ODDSET – Abusing Market Dominance? – An analysis by Martin Arendts, M.B.L.-HSG, attorney-at-law

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On August 3rd 2004 Oddset was officially presented as the fifth “National Sponsor” of the Football World Cup 2006. A lot of criticism as to the state sports betting operators’ commitment was to be heard in the forefront of this decision. Reason enough for me to have a closer look at this market behaviour from a legal point of view.

In addition we report on a new decision regarding sports betting: The Administrative Court of Osnabrück extensively invoked the requirements postulated by the “Gambelli-decision” and examined, whether the state met these requirements while limiting the German gambling market.

ODDSET – Abusing Market Dominance? – An analysis by Martin Arendts, M.B.L.-HSG, attorney-at-law

According to a press report of August 3rd 2004 ODDSET, the sporting bet operator of the state owned Lotto- and Toto-Block (DLTB), is the fifth “National Sponsor” of the Football World Cup 2006. The news magazine “Spiegel” beforehand reported, that in return ODDSET expected the Bundesliga (equivalent to the Premier League) Clubs to terminate their co-operation with private sporting bet operators (with a former GDR license). Furthermore, ODDSET and Westlotto respectively have been Sponsors of the Bundesliga Club “FC Schalke 04” (although, not even one year ago a private operator was refused perimeter advertising in the same stadium). In addition ODDSET invests millions a month in advertisements and tries to impede private operators’ advertisement and marketing efforts (e.g. spots on the DSF-channel) – in part by political channels.

Is this behaviour legally unproblematic? Not so from a point of view of anti-trust law. The abuse of a market dominant position is prohibited by German anti-trust laws as well as by European competition rules.

The rules for fair market competition are established by the law against restrictive practices (GWB). ODDSET still has a predominant market position and – until the liberalization of the gambling market – there are still “legal (…) restraints for other companies’ access to the market” (Art. 19 paragraph 2 GWB). Accordingly, ODDSET may not prejudice other businesses’ competition possibilities (Art. 19 paragraph 4 Nr. 1 GWB) and may also not constrain the same unreasonably (Art. 20 GWB). Pressuring Bundesliga Clubs not to accept advertisement requests from private operators would therefore clearly constitute a legal infringement.

An infringement should be on hand according to European Principles as well. According to Art. 86 paragraph 1 EC-Treaty, Competition rules apply to public businesses as well. ODDSET and the DLTB have to be considered as such public businesses, since they are granted “special or exclusive rights.” Like the Post or a former telecommunications company it could be considered as a company offering “services of general economic interest” (Art. 86 paragraph 2 EC-Treaty). The states’ intention to define the state gambling offer as public task (and not only as mere economic activity) speaks in favour of this interpretation.

According to Art. 81 EC-Treaty, all agreements “causing prevention, restriction or distortion of competition within the common market” shall be prohibited. A limitation is existent, if the freedom of action of one or several parties involved (in this case the possibility of gathering advertisement space in the soccer business) is prejudiced. The possibility of Competition as such is to be protected (in this case also by foreign bookmakers, as possible advertisement partners).

Legal consequence of such an infringement is (compulsory and automatic) nullity of the corresponding agreement. Moreover Art. 81 EC-Treaty is to be considered as a protective provision in terms of Art. 823 paragraph 2 German Civil Code. Such an agreement can therefore entail actions for damages in tort. In addition, prejudiced bookmakers may claim nonperformance against the DTLB.

ARENDTS ANWÄLTE, Perlacher Str. 68, D – 82031 Grünwald (near Munich) Tel: Int. + 49 + 89 – 64 91 11 – 75; Fax: Int. + 49 + 89 – 64 91 11 – 76

E-Mail: martin.arendts@anlageanwalt.de