Are Restrictions of Competition by Sports Associations Horizontal or Vertical in Nature?

27 Pages Posted: 23 Mar 2014

See all articles by Oliver Budzinski

Oliver Budzinski

Ilmenau University of Technology

Stefan Szymanski

Imperial College London - Imperial College of Science, Technology and Medicine

Date Written: March 18, 2014

Abstract

In this paper, we discuss from an economic perspective two alternative views of restrictions of competition by sports associations. The horizontal approach views such restrictions as an agreement among the participants of a sports league with the sports association merely representing an organization executing the horizontal cooperation. In contrast, the vertical approach views the sports association as being a dominant upstream firm enjoying a monopoly position on the market stage for competition organizing services, an important input for the actual product – the sports game. Taking the recent financial fair play (FFP) initiative by UEFA (the Union of European Football Associations) as an example, we demonstrate that the different views lead to different assessments of restrictive effects and, thus, matter for competition policy decisions. The economic story of the potential restrictive effect of FFP on players’ and player agents’ income may fit more plausibly to the horizontal approach, whereas the potentially anticompetitive foreclosure and deterrence effects of FFP may be economically more soundly reasoned by taking the vertical view.

Keywords: European competition policy, sports economics, financial fair play, horizontal agreements, vertical restrictions, European football, antitrust

JEL Classification: K21, L41, L42, L44, L83

Suggested Citation

Budzinski, Oliver and Szymanski, Stefan, Are Restrictions of Competition by Sports Associations Horizontal or Vertical in Nature? (March 18, 2014). Available at SSRN: https://ssrn.com/abstract=2412471 or http://dx.doi.org/10.2139/ssrn.2412471

Oliver Budzinski (Contact Author)

Ilmenau University of Technology ( email )

Ilmenau, D-98684
Germany

HOME PAGE: http://www.tu-ilmenau.de/wth

Stefan Szymanski

Imperial College London - Imperial College of Science, Technology and Medicine ( email )

Exhibition Road
London, SW7 2AZ
United Kingdom
+44 20 7594 9107 (Phone)
+44 20 7823 7685 (Fax)

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