The future of Golf: a question of Competition Law
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While some view this partnership as a favourable resolution to the division that prompted several prominent golf stars to depart from the traditional PGA Tour in favour of the highly profitable LIV Golf tour, others have already expressed concerns on the potential monopoly such a partnership could reinstate. Despite the parties' insistence that the collaboration is a joint venture rather than a merger, it is unlikely that this distinction will allow them to evade the scrutiny of EU and UK competition law, under the EU Merger Regulation and the Enterprise Act 2002, respectively.
The creation of a new single entity was particularly unexpected considering the fracture that unfolded over the last two years, culminating in LIV Golf's declaration of its intention to establish an independent golf league separate to the established PGA Tour and DP World Tour. LIV Golf had initially positioned itself as a revolutionary alternative to the existing tours, scheduling its events concurrently to offer global golf enthusiasts a wider array of competitions and increased golf content.
In the United States, the PGA Tour responded by relying on its contractual authority to suspend golfers for participating in LIV-hosted events. Subsequently, LIV filed antitrust actions which, in the UK, would be brought under Chapter I and Chapter II of UK competition laws prohibiting anti-competitive agreements between businesses and abuse of a dominant market position. Interestingly, arbitration proceedings were conducted in the UK involving the DP World Tour and its members. Beyond representing a significant commercial U-turn between rival entities, the joint venture could potentially diminish competition in the market in which these organisations operate, in turn triggering scrutiny by various antitrust bodies, which could review the arguments put forth in LIV's initial lawsuit when examining the anticompetitive ramifications of the commercial partnership.
Outside the United States, there is limited precedent for regulatory reviews of mergers among clubs, entities, and sports organisations. Prior merger control assessments involved the French Competition Authority's assessment of the sale of OGC Nice, a company governing the activities of Nice football club, in 2019, which was cleared due to minimal overlap between Buyer and Target. Although this transaction focused on player transfers among football clubs rather than the amalgamation of sporting bodies, the lack of precedents has not dissuaded EU/UK competition authorities from scrutinising novel markets before, and they are likely to assess the PGA Tour/DP World Tour/PIF joint venture.
In the probable event that antitrust authorities closely examine the proposed partnership, the PGA Tour and DP World Tour are likely to argue that the elite golfer market is already fiercely competitive even without the joint venture. The PGA Tour encompasses a wide array of tournaments, including the Ryder Cup, the Masters, and the US Open, where professional golfers can compete outside of LIV and PGA Tour events. Moreover, the argument could be made that there is already limited space in the golfing calendar for an additional competitive tour, apart from LIV and the PGA Tour, as top professionals have finite capacity for participating in events.
It has also been reported that the parties may now plan to structure the deal in a manner that might place it beyond the purview of EU, UK, and US merger control regulations. The PGA Tour asserts that its agreement with PIF will not grant PIF any ownership stake in the PGA Tour. Rather, PIF will invest alongside the PGA Tour in a special purpose vehicle where the PGA Tour will retain majority ownership and control. However, even if the parties manage to structure the deal to circumvent merger control jurisdiction, competition authorities could still investigate the arrangement as a form of cooperation between actual or potential rivals.
This dispute is likely to continue for a significant duration, drawing parallels with the European Super League case and other instances involving major shifts in sports structures. PIF, DP World Tour, and the PGA Tour could potentially engage in protracted legal proceedings unless they find a way to alleviate the concerns of competition authorities.
Nevertheless, financial interests often carry significant weight in professional sports, and the PGA Tour, DP World Tour, and PIF are likely exploring strategies to structure their relationship for mutual gain should the merger encounter obstacles. One conceivable approach could involve scheduling their respective events on alternating weekends. However, regardless of the eventual arrangement the parties settle on, competition law will likely play a pivotal role in shaping the future trajectory of golf.
This article was authored by Andrea Carrera, Solicitor Apprentice, and Asfand Gulzar, Associate in the Regulatory Team. If you have any queries or would like any further assistance on this or other sports law matters, please contact the Fieldfisher Sport practice.