Paul Goulding Q.C. and Kate Gallafent (instructed by
Denton Wilde Sapte for the Defendant)
- The Defendant in this claim, the World Professional Billiards and Snooker Association Limited, which I will call WPBSA, is the regulatory body, on a worldwide basis, for professional snooker. It has all, or virtually all, professional snooker players worldwide as its members. It is a company limited by guarantee not having a share capital, and is precluded, subject to given exceptions, from paying money to its members. It is, in effect, a players' association. A majority of its board have to be current or former professional snooker players. In addition to its regulatory and disciplinary functions, it organises and promotes professional snooker tournaments, and makes agreements with broadcasters to transmit some of the tournaments on television and otherwise and with sponsors for sponsorship rights in relation to some or all of the tournaments. It has recently set up a subsidiary company, World Snooker Ltd., which is intended to handle the commercial aspects of its operations, but nothing turns on that and I will not mention it further.
- The first two Claimants are leading snooker players. Mr Mark Williams was ranked number 1 in the world as at the end of the 2000/1 season, according to WPBSA's rankings. Mr Stephen Hendry was ranked number 1 for eight years and won the World Championship for a record seven times. At the end of the 2000/1 season he was ranked at number 5. They are among a number of leading snooker players who have been managed by Mr Ian Doyle, or by his company Cuemasters Ltd. That company has recently been acquired by the third Claimant, now called 110 Sport Ltd., but which, at the outset of the proceedings, was called The Sportsmasters Network Ltd, and therefore came to be referred to as TSN during the trial. I will refer to it as either TSN or 110 Sport in this judgment. Mr Doyle is a shareholder in and chairman of 110 Sport, and I dare say that, even though the parties seem to regard 110 Sport as being now the entity which manages the relevant players, in practice Mr Doyle goes on doing what he used to do in that respect.
- 110 Sport was incorporated, under a different name, in August 1999, as a company which aimed to exploit the Internet in relation to snooker. It was set up by Mr George Smith and Mr Gerald Sinclair. It entered into an agreement with Cuemasters Ltd, and the association with Mr Doyle became all the closer when, as mentioned, 110 Sport acquired Cuemasters in May this year. It is a company limited by shares. The majority of the shares are held by Mr Doyle and interests related to him. Other shares are held by Mr Smith and Mr Sinclair and others associated respectively with them. A small percentage of shares is held by a number of players, including each of the first and second Claimants. In addition, however, preference shares are held by an investment house, Warburg Pincus, which represents American investors who have put up significant capital. 110 Sport's interests are by no means limited to snooker, but this is a field in which it would like to be active to a significant degree.
- At the early stage, when TSN's focus was above all on the Internet, discussions commenced between it and WPBSA. Heads of Agreement were signed in December 1999 between TSN and WPBSA. The discussions developed, but did not reach fruition. In June 2000 different Heads of Agreement were signed, which made provision for sponsorship by TSN of several tournaments, but in early July 2000 TSN broke off negotiations. Contact was later renewed, but on 6 December 2000, TSN announced that it intended to put on a tour of professional snooker tournaments which would rival those run by WPBSA. Eventually, on 8 March 2001, TSN stated publicly that it would not run its tour which had been proposed for 2001/2. By then, however, these proceedings had been begun. In them, the Claimants allege that three rules introduced by WPBSA in February are illegal and void, as are modified versions of those rules introduced in March, and they also challenge two practices of WPBSA, one being part of its system of running professional snooker and the other part of its reaction to the actions of TSN.
- The different areas of law on which the Claimants rely are, first, the common law of restraint of trade, secondly the competition law of the European Union, found in what are now articles 81 and 82 of the EU Treaty, and thirdly the competition law of the UK, which parallels that of the EU, and is found in Chapters I and II of the Competition Act 1998. As regards one matter reliance is also placed on article 49 of the EU Treaty.
- In the course of the 20 days of the trial, I heard evidence from many factual and some expert witnesses about a variety of topics, and I was shown a lot of paper, though fortunately by no means all of that which was contained in the 30 or more ring binders of materials supplied. The ambit of the case has been wide-ranging, though not so wide as the Claimants would have wished. I have been greatly assisted with the material and the issues by Mr Shepherd for the Claimants and by Mr Goulding Q.C. for the Defendants, and also, both directly and indirectly, by their respective juniors, Mr Randolph and Miss Gallafent. This judgment is inevitably but regrettably lengthy. I will describe the present organisation and operation of professional snooker, and then TSN's proposed series of tournaments, before summarising the legal issues, then deal in detail with the facts, so far as I need to, then with the economic markets which are said to be relevant to the competition law issues, and then come to the five matters in issue one by one.
