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Legal disputes have been par for the course

AUTHORs: Niall Collins Services: EU, Competition & Regulatory DATE: 01/09/2022

Golf is an old reliable in terms of throwing up interesting legal disputes.  In 1930, amateur golfer Cyril Tolley was depicted in a national newspaper advertisement with a packet of Fry's chocolate sticking out of his pocket.  The defamatory meaning of the advertisement was said to be that Tolley had used his reputation as an amateur golfer for advertising purposes.

In 2013, Vijay Singh filed a lawsuit against the PGA Tour claiming damages for its handling of and reaction to the deer antler spray controversy.  The case was settled in 2018.

However, it is the impending antitrust law battle between the Professional Golfers Association (PGA) and LIV Golf that has the greatest potential to fundamentally change the old shepherd's game.  At the heart of this particular battle lies the polarising question about whether the PGA has the legal right to sanction players who decide to compete on a rival golf circuit. The PGA believes that it does.  Greg Norman, CEO of LIV Golf, clearly has a different view.  He has denounced the PGA's practices as anti-golf, anti-fan and anti-competitive.

This is not Norman's first spat with the PGA.  In 1994, the Great White Shark from Mount Isa in Queensland and the media mogul from Melbourne, Rupert Murdoch, teamed up in an attempt to deliver the World Golf Tour.  The endeavour was to feature purses dwarfing those on offer on the PGA Tour.  It never happened.  Rumour has it that one Arnold Daniel Palmer decided to contribute a few less than complimentary words on the World Golf Tour at a players-only meeting and that was the end of that as regards the possible migration to a rival circuit.

Interestingly, The Washington Post reported that a players' meeting took place on Tuesday last at Wilmington Country Club at which Tiger Woods spoke.  Woods has consistently advocated for the PGA Tour.  Following the meeting, his close friend, Justin Thomas, said: "If he's not behind something, then one, it's probably not a good idea in terms of the betterment of the game, but two, it's just not going to work."

This current battleground is not a new one.   On 1 September, 1995, the US Federal Trade Commission (FTC) announced that its commissioners had voted against issuing an antitrust complaint against the PGA Tour.  In doing so, the commissioners appeared to dispense with the internal recommendation of its antitrust lawyers.

In issue at the time were two little-known internal PGA rules that all professional golfers were required to accept as a condition of joining the PGA Tour.  The first rule prevented members from playing in a non-PGA event without permission, while the second rule effectively conveyed a veto power over appearances on televised golf events.  Even back then, the PGA case was not the first time that big-sport had collided with US antitrust rules.  In the early 1980s for example, an antitrust lawsuit by the University of Oklahoma successfully dismantled the NCAA's exclusive control of televised college football.

Antitrust law has many facets, but most relevant in the current context are the US rules around monopolisation and concerted activity in restraint of trade.  In broad terms, monopolisation is where a single entity uses unfair practices to gain or maintain significant and durable market power.  Concerted activity, on the other hand, covers myriad practices whereby two or more independent entities work together to stifle competition.

We use slightly different terminology on this side of the Atlantic.  In applying our competition rules, we talk about the abuse of a dominant market position and the prohibition of anti-competitive arrangements between two or more entities.

Challenges to the rules and decisions of sporting bodies under competition law are fairly common.  In 2020, the EU General Court upheld a European Commission decision that the eligibility rules of the International Skating Union (ISU) infringed competition law.  The rules in question provided for severe penalties and potentially a lifetime ban for speed skaters who competed in non-ISU events and, specifically, a new event promoted by a Korean company, Icederby.  The European Commission found that the rules restricted competition and enabled the ISU to pursue its own commercial interests to the detriment of the speed skaters and competing event organisers.

Here in Ireland, our competition regulator challenged a Show Jumping Ireland (SJI) rule that prevented SJI members from competing at unaffiliated events where the prize fund exceeded a specific monetary amount.  The case was closed in May 2012, on the basis that SJI agreed to amend the alleged anti-competitive rule.

The European Court of Justice also heard arguments over two days last month from Uefa and the three clubs that remain committed to the European Super League (Real Madrid, Barcelona and Juventus) on whether Uefa is in breach of competition law.  The clubs argued that Uefa is operating an illegal monopoly over European football, by virtue of being both its governing body and competition organiser.  The court is expected to deliver its judgment in early 2023.

Like a good bowl of Louisiana Gumbo, the 106-page antitrust complaint by Phil Michelson, Bryson DeChambeau and others, filed in San Francisco earlier this month, has many different and interesting ingredients.  We can also throw a parallel US Department of Justice investigation into the mix, with the new administration there appearing keen to bring more monopolisation cases.

In the main, their complaint alleges violations of sections 1 and 2 of the Sherman Act, the US version of our Competition Act (sections 4 and 5) and Articles 101 and 102 of the EU Treaty.  The section 1 claim appears centred on an allegation that the PGA Tour has unlawfully agreed with other entities in the golf ecosystem, such as the European Tour, to establish a group boycott to prevent LIV Golf from succeeding.

Based on this allegation, are we likely to see the European competition authorities becoming interested in the case? The section 2 claim appears centred on an allegation that the PGA Tour has unlawfully maintained its monopoly over the market for the services of professional golfers for elite golf events.  The heart of any monopolisation case is the ability to exclude competition.  There is a fair argument, however, that either the PGA does not have that power, or that it hasn't exercised that power — LIV Golf seems to have got out of the starting blocks quite quickly.

The recent swift dismissal by Judge Beth Labson Freeman of the request for injunctive relief by a trio of suspended PGA players should not be a barometer for the likely outcome of the main claim.  In her judgment, however, Judge Freeman briefly addressed the main claim and, interestingly, stated "the court acknowledges that [the players] raise significant antitrust issues that are facially appealing.  But the [Tour] has responded with preliminary evidence and argument potentially exposing fundamental flaws in the plaintiff's claims."

Far from celebrating, one suspects that the PGA leadership quickly returned to its bunker at PGA HQ to focus on the main complaint.  This is likely to consume the PGA for years to come as it looks, from the PGA's initial shots at least, to be bet the house stuff.  In terms of likely outcome, some form of settlement would appear a sensible bet.

However, I'm not sure that a degree of mutual coexistence with LIV Golf would be regarded by the PGA as an appetising dish.

* This article was originally published by the Sunday Independent on Sunday, 21 August.