CFTC’S DETERMINATION ON THE ALLEGED RESTRICTIVE BUSINESS PRACTICE BY TNM IN THE SPONSORSHIP OF THE SUPER LEAGUE OF MALAWI
The Competition and Fair Trading Commission (CFTC) launched investigation against Telekom Networks Malawi (TNM) Limited for alleged anti-competitive business practice in the sponsorship of the Super League of Malawi (SULOM). In its investigations the Commission collected information from various stakeholders in football and drew insights from other football jurisdictions.
At its 47th Meeting held on 3rd February 2017, the Competition and Fair Trading Commission considered the case. In its determination the Commission found that TNM and SULOM had signed a sponsorship agreement under which TNM provided financial and material support for the running of the Super League football competition. In return, TNM was granted exclusive rights to use the Super League for its brand visibility and promotion. The exclusive rights are embodied in various clauses of the Sponsorship Agreement including the following:
Clause 10.1:No other person, firm, company, corporation or other body involved or concerned in the operation, sale or distribution of products and services related or similar to TNM’s products and services, shall be allowed to sponsor, promote, advertise or have similar rights associated with the sponsorship.
Clause10.2:Prevent and discourage fans, club members, attendees and spectators at all super league matches from displaying banners, placards, or other materials bearing the trademark, name or identifier of competitors of TNM.
Clause 10.3: Ensure that where matches are held in a stadium or arena where the advertising and promotional materials of competitors are on display, to have such competitors advertising and promotional material covered and/or concealed for the entire duration of the match.
Clause10.5: That no competitor products such as airtime or other competitor products are sold at match venues. Prohibit any person vending wares in and around the stadia from wearing competitor bibs, T-shirts or any advertising apparel.
While acknowledging that sports sponsorship agreements are, by their nature, exclusive, the Commission found that some of the conditions imposed by TNM were too restrictive and exhibited a departure from international best practices. The Commission drew lessons from the English Premier League, football leagues in South Africa and Zimbabwe where competitors co-exist in the same league either through sponsorship of a specific component of the league or through team sponsorship.
Effect of the Sponsorship Agreement on competition in the telecommunication industry
The Commission found that, while the Sponsorship Agreement excluded TNM competitors from using the Super League as an advertising platform, its effect on the ability of TNM competitors to compete in the market was not substantial. Therefore, the Commission’s conclusion was that the Sponsorship Agreement would not likely result in substantial lessening of competition in the telecommunication market.
Effect of the Sponsorship Agreement on football sport
The Commission observed that football has transformed from a social sport to a commercial venture. The sport is, therefore, subject to provisions of the Competition and Fair Trading Act. The Commission found that the restrictions on access to football sponsorship that the Agreement imposes on football teams and the overarching nature of the restrictions would likely have negative effects on football development in Malawi. In its assessment, the Commission established that there are no guidelines for sports sponsorship in Malawi. The absence of sponsorship guidelines coupled with the scarcity of football sponsorship opportunities puts football teams in vulnerable positions and end up accepting any conditions imposed by the sponsors.
In light of the above findings, the Commission ordered that:
1. TNM should follow international best practices in its sponsorship of the Super League of Malawi. In this regard, in the event that the two parties agree to renew the sponsorship, the Agreement should be submitted to the Competition and Fair Trading Commission for assessment of compliance with the Competition and Fair Trading Act.
2.The Sports Council of Malawi should consider developing guidelines for sports sponsorship, particularly, football taking into consideration best practices from other jurisdictions to prevent sponsors from taking advantage of the weak bargaining power of sponsorship recipient.
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The Executive Director
Competition and Fair Trading Commission
Mpikisano House
Off Mandala Road, Old Town
P/Bag 332
LILONGWE 3
Tel: 01759506/07
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