Summary:- Report of the Independent Review Panel Into the Climate and Culture of The World Class Programme in British Cycling

The Report was published on 14 June 2017, is 70 pages long and was split into a number of sections, each one of which is summarised in turn below. This article provides a general overview with additional commentary at the end. The full Report can be found here.

The Panel

Annamarie Phelps (Chair):- Chairperson of British rowing

Jude Kelly:- Artistic Director of the Southbank Centre & member of the Cultural Olympian Board for London 2012

Stuart Lancaster:-Former England Rugby Union coach

John Mehrzad:-Sports & commercial barrister

Annie Panter:-Hockey bronze medallist at London 2012, member of the international hockey federation board and co-chair of the Athletes committee.

Scope of the Report (pages 7 – 12)

The Report is not a general review of British Cycling (“BC”) or a specific review of the allegations raised by the sprint cyclist Jessica Varnish (“JV”) – although these formed part of the Report (JV was a female sprint cyclist dropped from the World Class Programme (“WCP”) in April 2016 who made allegations of improper conduct against BC and Shane Sutton (“SS”) the former Technical Director). The remit of the Report was to understand whether there were fundamental behavioural issues that needed addressing within the culture of the WCP (the WCP is the elite program containing those athletes deemed the best medal prospects). The Report covered the Olympic cycle between 2012 and 2016.

 NB: In the course of the investigations the Panel discovered allegations of financial impropriety and historical doping. On the financial impropriety the Panel pointed to the introduction in April 2017 of the UK Sports Code for Sports Governance which sets out the standards required for organisations funded by public money (See full details of the Code here). In respect of the historical doping, this was a matter for UK Anti-Doping.

Methodology (pages 15 – 19)

On 16 December 2016 a draft report was provided to the Commissioning board and unfortunately the contents of this report were leaked to the public in the spring. This was before the Panel had the opportunity to revise the draft under a process called ‘Maxwellisation’ whereby individuals named in the Report have the right to object before a final version is published.

NB: The outcome of the Maxwellisation process was that a number of individuals were not named directly in the Report (although we know who they are) and some of the language was changed. See article on the leaked report – Guardian – 9 March 2017

All interviews were confidential (44 were undertaken in total) and the Panel also received 180 written comments. The Panel aimed to make the process balanced, fair and consider the thoughts of those without grievances; however they noted that no one could be forced to contribute.

Key Findings

In addition to a summary at the start of the Report (pages 1 – 6), the key findings were split into three overall headings.

1. Leadership (pages 20 – 33)

• BC Board

The Panel observed that whilst the BC Board had ultimate responsibility for the WCP, the WCP had a great deal of autonomy (indeed UK Sport had encouraged it). A former WCP leadership figure confirmed that because of BC’s medal winning success, the BC Board and UK Sport just let the WCP get on with it. A former BC Board member also questioned whether the unremitting focus on success was sustainable in the long term.

The Panel found there was a general feeling that after the medal success in the Beijing Olympics, the organisation was heading in the wrong direction. It was on this basis that an internal report (written by a former BC director Peter King) was commissioned in 2012 (the “2012 Report”). The four year period preceding the 2012 Report coincided with the creation of Team Sky (which would overlap with the men’s side of the WCP) and also SS’s temporary removal from the WCP in 2009 (for allegedly unacceptable behaviour). The fact SS went from almost dismissal to what some staff viewed as ‘untouchable’ on the eve of the 2012 Olympics, was a key reason it was felt the 2012 Report was required.

The 2012 Report talks of a ‘culture of fear, intimidation and bullying’ and of many interpersonal relationships being ‘untenable’. It goes on to suggest that ‘any semblance of management structure had clearly disintegrated during the last Olympic cycle’. In terms of recommendations it said that David Brailsford (“DB”) should remain as Performance Director (“PD”) whilst succession planning was put in place. The 2012 Report, in addition to not being distributed in full to UK Sport was not even fully distributed within BC (apparently only three people read the whole report). Approximately two years after the 2012 Report, in April 2014 (by which point DB had left BC) it was clear that not much progress had been made.

• WCP

It was apparent that the WCP was dominated by a number of key figures. This had proved an effective leadership structure during the early stages of the program (early 2000’s), and was ‘coach led and athlete centred’. However following the success of the Beijing Olympics and the new expectation of medals, there was a shift to a ‘coach led – coach centred’ approach (ie: the athletes were disposable). Athletes and staff were expected to toe the line, and many didn’t feel that Human Resources (“HR”) at BC had the authority to deal with their concerns (indeed many believed HR would report them to SS or DB – which in turn would lead to retribution).

The creation of Team Sky in 2009, saw DB’s presence within WCP reduced and SS became the de facto head of the WCP. The Report points out that SS was left to his own devices, there was an absence of checks and balances and he was not given training or support for the role of Technical Director from BC or UK Sport (Technical Director was a managerial position as much as a coaching role, and SS’s background was purely in coaching).

Midway through the Olympic programme in 2014, there was an increasing sense of disillusionment amongst staff, with intense pressure to meet targets or face the prospect of dismissal. Moral amongst staff was not helped by the use of confidential settlement agreements (Also known as Compromise agreements – they are commonly used to ensure a former employee does not pursue an employment tribunal claim against a former employer) which meant that the issues which led to staff dismissal were never addressed. Consistently staff described the WCP as ‘dictatorial’ where there was little chance of professional development and staff appraisals did not exist.