- For the reasons set out in this judgment, my conclusions are that the Claimants are correct in saying that one rule (A5), in the version adopted in March, was in breach of articles 81 and 82 of the EU Treaty, and of the Competition Act 1998, but that their contentions on all the other matters on which they seek relief are wrong.
Professional snooker: its present organisation and operation
- WPBSA was set up in 1982. I do not need to consider how professional snooker operated before that, or even for a good many years afterwards, but I need to say something about WPBSA itself. Its principal object is to promote, encourage and popularise the games of snooker and billiards generally and in particular for the benefit of members of the company. The income and property of the company must be applied solely for the promotion of its objects, and no part of it may be paid to or for the benefit of any member, subject to certain express exceptions. One that is obviously necessary is the payment of prize money to members in tournaments sanctioned, organised or promoted by the company, and also of expenses incurred in relation to such tournaments. Another is the payment of reasonable and proper remuneration for services rendered to the company. The articles of association make provision for a number of matters, including the need to have current or retired snooker players as a majority of the directors. Membership of the company is unlimited and open. Article 4 provides for the company to maintain a ranking list of its player members. This is of importance as regards tournaments, but it also dictates which of the player members have what (if any) voting rights. Full Voting Members are those who are (or have been, during at least one of the last two previous seasons) ranked 1 to 64 in the ranking list, and any Director of the company, even if not otherwise qualified. Limited Voting Members are those who are (or have been) ranked between 65 to 128. They can only vote on certain types of resolution, including amendments to the memorandum or articles. Players who are not and have not been ranked as high as 128 (and with a membership of some 450 there are many) do not have a vote under any circumstances. A majority of the Board must always consist of present or former players who are or have at some time been ranked in the first 128. The articles also provide for the company to make rules as to discipline.
- The Claimant sought to allege mismanagement of the affairs of WPBSA in previous years. At an early stage of the trial I ruled that this was not relevant, for reasons set out in a judgment which I delivered on 29 June. Though some witnesses made reference to this in one way or another, I did not allow the matter to be investigated in the evidence. Accordingly, I know that there was dissatisfaction with the way WPBSA was run in the past, but I know nothing about the rights or wrongs of that. So far as I am concerned the relevant events do not go back beyond the middle of 1999.
- WPBSA has sought to carry out its objects by organising and promoting tournaments, by sanctioning tournaments promoted by others, by operating the ranking system, and by carrying out disciplinary functions as necessary. In relation to its own tournaments, it has the benefit of broadcasting contracts and sponsorship contracts. It is the sole regulatory body for professional snooker, but this is not, of course, a statutory role; it is one which derives from its position as a members' association and from the consent of the members. How easily it might be replaced in that role is one of the issues in the case. Its members comprise all, or virtually all, professional snooker players worldwide, and certainly all such players based in the UK and Ireland.
- Among WPBSA's main operations is running the tournaments which constitute its Main Tour each year, most of which count for ranking purposes and are open to all players on the Main Tour in the given year, and sanctioning events promoted by others. The snooker season is reckoned by WPBSA as running from the day after the last event in the calendar on the Main Tour, which is the World Championship, normally played in late April and early May, but the first event in the calendar does not occur until late July or August, so there is in practice a close season. WPBSA also runs a Challenge Tour, as a way for other players to gain access to the Main Tour. From 2001/2 the Challenge Tour will itself be limited in numbers and will be backed up by a third tier Open Tour.
- In 2000/1 WPBSA's Main Tour consisted of 8 ranking tournaments, and two invitation events. The 8 ranking events were open to all players on the Main Tour, who numbered 160. (From 2001/2 only 128 players will be on the Main Tour.) All but the top 16 seeds for each event had to qualify in qualifying rounds most of which were held separately from the main event. The calendar for 2000/1 is set out in an Appendix to this judgment, including events promoted by others but sanctioned by WPBSA.
- I do not need to discuss the ranking system in detail. It is a complex process, and it is reviewed and changed from season to season. There is currently no other ranking system in the world of professional snooker than that which is operated by WPBSA. How a player is ranked is important to him and it is therefore important to take part in the ranking tournaments. The Claimants allege that WPBSA reserves its ranking system to its own events, and complain of this in the proceedings. In fact no-one has ever yet asked WPBSA to award ranking points in respect of an event which is not run by it.
- Not all tournaments count for ranking. WPBSA's position is that a ranking tournament must be open to all the players on the Main Tour for that season, since otherwise it would be unfair to the players who are excluded. WPBSA operates some invitation events, and sanctions some promoted by others. Some of these are limited to a small number of players, others are less restricted. To take an example of the former which is relevant in the story of this case, the Rothmans Grand Prix in Malta, held in February this year, was open to 12 players: the defending champion, the top 6 seeded players available, 3 local players and two "wild cards" chosen by the promoter.
