the courts, which had not previously existed in Italy. In particular, pursuant to the Directive, national courts can now order the disclosure «of relevant evidence» which lies under the control of private persons or of the authorities, and this is very different from the pre-existing powers of the courts to order the parties to exhibit individual documents. Such new powers are, more or less, like discovery orders in common law, which refer to the powers of the courts to order the disclosure of a broad category of evidence which is in the possession of either of the parties, and which is capable of proving facts against the disclosing parties.
The right to compensation covers the actual loss, the loss of profit, as well as the payment of interest without, at any rate, leading to over compensation. The Antitrust Damages Directive does not, in fact, grant “punitive” damages to the victims of anti-competitive conduct, since the punitive purpose is already covered by public fines that are imposed by the competition authorities.
Further, the Antitrust Damage Directive expressly provides that each cartelist is, jointly and severally, liable for the overall damages caused by the cartel to each victim (although, in Italy, this principle already applied to such case under general rules), which means that the IFL may claim the total damage from just one cartelist (without prejudice to the latter’s right to call the other cartelists to contribute in proportion to their individual involvement and responsibilities). Theoretically, such action might be anchored in any of the EU jurisdictions in which at least one of the parties involved is established (these include in this case Italy, Luxembourg, the UK and Ireland) or, alternatively, in the place where the agreement was concluded or the damage occurred (which, in this case, certainly includes Italy).
In any case, the compensation should be equivalent to the difference between the International Broadcasting Rights actually paid, and those which would have been granted in the absence of the cartel. Reportedly, an estimate of such damages may amount to roughly EUR 500 million in total.
It is now to be seen whether the IFL is willing to recover the full damage from any of the parties, and what course of action it will follow. Football teams, which should be the ultimate beneficiary of any award of damages, may want to monitor the IFL’s strategy and actions, and to intervene individually or collectively, if the IFL were to stay idle.