In addition, as is now well publicised, UK Sport operates a ‘cash for medals’ approach to distributing funding across all sports (Guardian – 15 August 2016). Whilst there can be little doubt about the effectiveness of this approach in terms of driving medal success, the Report questions whether this translates into an ‘ends justifies the means mentality’. In short, the nature of the funding formula means that creating a positive and balanced working environment is not rewarded in the same way as an environment which delivers medal success (the Report does stress that many of the interviewees believed that the WCP would win more medals if it had a better working culture).

2. Relationships (pages 33 – 51) 

• BC Board – WCP

There was a lack of accountability in the WCP. This was not helped by BC’s handling of the allegations made by JV against SS. There was a view that the BC Board supported SS regardless of the content of the allegations and that the grievance procedure was not properly followed.

• WCP leadership – WCP staff

Whilst the Report stressed that not all the interviewee’s responses were negative, generally there was a strong feeling amongst staff that you were either ‘inside the circle’ or ‘outside the circle’. In addition many staff members were under the impression that complaints would lead to reprisals, that the recruitment processes was opaque and they didn’t know on what basis people were hired or fired.

• WCP coaches – WCP athletes

The Panel looked at the Athlete Insights Survey’s from 2013 and 2014, and concluded that proper analysis of these surveys would have revealed a number of warnings. Between 2013 and 2014, in answer to the question ‘Morale is high amongst athletes in my sport’ the answer declined from 86% to 66%, a decline mirrored in other areas such as ‘confidence in the leadership’ and ‘effective communication’. There is little evidence these findings were acted upon and the athletes felt detached from the leadership of the WCP (in the sprint team in particular).

The Report looked at the selection process for athletes into the WCP. Whilst generally this process seemed robust, concerns were identified with how athletes were removed from the WCP and also the appeal procedure. In particular the Report questioned whether having only one ground for appeal (failure to follow the correct procedure) was adequate. Furthermore the athlete has to pay a deposit of £500 in order to appeal and there are further cost consequences if they lose the appeal. The Panel commented that the right to appeal should be unconditional and that the whole process of removal from the WCP was opaque (see recommendation 4 below). This was no more apparent than in the removal of JV from the WCP, who was seemingly viewed by the leadership as a troublemaker. The nature of her removal was made worse by the poor levels of communication (a consistent theme), with JV being informed of her removal over the phone.

In addition to the lack of professional support whilst in the WCP, the Panel also criticised the fact that athletes are left stranded when they left the WCP with no support mechanisms to assist them in a difficult transition to a ‘normal life’.

• WCP – UK Sport

UK Sport should not just be a source of cash for BC but should also provide oversight, something which it has failed to do (described in the Report as a ‘passive observer’). There should be a chain of accountability, with the WCP reporting directly to the BC Board/CEO and then any concerns being passed onto UK Sport as and when required. Whilst UK Sport has been hamstrung in terms of the lack of information it has received from BC, the Panel believed that there were warning signs which should have been picked up on and that UK Sport bears some responsibility for the failings outlined in this report.

3. Environment (pages 51 – 57)

• No Compromise:- The ‘no compromise’ approach that UK Sport applied to providing funding is reflected in the ruthless approach taken by the WCP;
• Fear and distrust:- Many interviewees did not want their identities revealed and were convinced their thoughts would leak back to the BC Board. Whilst there was no basis for these fears, it illustrates the culture of suspicion in the organisation;
• Favouritism:- There was a perception that some athletes were particularly favoured;
• Discrimination:- There was a disparity between the treatment of some disciplines, although this perhaps reflected the nature of the funding model (ie:- more time and energy is put into areas with more medal chances). In terms of ‘Gender’ the Panel found the language used towards female riders was often crude and sexist, particularly from SS. However the Report once again criticised the fact that SS was not given proper training and support;
• Communication:- Communication across the WCP needs improvement and the decision making procedure is often unclear; and
• Rumour and conjecture:- Refers to rumours of financial impropriety and Doping (See earlier section on Scope of report).

Key Recommendations (pages 58 – 68)

The Panel made five overarching recommendations:-

1. New Leadership

• BC needs a strong leader, prepared to implement the necessary reforms;
• The new CEO, need not be from a cycling background (indeed this may be preferable); and
• The new PD must report upwards and be accountable to the new CEO.

2. Close monitoring and supervision

• BC and UK Sport must be engaged with the WCP, and UK Sport should build a relationship with the new PD;
• Recruitment to the WCP should be more transparent and all those leaving the WCP should conduct exit interviews to ensure any issues are identified;
• Even when settlement agreements are entered into, HR should take care to log any issues and raise them with the BC Board (not with the PD of the WCP)

3. Training and Development

• Regular, confidential two way appraisals;
• Full training should be offered, with staff given the chance to develop their skills (particularly soft skills) and they should be empowered to suggest changes and innovate;
• There should be a full induction process for athletes entering the WCP;
• Athletes should be encouraged to take leadership roles, participate in decision making and consistently improve, with appropriate training and development;
• Consideration should be given to putting an athlete on the BC Board; and
• Psychological support for athletes should be maintained, but it should not a substitute for a positive culture within the WCP.

