Is CCTV Refusing to Sub-license World Cup Broadcasting Rights Found Violation of the Anti-Monopoly Law?

(By You Yunting)The 2014 FIFA World Cup is taking place at several venues across Brazil, and is attracting attentions from all over the world. According to reports, CCTV holds the exclusive rights of broadcasting 2014 FIFA World Cup in mainland China. However, CCTV refuses to sell the right of live network broadcasting but only sells the on-demand right of network broadcasting to video sharing websites. In reality, CCTV refusing to sell the right of live network broadcasting could potentially be considered to be a violation of the Anti-Monopoly Law. The following is our legal analysis.

To begin with, we shall look at how CCTV received the rights of broadcasting the World Cup to mainland China. In the last century, all local TV Stations participated in bidding for the right to broadcast the World Cup and other major events in mainland China. However, in 2000, SARFT issued a Circular for Enhancing the Management of Reporting and Broadcasting Sporting Events (the “Circular”), providing that “CCTV shall be responsible for negotiating and purchasing the right to broadcast significant international sports competitions, including the Olympic Games, the Asia Games, the World Cup and other major sports events in China, and that all other local TV Stations (including Cable broadcasting and TV Station) will not be allowed to purchase them outright”. Since the Circular issued by the SARFT, CCTV has become the sole authority to purchase the right to broadcast the World Cup.

As the Circular gave privileges to CCTV and thus eliminated its competitors, CCTV’s broadcasting rights were much lower when acquiring the right to broadcast the Olympics Games, World Cup and other major sports events. There is no doubt that because of this governmental order, it means that football fans can watch the World Cup for free, quite different from some other countries. In regard to this point, it seems that the Circular is good, but regarding competition within the market, it has led to unfair competition. This is because CCTV has unfairly dealt with the right of broadcasting in China. They have often refused, without any justified reason, to sublicense the right of broadcasting to other media, triggering a lot of controversy.

In 2006 FIFA World Cup Germany, CCTV only sublicensed part of competitions in the group phase to local TV Stations.

In 2010 FIFA World Cup South Africa, CCTV prohibiting Shanghai TV Station from broadcasting the World Cup triggers controversy.

In 2014 FIFA World Cup Brazil, video sharing websites are excluded from live broadcasting, becoming the latest victims.

From a legal perspective, the following questions exist in regard to SARFT’s Circular and CCTV refusing to allow the live network to broadcast the World Cup.

According to Article 37 of the Anti-Monopoly Law, it stipulates that administrative authorities shall not misuse their authority by drafting regulations containing provisions that eliminate or restrict competition. However, SARFT’s Circular is a policy that eliminates competition, thus conflicting with the Article 37 of the Anti-Monopoly Law. Objectively, the starting point for issuing the Circular was not to misuse administrative authority, but to aim to solve the competition among TV Stations which forced prices to become inappropriately higher. As such, the Circular is a restriction that constrains the irrational matters in a market-oriented economy.

Although the unreasonable price problem of major sports events can be solved by administrative orders, economic common sense tells us: there is no free lunch. We have paid the price for the Circular, as the openness, fairness and justness in the field of sports broadcasting has been destroyed.

Since SARFT empowered CCTV to purchase the broadcasting rights to major sporting events through an administrative order, CCTV should sublicense the right of broadcasting fairly in accordance with public interests. However, the reality is different. As the World Cup, a popular TV event, is an ideal approach to gain a strong position in the field of media, CCTV has acted as the sole monopolist in broadcasting the World Cup and made full use of its right of broadcasting as a main means of competing with its competitors. On the one hand, through the sale of ads, CCTV has obtained higher profits. However, on the other hand, other television and video sites threaten its market share and could risk CCTV’s strong position against its competitors.

However, CCTV, by refusing to sublicense, is under suspicion of violating the Anti-Monopoly Law. According to the Anti-Monopoly Law, those who have the ability to control the prices or volume of commodities or other trades in a relevant market, or can obstruct or affect other operators’ capability to enter into a relevant market, shall not refuse to trade with relevant trading counterparts without justified reasons. If an operator who holds a dominant market position carries out the afore-said conduct, this will be regarded as abuse of market dominance. CCTV may have controlled the prices or volume of commodities or other trades in the broadcasting of the World Cup market, or may have obstructed or affected other operators’ capability to enter into such a market, therefore because of the conduct of CCTV, the company is under suspicion of abusing its dominant position.

Observing the current situation, on the surface CCTV is abusing its dominant position but underneath this problem all results from the Circular issued by SARFT.The prohibition on inflating prices and the nationwide coverage of broadcasting shall be taken into consideration when solely authorizing CCTV to purchase the right of broadcasting, however fair competition is not considered. As broadcasting major sports events brings huge economic benefits for CCTV, how have CCTV dealt with such administrative benefits? How could CCTV make a fair sublicense after its sole purchase?

In the market-oriented economy, the afore-mentioned questions are important by virtue of their relationship with economic interests. However, there is no such provision in the Circular, resulting in the possibility that CCTV may be entitled to the sole ownership of all the economic benefits. This also shows the value of the Circular, that SARFT may strengthen the position of CCTV through issuing public policies. However, this completely violates the basic principles of market economy.

Finally, there is very serious monopoly and unfair competition issues in the field of radio, television and online networks. As such, Local TV Stations and private-owned enterprises have encountered so much unfair treatment. Local TV Stations rely on local governments so that they can compete with CCTV. However, private-owned enterprises have become completely oppressed. For example, when CCTV refused to sublicense the right of live network broadcasting of the World Cup, and in doing so violated the right to broadcast, no private-owned enterprise objected, because of the government regulation, and on the condition that the “Sword Net Action” is ongoing. Private-owned video sharing websites may, as potential targets of law enforcement, be frightened into complete silence.

Lawyer Contacts

You Yunting86-21-52134918

Disclaimer of Bridge IP Law Commentary

Leave a Reply

Your email address will not be published. Required fields are marked *