- The Malta event was promoted by a local promoter, Snooker Promotions (Malta) Ltd, whose director Mr Richard Balani gave evidence at the trial. Other events are promoted by others, including Cuemasters, and Mr Barry Hearn's Matchroom organisation. I will consider the relevant rules in detail later, but it has been the case for years that other promoters have required WPBSA's sanction in order to put on an event in which WPBSA members are able to play. WPBSA has a procedure for sanctioning, which has required the submission of a good deal of information about the event in advance and it imposes conditions, for example as to the deposit of the prize money in advance. This is a major aspect of the Claimants' challenge, though WPBSA has now abandoned the rule (A5) which imposed a requirement of its consent for its members to play in other events.
- There is no dispute that television broadcasting is of enormous importance to snooker. Over the years the fact that the audience for snooker has been broadened to those who watch at home has had a major impact on the game, and on its players. It has generated funds for the game both in respect of the payments for the right to broadcast itself, and also as regards sponsorship of events. The BBC has a particular history of broadcasting snooker, which it is able to spread over its two channels and to offer extended coverage, running into the late evening, of what can be lengthy matches. Both ITV and BSkyB however do also broadcast some events.
- Sponsors play a part in snooker in two ways. As regards events, various commercial entities will provide sponsorship at different levels and in different ways of the events themselves, above all the title sponsorship of the event. Historically, a great deal of this sponsorship has been provided by tobacco companies. Separately, individual players may have sponsors, for whom they will wear a badge and carry out other promotional activities. The WPBSA rules relating to these operations by players are the subject of challenge in these proceedings.
- As a result of European legislation, it is expected that tobacco sponsorship will have to be phased out between 2003 and 2006. Any promoter who seeks or depends on sponsorship is going to have to adjust to this. It was a feature of TSN's proposal that, starting with no sponsorship at all, they intended to do without tobacco sponsorship entirely.
- In previous years, WPBSA has generally announced the dates of its next season's events shortly after the end of the World Championship, in May. It has to issue forms to its members to apply to take part in the next year's Main Tour, and this has generally been done at about the same time, with a period of about a month allowed for the return of the form. It is fair to say that the pattern of the calendar has not changed a great deal from one year to the next. Also, before this year no other promoter has ever sought to put on a rival tour on the same scale as that of WPBSA. WPBSA's policy as regards sanctioning has always been that it would not approve a tournament which was to take place at the same time as one of its own. WPBSA has never before faced a threat such as TSN made. It was in response to this that WPBSA brought forward this year both the announcement of the likely dates for its events in 2001/2 and the date for submission of entry forms. It informed its members of the likely dates late in January, and issued entry forms in mid February, giving until 28 February for their return. This is another thing which the Claimants complain of in these proceedings, and which provoked the issue of the claim.
- TSN decided in the autumn of 2000 to try to promote a tour during the following season. I will describe the development of this in more detail later. On 6 December 2000 they issued a press release stating their intention to mount such a tour. On 16 February they published their proposed tour dates and details. It consisted of 10 events, three in Asia, one in Malta, one in Belgium, one in Northern Ireland, one in Scotland and three in England. The latter, called the Grand Prix, the UK Championship and the World Championship, were to clash directly with the events of the same title proposed by WPBSA. The Appendix to this judgment contains a comparison of the TSN Tour as announced in February with the WPBSA Tour as it had by then been announced. It seemed that the TSN Tour would be open only to the top 64 players.
- On 19 February 2001 WPBSA held a players' meeting, which it had convened by letter dated 7 February, at which it made a presentation about its own plans, with a comparison to the plans of TSN. Players were given or sent materials which included the dates of the WPBSA Main Tour and an entry form, and were given until 28 February to return the entry form. The materials supplied also included a new handbook which set out WPBSA's memorandum and articles of association and its rules, the latter in the form of a new text. Members signing up to play on the tour would be agreeing to be bound by the new rules. The new rules had not yet been adopted by the board. A fairly large number of players did submit entry forms by 28 February, but these did not include the first and second Claimants, nor most of those managed or sponsored by TSN or Cuemasters. In March the board did adopt new rules, with some changes in relevant respects from the version put forward in February. At that stage, it is common ground, the rules became binding on all members through the articles of association.