4. Selection and communication

• Regular athletes review – all parties know where each other stand;
• Selection criteria should be clear and accessible to all;
• The £500 payment required to appeal should be removed;
• The grounds of appeal should be extended beyond procedure impropriety to cover breach of the selection policy (as published), policy misapplication or where the decision maker has shown bias;
• The process for the removal of athletes from the WCP should be clear and include pre warning of removal, the chance to improve, interim reviews of targets, and a final review of targets. If they are removed from the programme, the athlete is then given a full explanation;
• The policy for selection/non selection should be decided upon in consultant with athletes; and
• Selection processes should be reviewed every Olympic period.

5. Conditional Funding

• Funding from UK Sport should be conditional on the above recommendations being implemented.

Comment

As alluded to, much has been made in the press about the difference between the draft report and the final report. The word ‘bullying’ which appeared in the draft report was left out of the final report, as were references to the former Performance Director David Brailsford. There have been accusations the Report has been heavily watered down or even that there has been a ‘cover up’. However in looking for a new scandal, there is a risk that the points made in the Report are missed, as despite the changes the Report is clear and unequivocal about the need for change within the WCP and its interaction with BC and UK Sport. Furthermore as the chair Annamarie Phelps has subsequently pointed out, the draft report was not meant to be published and was produced before the standard process of ‘Maxwellisation’ had been carried out.

 The language used to describe the culture within the WCP in the Report is very similar to the 2012 Report (a copy of which can be found in the UK Sport link below). In terms of who is to blame for why the 2012 Report was not the catalyst for change, the Report looks at both BC and UK Sport. Responding to the Report the head of UK Sport, Liz Nicholl has acknowledged they should have done more but also criticised the lack of communication from BC commenting: ‘We should have pursued it, we should have demanded it. But we were unsighted. I had a long email from the CEO [of BC] at the time and I trusted it was full and frank’. Whilst it is important to recognise the significant failings within BC and WCP, this statement supports the Report’s assertion that BC and the WCP were trusted by UK Sport to get on with managing themselves and as a result there was no proper accountability. This self-regulation may have suited a small organisation (as BC was initially) but as it quickly grew a proper system of checks and balances should have developed alongside it.

 Problems of accountability and governance are not just confined to cycling and can currently be seen across other sports (particularly those with an amateur background), for instance in Canoeing and Bobsleigh, where there have been allegations of sexual misconduct and a ‘culture of fear’ respectively. Furthermore when you compare the finding and recommendations made in this Report to the Duty of Care in Sport Report on which this blog reported on in May (Link here), the same issues come up; – the need for greater training and support both during careers and after, a lack of transparency in selection, poor communication, the need for a more prominent Athletes voice at Board level and a macho culture in sport (which reveals itself in the way athletes are treated).

Both the reports recognise that in order to affect meaningful change, implementation of recommendations needs to be linked to funding (see of recommendation 5 of the Report). UK Sport has a crucial role to play and it should not be afraid of utilising its power by reducing funding if the recommendations are not implemented. Like any business or organisation, the culture is set from the very top, so if UK Sport is ruthless in their approach to funding then it can hardly be surprising that this attitude trickles down through the system. In reaction to the Report, UK Sport has recognised the need to develop a more sustainable culture (UK Sport – 14 June 2017). However there may need to be a wider debate about adjusting the funding model to reflect factors other than meeting medal targets. For instance due to a lack of medal success, funding for Basketball is low despite some studies making the second most popular participation sport amongst teenagers. Given these teenagers are often from poorer socio-economic backgrounds, there is strong argument for increasing funding on the basis of the social impact, as opposed to purely medal winning potential.

Concluding on the Report itself, it should be another reminder of how far sporting institutions have to go to implement proper regulatory and governance structures. Putting these systems in place helps force culture change and ensures a solid platform to make the organisation more effective. If this does not happen, it could affect public trust in sporting competitions, may deter commercial partners and lead to more scandals in the future.

Court of Arbitration for Sport:- Winter 2016/2017- Case Round Up

This article looks at a number of the decisions made by the Court of Arbitration for Sport (“CAS”) between December 2016 and February 2017. For details of all the decisions made by CAS in this period, please consult their website. A video version of this article can be found via this link :- Youtube:- SportsLawin5

1. An appeal by a Turkish weightlifter was dismissed on 8 December 2016, illustrating the Court’s strict approach to an anti-doping rule violation.

Sibel Ozkan Konak, was originally found guilty by the IOC Disciplinary Committee on 21 July 2016 for an anti-doping rule violation. A substance called Stanozolol (a steroid) had been found in a urine sample taken whilst she was competing in the Beijing Olympics. Konak had her competition results declared void and was ordered to return her silver medal. She subsequently filed an appeal at CAS against the ruling.

The appeal was given short shift by the sole arbitrator Hon. Michael J Beloff QC who described the case as ‘straightforward’. Beloff stated that any arguments about the degrees of fault of the athlete were irrelevant. The presence of Stanozolol in the body is prohibited by the Olympic anti-doping rules, and this drug was discovered in Konak’s sample. As a result there was no other option but to impose a sanction, and the appeal was dismissed.

