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Comesa watchdog raises red flag over CAF television deal

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Confederation of African Football president Ahmad Ahmad. PHOTO | AFP

The Confederation of African Football (CAF) risks paying 10 per cent of its turnover in fines following preliminary findings of a probe on its football television rights. CAF’s latest turnover was not immediately available.

The competition watchdog of the Common Market for Eastern and Southern Africa (Comesa) said initial investigations had found CAF culpable of engaging in anti-competitive practices.

The Comesa Competition Commission (CCC) began the probe in February this year after concern was raised on a TV rights deal between CAF and French based Lagardère Sports SAS.

In its report on the findings, CCC says that CAF is in contravention of competition rules through exclusive arrangements that locked out other players.

“Following consultations with various stakeholders and football administrators at the 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 19 member states of Comesa,” says CCC in a statement.

The probe found that CAF and Lagardere Sports SAS had signed an exclusive agreement that covered the period between 2009 to 2016. The deal covered a potential period of 28 years, which is likely to lead to anti-competitive foreclosure of competitors in the market, according to CCC.

The agreement was renewed in 2015 to cover the period 2016 to 2028, with an option for the contract to be extended to 2036.

“It is noted that an exclusive arrangement, by itself, constitutes a restriction of competition. Not all restrictions on competition are frowned upon by competition authorities, as they may be necessary to achieve some desirable benefits,” reads the statement.

“Any restrictions on competition must, however, be objectively justified and go no further than strictly necessary,” adds the statement from CCC. Article 16 of the Comesa Competition Regulations prohibits agreements which may affect trade between members. Comesa says 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.

These clauses further lengthen the duration of exclusive contracts and in the process inhibit the competitive process by dampening demand from potential competitors, making it more difficult for new players to enter the market, or for existing operators to expand their current commercial activities.

The Right of First Refusal clause is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into the transaction with a third party.

The commission has also faulted lack of tender procedures within the CAF in the award of the various rights to market players.

“It is international practice that the conduct of transparent and competitive tender processes gives the tendering organisation the opportunity to select the best offer based on competitive elements such as price and quality of service, for the ultimate benefits of consumers,” says the Malawi based commission.