- The Claimants contend that WPBSA's deadline of 28 February was an anti-competitive response to the attempt by TSN to break into the world of organising snooker tournaments. On 26 February they began these proceedings, with an application for an interim injunction which, as it happens, came before me. It was dealt with on undertakings, with directions for a speedy trial. WPBSA agreed to extend the time for applications to join the Main Tour until 8 May, then envisaged as the start of the trial. In fact, on 8 March TSN announced the abandonment of its intended tour. Since then there has only been one tour planned for 2001/2, and eventually all the players managed by TSN submitted entry forms.
The legal issues
- The Claimant's attack is based partly on the parallel rules of competition law of the European Treaty and the Competition Act 1998 ("the Act"), partly on another article of the Treaty, and partly on the common law doctrine of restraint of trade. In order to explain the legal issues, I will start with Chapter I of the Act, and in particular section 2, which is based on article 81 (formerly 85) of the Treaty. The relevant parts of section 2 are as follows:
"(1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings and concerted practices which
(a) may affect trade within the United Kingdom and
(b) have as their object or effect the prevention restriction or distortion of competition within the United Kingdom
are prohibited unless they are exempt in accordance with the provisions of this Part.
(2) Subsection (1) applies in particular to agreements decisions or practices which
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production markets technical development or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.
(4) Any agreement or decision which is prohibited by subsection (1) is void."
- It is common ground that WPBSA is an undertaking, as are professional snooker players. WPBSA's rules, as imposed by agreement in February and by adoption by the board in March, are an agreement between undertakings. It is said that they may affect trade within the United Kingdom, and that they are in relevant respects struck down by this section.
- The section reflects article 81 of the Treaty which is in very similar terms, (and has direct effect, like article 82) save that it refers to affecting trade between Member States. I do not think it necessary to set out the article separately here. There is an international dimension to professional snooker. In particular a tournament is played regularly in the Republic of Ireland, and players based there regularly compete in tournaments held in the UK. Tournaments have also been held in other Member States in the past. But it seems to me that the primary impact of the rules in question is on trade in the UK, and I do not intend to devote much time or attention to the Treaty provisions separately. Decisions on articles 81 and 82, however, have to be taken into account under section 60(2) of the Act and this court is also to have regard to relevant decisions or statements of the European Commission: see section 60(3).
- Chapter I is said to render void WPBSA's three rules under attack and also its alleged reservation to itself of the ranking system. Leaving aside the ranking system point, the question is therefore whether the three rules represent agreements with the object or effect of preventing restricting or distorting competition within the United Kingdom.
- As to this, it seems to be common ground between the parties that whether particular conduct falls within the scope of section 2 depends on an assessment of the legal and economic context of the given case, regard being had to the position as regards competition in the relevant market in the absence of the relevant restriction, and having regard also to the power of the undertaking in question in the relevant market. The first and still leading authority on this is Technique Minière v. Maschinenbau Ulm Case 56/65 [1966] ECR 235, in particular at 250. It is sufficient if either the object of the agreement (objectively determined) or its effect is within the scope of the provision. WPBSA argues that a restriction may fall outside the scope of these provisions on either of two bases. First, on a thorough analysis of the economic context and the agreement and of its effect in the relevant market, it may be found not to be anti-competitive to any significant extent. Alternatively, if on balance the economic advantages of the agreement are seen as pro-competitive overall, any restrictions which are necessary to the performance of the agreement are not affected by the provisions. The Claimants accept that this second approach may be used, but they contend that it applies only to ancillary restrictions, subordinate to the main object of the agreement, and then only to those which are really necessary for the purposes of the main agreement. As to this second approach reference was made particularly to Gøttrup-Klim Grovvareforening v. Dansk Landbrugs Grovvareselskab Case C-250/92 [1994] ECR I-5641, especially at paragraphs 35 to 40.
- Thus, the assessment of the position under these provisions requires a view to be taken of what are the relevant markets, in order to decide whether the undertaking in question has market power in them, so that one can then determine whether the challenged provisions offend against section 2. In deciding whether the undertaking does have market power, the impugned restriction has to be ignored.
- The Claimants' second line of attack is based on Chapter II of the Act and article 82 (formerly 86) of the Treaty. Section 18 of the Act is in the following terms, so far as relevant.
"(1) Subject to section 19, any conduct on the part of one or more undertakings which amounts to an abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom.
(2) Conduct may in particular amount to such an abuse if it consists in
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of the contract."