2. In contrast to the weightlifter case, on 23 January 2017 the Belarus Canoe Association managed to get a ban for an anti-doping rule violation overturned on appeal.

On 15 July 2016, the International Canoe Federation imposed a one-year competition ban on the whole Belarusian men’s canoe/kayak team including coaches, staff and athletes, due to a number of alleged doping violations. The allegations were made after French police raided the Belarusian training camp in April 2016. At the raid a number of doping substances and equipment were confiscated and after the raid five of the athletes subsequently tested positive. After appealing to CAS a panel of arbitrators found there was not enough evidence to justify banning the whole Belarusian canoe team and overturned the ban.

3. On appeal, CAS reduced the sanctions imposed on Real Madrid CF for breaching FIFA rules on the transfer of minors.(20 December 2016)

The FIFA Appeal Committee originally found that Real Madrid had breached a number of articles in FIFA’s regulations on the Status and Transfer of Players. Primarily the breach concerned Article 19, which prohibits the international transfer and first registration of foreign players under the age of 18, except in limited circumstances. After a FIFA appeal, Real Madrid appealed to CAS who amended FIFA’s decision as follows:-

1. Real Madrid were banned from registering any new players (international or national) for one transfer period (previously two); and

2. Real Madrid had to pay a fine of 240,000 Swiss francs (previously 360,000).

The arbitrator explained that Real Madrid’s infractions were less serious than was being argued by FIFA’s judiciary bodies, and as such while the ruling was upheld, the sanctions would be reduced.

While Real Madrid welcomed the sanction reduction they argued CAS should have revoked the ruling entirely. On the other hand, many Catalan commentators argued Madrid received favourable treatment. They point to the fact that Barcelona had an appeal for similar violations dismissed in 2014. Either way, with many top European football clubs increasingly looking to recruit young talent in order to gain a competitive advantage, CAS will inevitably deal with this issue again.

4. On 2 February 2017, CAS decided on an employment law dispute between Turkish footballer Hakan Calhanoglu (the “Player”) and Trabzonspor FC (the “Club”).

In April 2013 the club filed a complaint with the FIFA Dispute Resolution Chamber (“FIFA DRA”) claiming the Player had breached the terms of his employment contract without just cause when he signed for another football team in Germany. In January 2016 the FIFA DRA imposed on four-month period of ineligibility on the player. The Player and the Club appealed, with the Player asking for a stay of the four-month ban pending the outcome of the CAS hearing whilst the Club sought compensation.

The panel of arbitrators found the Player had breach the FIFA regulations on the Status and Transfer of Players and dismissed the Player’s appeal. However CAS allowed the Club’s appeal and ordered the Player to pay 100,00 euros in compensation to the Club.

5. CAS usually acts as a final court of appeal, however in the below case, due to suspension of the All Russia Athletics Federation, it acted as a court of first instance.

The case, decided on 23 December 2016, involved a Russian athlete, Anastasiya Bazdyrera (“Athlete”) and Russian coach Vladimir Mokhnev (“Coach”). The Player was found to have breached Article 32.2 (b) of the IAAF competition rules on use of a prohibited substances/methods and was given a two year ban. The coach was found guilty of violating IAAF rules on the possession, trafficking and administration of banned substances and was banned for 10 years.

 

 

 

 

Case Law update: BT v OFCOM

British Telecommunications plc v Office of Communication (Sky UK Ltd intervening) [2016] CAT 25

A long running legal battle over pay-tv sport rights came to a conclusion in December 2016. The Competition Appeals Tribunal (“CAT”) rejected British Telecommunications’ (“BT’s”) appeal against the Office of Telecommunications (“OFCOM”) decision in 2015 to drop a requirement that it had previously imposed in 2010 on Sky UK Ltd (“Sky”) when wholesaling its sports channels to its rivals including BT.

Background

This case originates from a ruling by OFCOM in 2010, which followed a review that identified competition concerns in the pay-tv market.

OFCOM’s review concluded that Sky had engaged in conduct prejudicial to fair and effective competition in connection with the wholesale of its core premium sports channels and had not constructively engaged with other providers who wished to access its sports channels. OFCOM also stated the terms of the supply agreements Sky had with other retailers weakened the ability of the competitors to compete with Sky, particularly in respect of the high prices charged and the availability of high definition channels. As a result of this, consumer choice was negatively affected and OFCOM imposed an obligation on Sky to offer on a wholesale basis Sky Sports 1 & 2 (including in high definition) at prices which were fair, reasonable and non-discriminatory. This is known as a wholesale must-offer obligation (“WMO”). This decision was given pursuant to the powers granted in ss.316 – 318 of the Communication Act 2003 (“The Act”). The exact wording of s.316 comes under scrutiny in this case, so it is worth setting out in full:-

Communication Act 2003 s.316:-

1. The regulatory regime for every licensed service includes the conditions (if any) that OFCOM considers appropriate for ensuring fair and effective competition in the provision of licensed services.
2. Those conditions must include the conditions (if any) that OFCOM consider appropriate for securing that the provider of the service does not

(a) enter into or maintain any arrangements, or

(b) engage in any practice, which OFCOM consider, or would consider, to be prejudicial to fair and effective competition in the provision of licensed services or connected services.

