PIC: CAF chief Ahmad Ahmad
The Common Market for Eastern and Southern Africa (COMESA) Competition Commission which has been carrying out an investigation into uncompetitive actions by the Confédération Africaine de Football (“CAF”) has released a statement, noting that its investigations have reached a final stage.
Although football is more than a religion to many Ugandans, many were unable to watch the Uganda Cranes at the Gabon 2017 Africa Cup of Nations (AFCON) finals due to the obscene $113,500 (about sh412m) required to secure broadcasting rights.
Now, the competition commission says it has completed a thorough investigation into a deal between CAF and France based Lagardère Sports S.A.S for the Commercialisation of Marketing and Media Rights of Football Tournaments which has unearthed uncompetitive behavior.
“Following consultations with various stakeholders and football administrators at national level, the Commission’s assessment has identified a number of concerns arising from clauses contained in those agreements, which could affect competition in the relevant markets for all nineteen Member States of COMESA,” a statement from the COMESA reads.
In its investigations, COMESA found that CAF and Lagardere Sports S.A.S had signed an exclusive agreement that covered the period 2009 to 2016. This agreement was renewed in 2015 to cover the period 2016 to 2028, with an option for the contract to be extended until 2036.
It also noted that the exclusive arrangement, by itself, constitutes a restriction of competition. It was found that agreements between CAF and Lagardere Sports S.A.S covered a combined potential period of 28 years, which is likely to lead to the anticompetitive foreclosure of competitors in the market.
It was also observed that the contracts were renewed as a result of ‘Right of First Refusal’ clauses contained in the agreements, which prevent CAF from seeking out other offers before renewal discussions with the current stakeholder has ended.
“These clauses further lengthen the duration of the exclusive contracts and in the process inhibit the competitive process by dampening the demand from actual and potential competitors, making it more difficult for new players to enter the market, or for existing operators to expand their current commercial activities,” COMESA said.
“Such provisions deny CAF the opportunity to assess other market offers, which could result in better terms and conditions for CAF, its stakeholders and ultimately for the consumers,” the statement added.
The competition commission also observed that agreements entered into by CAF with various broadcasters and sponsors similarly covered long periods of time (up to 8 years in some instances) and contained right of first refusal clauses, which could affect the ability of other players to compete for the rights.
It noted that this is in contravention of international case law relating to sports media and marketing rights have recommended that contracts should not exceed period of four years in order to allow market participants to compete for the rights.
In relation to agreements relating to the award of media rights, stakeholders interviewed by the Commission raised concerns that the media rights for CAF competitions were offered as one package, which made the package too expensive and resulted in a number of broadcasters not being able to broadcast the CAF competitions.
The Commission heard from the stakeholders that smaller packages dedicated for instance to radio rights; live transmissions; or delayed transmissions, would be more affordable and hence would result in a larger coverage of the CAF games.
The Commission was further concerned by the general lack of tender procedures within the CAF organization in the award of the various rights to market players.
“It is recognized international practice that the conduct of transparent and competitive tender processes gives the tendering organization the opportunity to select the best offer based on competitive elements such as price and quality of service, for the ultimate benefits of consumers,” the commission said.
The commission said that it met with new CAF President Ahmad Ahmad of Madagscar and CAF’s legal representatives on 20th October 2017 to respond to queries against its dealings.
“The Commission wishes to inform all interested stakeholders that, in accordance with Article 15 of the Regulations, it shall soon submit its findings and proposed remedies to the Board of Commissioners for their determination,” COMESA said.
“The Commission wishes to invite stakeholders who may have submissions regarding the matter to do so before the findings and proposed remedies are submitted to the Board for determination,” it added.