Academic journal article The International Sports Law Journal

Price-Fixing between Horizontal Competitors in the English Super League

Academic journal article The International Sports Law Journal

Price-Fixing between Horizontal Competitors in the English Super League

Article excerpt

Introduction

The English Super League rugby league competition is one of few professional team sports in Europe that operates under a salary cap. The Super League salary cap limits the total amount that a club is permitted to spend on player wage payments and is currently set at a maximum limit of 1.6 million [pounds sterling]. (1) A Super League club is not permitted to spend more than the salary cap on payments to the twenty five registered players that comprise a club's first team squad. (2) Failure to observe the salary cap rule may result in a club being penalised by way of: (3) a warning; a fine; a deduction of up to 20 competition points; a restriction imposed on the club's capacity to register new players; and/or a recommendation to the Rugby Football League (the sporting code's governing body) that the club be withdrawn from participation in some competitions. Penalties also apply to players and other stakeholders who are subject to the salary cap rules. (4)

A salary cap is a mechanism which fixes the total amount individual clubs are permitted to spend on player wage payments. Frequently, professional sports leagues justify the implementation of such a restraint on the basis that, inter alia, it increases uncertainty of outcome and thus promotes competitive balance within a sports competition. Competitive balance within a sports competition purportedly increases spectator demand with a consequential positive effect for competition revenue.

However, a salary cap also distorts competition between clubs on the market for playing services. Whilst employment contracts are individually negotiated, a club and player must negotiate the salary amount within the parameters of the salary cap regulations. Some rugby league players are represented by the Rugby League Players Association ("the union") but the union is not involved with determining the content of the salary cap regulations.

This article contemplates the application of European competition law,--specifically Article 81--to the Super League salary cap. It asserts: that the Super League clubs are engaged in price-fixing which restricts, distorts or prevents competition between the clubs in the market for rugby league playing services; that the salary cap fails to satisfy the test laid down by the European Court of Justice in Meca-Medina (5); and accordingly breaches European competition law. The article also summarises the views of twenty seven industry stakeholders concerning the effects of the salary cap. (6)

The English Super League

The English Super League comprises of twelve professional rugby league clubs, eleven of which are located in England and one club located in Perpignan, France. (7) The competition is organised under the umbrella of Super League (Europe) Limited ("SLE"). Each Super League club and the RFL hold a single share in SLE. The Articles of Association for SLE prescribe the decision-making process by which the salary cap regulations are promulgated. Amendments to the salary cap require the consent of the Super League clubs and the RFL. The RFL is responsible for enforcing the salary cap regulations.

Article 81

Article 81 prohibits co operation between independent undertakings which prevents, restricts or distorts competition in the single European market. (8) Any agreement, decision or concerted practice which, prima facie, falls within the scope of Article 81 is prohibited and thus void, (9) unless it is: a proportionate means of achieving a legitimate aim; (10) has no appreciable effect on competition or inter-state trade (the "de minimus doctrine"); (11) or is justified under Article 81(3). (12) Additionally, a person, who suffers damage as a result of actions which infringe Article 81, can challenge the anti-competitive arrangement in the national court of a Member State. (13)

Article 81 is concerned with identifying collusion between economic entities irrespective of the form the collusion takes. …

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