Litigation History

OFCOM’s 2010 ruling was appealed in CAT, which held that the WMO was not justified. There was then a further appeal in the Court of Appeal in February 2014 which confirmed OFCOM had the power to make the ruling under s.316 of the Act and agreed with the conclusion made by CAT that the WMO was not justified and was based on incomplete set of conclusions. The matter was to be sent back to CAT for further consideration.

As the remittal proceedings concerning OFCOM’s 2010 ruling were commencing, OFCOM, as they had promised to do in 2010, were conducting an up to date analysis of pay-tv market conditions. The result of this review was announced in November 2015 and it was decided that the WMO was no longer necessary (subject to continued monitoring of Sky’s conduct and market review). BT appealed this decision, claiming that Sky continued to operate in an unregulated monopoly. Sky was then granted permission to intervene in the proceedings in support of OFCOM.

Decision

BT’s grounds of appeal can be broken down in five different elements (albeit with overlap between some of the grounds):-

Ground 1

OFCOM erred in law in its application of s.316 of the Act and acted in breach of its statutory duties under the Act by adopting a “wait and see” approach to Sky’s behaviour and the condition of the market. BT’s argument had two main strands:-

1. OFCOM did not carry out a proper assessment of the future risk of Sky behaving in an anticompetitive manner; and
2. OFCOM had not acted in accordance with its general duties under the Act specifically in connection with its requirement to promote competition and innovation.

BT placed emphasis on the word ‘must’ at s.316 (2) of the Act, claiming this word conferred an imperative that OFCOM had to act (ie:- impose licensing conditions on Sky) once a relevant risk had been identified.

The CAT dismissed BT’s arguments. Firstly the Judge concluded that the word ‘must’ conferred an obligation to give full consideration of the need to include licensing conditions on Sky, rather than a requirement that OFCOM must include such conditions. The Judge also found that OFCOM had carried out a forward looking assessment on the future risk of Sky behaving anti-competitively. It conducted this assessment and then decided there was no evidence to suggest Sky would refuse to enter into supply contracts without licensing conditions. As part of point (1) above BT had also claimed that OFCOM, when deciding whether to continue with the WMO, should have carried out a proportionality assessment as referred to in the Competition judgment of Tesco plc v Competition Commission [2009] CAT 6 (known as the ‘Fedesa test’). The Fedesa test is very comprehensive but essentially looks at whether a particular regulatory measure is effective in achieving a legitimate aim and is no more onerous than it needs to be. The Judge decided that the full Fedesa test was not necessary and OFCOM only had to conduct a balancing exercise to identify the benefit and burden of the regulation. The CAT decided that OFCOM had achieved this.

 In relation to point (2) above, the CAT gave short shrift to BT’s argument, stating that there was no evidence that OFCOM had failed to discharge its duties in relation to the statutory requirements.

The full reasoning on Ground 1 can be at paragraphs 77 to 108 of the judgment.

Ground 2

OFCOM erred in the exercise of its discretion in failing to appreciate that there continued to be a significant risk of Sky engaging in wholesale distribution practices that would be detrimental to the emergence of fair and effective competition. BT argued that OFCOM should have engaged in a more ‘orthodox’ analysis of the market. They criticised OFCOM’s findings on Sky’s behaviour in the upstream market (see paragraph 124 to 133 of the judgment) and the downstream market see (paragraph 134 to 137 of the judgment).

The Judge rejected this point and held that OFCOM had not erred in exercising its discretion in analysing the pay-tv market. He further commented that there was little substance to the idea put forward by BT that competition analysis involved a series of mechanical prescribed tests. The CAT also held OFCOM’s decision that Sky’s behaviour in the upstream and downstream markets was acceptable.

The Judge recognised that OFCOM had previously highlighted concerns it had over Sky’s behaviour (most notably in 2010) but they were perfectly entitled to, after finalising the 2015 review, to decide that the market conditions had changed in a way that meant the original concerns were no longer apparent. OFCOM had found in its analysis that Sky Sports was widely available to consumers with other suppliers providing it outside BT’s arrangement with Sky under the WMO. Therefore the problem the WMO had sought to correct was less apparent (see paragraph 152 – 155 of the judgment for the full conclusion).

Ground 3

OFCOM erred in the exercise of its discretion by directing its analysis on the distribution of key sports content rather than on the product that customer’s purchase, and which is the focus of the statutory remedy under s. 316 of the Act, namely sports channels.

As BT had themselves pointed out, ground 3 was essentially a sub-section of ground 2, therefore for the same reasoning that ground 2 was dismissed so was ground 3 and OFCOM were found to have validly exercised its discretion in its analysis of competition in the pay-tv market (see paragraph 156 – 162). 

Ground 4

OFCOM erred in concluding that there was sufficient evidence that Sky would not engage in practices prejudicial to fair and effective competition in the pay-tv market by offering Sky sports channels only at wholesale prices that were too high to allow competition to emerge.

The Judge rejected this ground. He stated whilst BT had made it clear they fundamentally disagreed with the findings of OFCOM in relation to the pricing they had not proved that OFCOM had examined the pricing issues inappropriately. The Judge looked in detail at pricing evidence provided by BT (paragraph 192 – 202 of the judgment), and decided that whilst it was accurate it did not go to the heart of the argument BT was trying to make. BT’s data was relevant to assessing market prices prior to the introduction of the WMO instead of , as it should have been, assessing the market prices after the introduction of the WMO.

Ground 5

OFCOM erred in the exercise of its discretion and acted in breach of its statutory duties under the Act by failing to identify unfair demands by Sky in relation to Sky’s insistence of a ‘grant-back’ provision in its supply contracts. This essentially means that when Sky enters into a supply agreement with other providers it demands that the provider in question, as a condition of getting Sky sports, has to provide its own sports channels (ie: BT sport). BT argued OFCOM should have found the ‘grant back’ provision condition to be prejudicial and unfair and they should have imposed a condition to prevent this practice. This argument is further broken down as follows:-

1. OFCOM had previously accepted in 2010 the grant back conditions were unfair in principle;
2. The issue was not just confined to BT (but other pay-tv providers);
3. OFCOM could not in law rely on the content of the negotiations (over the supply contract between BT and Sky) but had to decide the issue in principle;
4. OFCOM fundamentally misunderstood the nature of the supply contract negotiations; and
5. OFCOM has ignored the economic modelling evidence put forward by BT as evidence of Sky’s insistence that the ‘grant back’ was purely tactical as opposed to being commercially necessary.

The Judge dealt with these points as follows:-

1. OFCOM was justified in deciding that while in principle a ‘grant back’ requirement may raise concerns, they did not apply in this instance. As reiterated throughout the judgment, OFCOM had thoroughly examined the state of the market as well as the conduct of the parties and BT had not provided any evidence which proved OFCOM had failed in its approach;
2. Sky freely admits that this issue does not just affect BT, but it is only BT that has raised it as an issue;
3. OFCOM was entitled to examine the course of the negotiations between BT and Sky and draw conclusions. The Judge agreed with OFCOM’s analysis that no positions in the negotiations had yet been absolutely decided (referred to as ‘crystallisation’- see paragraphs 232 – 245 of the judgment) and that as such the negotiations were not a reliable indicator of what the outcome would be. There is no error of law in this approach.
4. Dealt with at point (3) above; and
5. The Judge decided that the economic models put forward by BT were of limited assistance and OFCOM were entitled to decide these were not conclusive (see paragraph 240 – 250 of the judgment).

In addition to the points put forward above, BT also criticised OFCOM’s decision to withdraw the WMO and implement a ‘wait and see’ approach as to whether they needed to impose licensing conditions on Sky. (This point links into the first ground of appeal).

The judge concluded there was nothing wrong with OFCOM’s decision to monitor the market closely and intervene when considered necessary. If OFCOM intervened unnecessarily that would also had negative effects on the market. The Judge commented that OFCOM had acted in accordance with the provisions of the Act and that there had to be clear evidence it acted unreasonably for the decision to be overturned. There was no such evidence. The Judge also highlighted that this flexible ‘wait and see’ approach was perfectly acceptable given the changing nature of the market.

Comment

The Judge commented throughout the written judgment that BT’s points seemed to be based on gripes about the position of Sky and the decisions which OFCOM had made, as opposed to whether OFCOM had correctly dealt with the situation in accordance with its statutory remit. BT’s arguments suffered from a lack of focus as illustrated by the production of the economic modelling and the pricing evidence which would have considerable taken time and expertise to produce, but did not actually support the grounds of appeal.

The ultimate purpose of competition legalisation and subsequent intervention is to benefit the consumer. On that basis, there has to be a question mark over whether the consumer has actually benefited from the splitting of sports rights between Sky and BT. A decade ago (discounting a brief foray by Setanta Sports), sport obsessed consumers simply paid their Sky sports subscription. This contrasts with the current situation where high profile sports are split across BT and Sky, meaning the consumer has to pay more to access all the live sport available. Many will point out that even if you don’t subscribe to all the channels, there is a greater volume of sport available now than there was a decade ago. This is of course a subject for debate, and its also important to note that OFCOM’s concerns about the nature of competition in the pay-tv market have not simply fallen away, as Sky still hold a powerful position in the market. Furthermore given the increasing revenue generated by the acquisition of pay-tv sports rights, the relationship between providers such as Sky and BT and the regulators looks set to remain strained for the foreseeable future.

http://www.bailii.org/uk/cases/CAT/2016/25.html

 

 

The Court of Arbitration for Sport

The Court of Arbitration for Sport (“CAS”) has been in existence for over 30 years, with the first case being submitted in 1986. In this time sport has increasingly become a multi billion-dollar industry and the number of parties using the CAS is growing every year. This is illustrated by the fact that since 1986 over 3,000 requests for arbitration have been filed and 407 of these were filed in 2013 alone.

This article will briefly outline what the CAS does, from where it derives its authority and provide an overview of how it works.

What is the CAS?

The CAS was the brainchild of the International Olympic committee (“IOC”) and its statute came into force on 30 June 1984. Despite it links to the IOC, the CAS is not connected to any other sporting bodies, particularly following reforms in the early 1990’s. It is an independent institution, and the ‘awards’ that it makes have the same authority as a Court decision.

How does it work?

Arbitration is a form of alternative dispute resolution where parties submit a dispute to the arbitrator(s) and agree to be bound by the ‘award’. For a dispute to be heard in the CAS it needs to be sports related, directly or indirectly and the parties must agree in writing that the case is to be submitted, which can either happen prior to the dispute has arisen or afterwards. Most often it is agreed in a commercial contract or contained in a sporting bodies regulations that the CAS will apply when a dispute arises. Once the CAS makes an award, there are very limited avenues for further appeal.

Broadly speaking there are three different types of arbitration at the CAS:-

1. Ordinary Arbitration Procedure

This procedure applies to first instance disputes (ie: those not appealed) and parties wishing to submit a dispute to the CAS must send a request for arbitration to the CAS Court office. This type of arbitration applies to around 10% of the caseload and usually takes around 6 – 12 months. Each party chooses one arbitrator from a list provided by the CAS and these two arbitrators agree on who will be president of the panel of arbitrators (“Panel”). If they can’t agree, then the President of the Ordinary Arbitration Division makes this selection. The parties involved in the dispute agree on what national law applies, and if no agreement is reached then Swiss law will apply (The CAS head office is based Lausanne, Switzerland).

2. Appeal Arbitration Procedure

This procedure accounts for around 90% of the CAS caseload, and the CAS is called to rule disputes where a decision has already been made by a sports organisation, regulatory body or disciplinary panel (provided there is a provision for recourse to the CAS within the charter/rules of the sporting body in question).

A party (once it has exhausted all internal appeals avenues) can submit a statement of appeal and each party chooses one arbitrator with the President of the panel being chosen by the President of the Appeals Arbitration Division (in some instances a sole arbitrator can be appointed). Once the appeal file is transferred to the panel an award must be made within 3 months. The arbitrators make their award based on the relevant code or regulations of the sporting bodies.

A good example of this procedure is the recent appeal by the Russian Paralympic committee, which appealed against the decision by the International Paralympic committee to exclude Russian athletes from the Paralympic games. This appeal was dismissed.

3. The Ad Hoc Arbitration Procedure

As the name alludes too, Ad Hoc divisions of the CAS are set up for winter and summer Olympic games. It then has jurisdiction over disputes that arise during the games or in the ten days preceding the opening ceremony (Article 1 CAS Ad Hoc Rules). It works in a similar way to the appeals procedure above but it is designed to provide a resolution in a swift manner to reflect the time scale of the competition in question. For instance a ruling on whether an athlete can compete will be made prior to their event starting.

An example of this during the Rio Olympics, was when on 3 August 2016 the ad hoc division dismissed the appeal of the Russian Weightlifting federation, against its suspension for doping in accordance with the rules of the International Weightlifting Federation.

For more information the Court of Arbitration for Sport visit the website:-

http://www.tas-cas.org/en/index.html

 

 

Rio 2016: The Olympics and Ambush Marketing

As the 4-year Olympic cycle comes to Rio de Janeiro, Brazil, this article will look at the issue of ‘ambush marketing’ during the Games. It will briefly analyse the rule put in place by the International Olympic Committee (‘”IOC”) to deal with ambush marketing, and the subsequent impact of these rule.

Ambush Marketing

Ambush marketing can be defined as an attempt by a third party to associate itself with a major event (such as the Olympics) and thereby benefit from the prestige and goodwill of the event without having to pay for that privilege.

It is particularly relevant for the Olympics, as it is an event of high global prominence with a generally positive image (the ‘Olympic spirit’) thereby attracting large amounts of money in sponsorship.

What is Rule 40?

The IOC has provisions in the Olympic Charter, which are designed to prevent ambush marketing. These are known as Rule 40, which states:-

‘Except as permitted by the IOC Executive Board, no competitor, team official or other team personnel who participates in the Olympic Games may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games’

Guidance accompanying Rule 40, clarifies its purpose is:-

‘To preserve the unique nature of the Olympic Games by preventing over commercialisation and to allow the focus to remain on the athletes’ performance and to preserve sources of funding, as 90 per cent of the revenues generated by the IOC are distributed to the wider sporting movement’

The rule is designed to apply during the ‘Games Period’, which runs from 27 July 2016 to 24 August 2016 and relates to coaches and officials as well as athletes.

Changes to Rule 40

Prior to and during the London games in 2012 there was increasing demand for changes to Rule 40. The side effect of the implementation of Rule 40 had been that long-term sponsors of athletes were prevented from benefiting from their athletes at the time they were most publicly exposed. As such in July 2015 the IOC amended the rules to allow:-

“generic (non-Olympic) advertising during the period of the Games…provided it does not create any impression of a commercial connection with any Olympic property and in particular the Olympic Games”.

It has been left to individual National Olympic Committees to regulate and control Rule 40 (within the guidelines set by the IOC) however the IOC is still responsible for enforcement and can put sanctions on athletes such as fines, removal of accreditation, and disqualification.

Impact of the Changes

To implement Rule 40, the British Olympic Association (“BOC”) has issued guidelines on advertising involving British athletes and how to avoid breaching the rule (see link).

https://www.teamgb.com/docs/default-source/default-document-library/default-document-library/rule-40-guidelines-final.pdf?sfvrsn=2

To advertise during the Games Period, you can either get ‘express consent’ to do so (the deadline to obtain this has now passed) or if you meet the criteria you can gain ‘deemed consent’. The full details are outlined in the guidance, however as a general rule, an athlete can continue to feature in an advertising campaign if the advert has been used in the same way consistently prior to 27 March 2016 (4 months prior to the Games Period) This is provided no association is created with team GB or the Olympics. For example the following should be avoided:-

1. A re-tweet of team GB message on twitter;
2. A congratulatory message on social media from a company to an athlete; or
3. Use of any words associated with the Olympics. There has been lots of negative press on this point, with many suggesting the restrictions are absurd. However as a Company you should think logically. If an advert has been designed to promote a link with the Olympics and you think it does. It will most likely breach the rules.

Conclusion

The Guidance to Rule 40, stated served a number of purposes. So have these been achieved?:-

• Firstly it is designed to protect the commercial revenue generated from the Olympics. Namely that the sponsors receive protection for the millions of dollars they invest in the Games. The over $1 billion dollars in sponsorship for the 2016 games suggest that sponsors feel the Olympics is worth the investment and there is adequate protection in place; and

• Secondly it’s designed to prevent over commercialisation. This idea is perhaps outdated and a relic from an era when the Olympics was truly an amateur pursuit. Modern Olympics are heavily commercialised and Rule 40 does not change this, it just protects those companies who have directly sponsored it.

An additional point to note is that the nature of the reforms to Rule 40 have arguably only provided protection for heavily commercialised athletes and their high profile sponsors. For instance the 27 March 2016 deadline set by the BOA provides little help for those less high profile athletes who hadn’t yet made the Olympic team. Such Olympians are often the most reliant on their sponsor’s money; sponsors who will not be as high end as those backing stars like Jessica Ennis-Hill (Santander). Such a sponsor is then denied exposure during a period when it is particularly able to benefit.

Ultimately the changes to Rule 40 and how effective they are, will be put to the test over the next two weeks as the world focuses on the Rio.

Stay tuned for another article!

Anti Doping in Sport

This article will briefly look at the present fight against doping in sport and suggest some alternatives to the current system.

Using the example of Athletics, during the 2012 Olympics, the World Anti-Doping Agency (WADA) carried out a record 6,000 drug tests, yet that still left 4,000 athletes untested. Furthermore those 6,000 tests carried out don’t uncover ‘out of competition’ drug takers, who during tournaments are able to test clean. Their annual budget to police Olympics sports is £17.8 million, a fraction of the budget of national associations (In the year prior to the 2012 Olympics, Great Britain’s budget was approximately £78 million). So because of the lack of resources, WADA’s role is primarily as a guiding organisation with the main enforcement burden falling on national sports associations. This, as has been seen with doping scandals in Kenyan and Russian athletics is difficult because of the poor standards of governance in many national associations. Moreover there are even questions whether in some countries doping is institutional and even government backed.

So are WADA and anti doping bodies up against an impossible task, or is more funding and international co-operation the answer? Arguably this won’t make a difference, as there is a fundamental conflict in world sport, which means it is no ones interest to catch drug cheats. For sports associations in charge of advertising and finances, the last thing they want are drug scandals damaging the appeal and credibility of the sport they are trying to sell. Therefore if we continue with the status quo in anti doping, there must be a move to establish independent regulators in individual countries with total freedom from national federations. Alternatively, there are other options, albeit more radical ones:-

1. Full legalisation of drugs

To many this is accepting the reality (or accepting defeat) that drugs are already prevalent in sport and impossible to control. Legalising performance enhancing drugs would, many argue, level the playing field and allow proper regulation reducing the possible harm drugs can cause to athletes. Furthermore, is access to the best chemist any different from the current system in which access to the best equipment or the best coaches is often the decisive factor? Alternatively there are those who suggest this would reduce competitions to freak shows, determined not by skill but by those willing to take the most risk; and

2. Criminalisation

Making performance enhancing drugs illegal is another option, one which is illustrated by Germany’s recently passed Anti-Doping Bill (which introduced a range of measures designed both at elite athletes and those who supply, administer or are involved in the production of doping). The central tenet to this argument is that making doping a criminal offence would act as a deterrent to those doping or those connected to doping. There are a number of problems with criminalising doping. Firstly, doping is a strict liability offence, namely if you are caught you are assumed guilty not innocent. In England & Wales, criminal prosecutions require the Crown to prove guilt beyond reasonable doubt, a much higher threshold. Secondly, a country-by-country approach is very limited, given that sport is international. For instant taking Germany’s recent legislation, foreign athletes may just avoid German competitions and equally the best German athletes may move abroad. This suggests that for criminalisation of doping to work there has to cross-jurisdictional legislation (ie: like Intellectual Property Regulations).

Realistically, it is likely that the status quo will remain, however if the stream of doping revelations continue it will be interesting to see whether the clamour for alternative approaches will increase.