- In support of his submissions under articles 81 and 82, Mr Shepherd showed me some material arising from the notification, in 1994 and 1997, to the European Commission of certain arrangements concerning Formula 1 racing. Following that notification and an investigation over several years, the Commission took the view that breaches of the articles had been committed in respect of these arrangements, and it issued a lengthy statement of its objections to the arrangements in 1999. After a number of further steps in the proceedings, proposals were submitted by the parties for the modification of the notified arrangements. These met with the approval of the Commission, which issued a public notice of its intention to take a favourable view of the modified arrangements, inviting third party comments. One of the features of the original arrangements to which objection was taken was the combination in one hand of both the regulatory power over, and commercial exploitation of, the sport. Under the modified arrangements these two roles will be divided one from the other, over time. Mr Shepherd relied on this as a powerful analogy with the present case. I have had regard to it, as I should under section 60(3) of the Act. However, it seems to me to be of more value as an illustration of the points that can arise under these articles than it is as a direct analogy. This is because of notable differences in the circumstances of the two sports and therefore the facts of the two cases, and also because the statement of objections, though of course fully considered and issued after years of investigation, is not a decision on the case but rather a statement of the Commission's position, to which the parties had and exercised the right to respond, and which, if the process had not been cut short by the new proposals, would have been followed by further steps before any decision was reached.
- The Claimants also attack the sanctioning rule under article 49 of the Treaty. This provides:
"Within the framework of the provisions set out below, restrictions on the freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended."
- The argument is that the sanctioning rule restricts the freedom of players who are based in one Member State to provide their services, by playing in a tournament organised by a promoter established in another such State, and is therefore prohibited by this article.
- The remaining basis of attack, on the three rules, is that they are void as being agreements in restraint of trade which are not justifiable as being reasonable.
The facts
The genesis of TSN
- TSN was set up in August 1999 following discussions between Mr George Smith and Mr Gerry Sinclair. Mr Sinclair is a Scottish solicitor, while Mr Smith has special knowledge and experience of computers and the Internet. Their original discussions were about how to use in relation to sport technology which Mr Smith had developed for other purposes. Before long they focussed on snooker as one of the sports for which this technology might be particularly useful, with a view to raising awareness of the game and broadcasting snooker material on the Internet. At quite an early stage they talked to Mr Ian Doyle. Not long after the company had been incorporated, in late September 1999, TSN signed a collaboration and licence agreement with Cuemasters. This was effective as of 17 September 1999 for 6 years. Under it TSN was to set up and maintain a website, and was to use its best efforts to promote Cuemasters and its players on the website. The players were defined as those managed from time to time by Cuemasters, of whom the then current list of 21 was scheduled to the agreement. Cuemasters was to procure that the players promote and endorse the website and TSN, subject to any inconsistency with their contractual sponsorship and playing obligations. This was to apply particularly when playing snooker or conducting interviews as well as generally. Cuemasters was itself to promote the activities of TSN.
Negotiations and discussions between WPBSA and TSN
- At an early stage TSN got talking to WPBSA. Those who were then involved on behalf of WPBSA are no longer with it, and did not give evidence. The chief executive at that stage was Mr Peter Middleton, but he resigned in August 2000, to be replaced in October by Mr Jim McKenzie who did give evidence. Miss Walker, the company secretary and head of legal services, joined WPBSA from private practice in February 2000.
- However, the course of the early negotiations can be told quite briefly. In late November 1999 they had reached a stage at which TSN submitted draft Heads of Agreement to WPBSA. In this TSN was described as an events promoter, media and internet company. It was to design, build and operate a sports website, containing editorial content, on-line merchandising, on-line gaming and on-line snooker, and was actively to promote and market the game of snooker, and to create a full website for WPBSA on its own website. WPBSA was to provide archive material and a computerised results service for use on the Internet to TSN. WPBSA responded with a revised version, and eventually a document was signed by both parties in December 1999. This was not to be legally binding, except for its confidentiality clause, and depended on a full agreement being entered into. It was concerned only with the creation by TSN of a website for itself and of a separate website for WPBSA, apart from a mention of future negotiations for WPBSA to acquire an option to invest in TSN. Even before it was signed, on 10 December, Mr Middleton learned that TSN was planning a presentation to publicise the signature of the document and had to warn Mr Smith not to make announcements beyond the fact that the parties had signed non-binding Heads of Agreement.
- No progress could be made towards a full agreement until Miss Walker arrived to take up her post in February, and in fact no such progress was made until well after that, because the basis of the negotiations was widened. By the end of March an option agreement was entered into under which WPBSA had the option to subscribe for shares in TSN, but this option would not become exercisable unless a full agreement was entered into on the other matters. Since that never happened, the option agreement is purely a matter of history.
- At the beginning of April 2000 TSN came to an agreement with Warburg Pincus, an American based investment house, for them to invest £10 million, by way of convertible preference shares. They disclosed to Warburg Pincus at the end of March not only the Heads of Agreement signed in December but also the first draft of a new Heads of Agreement which had just been submitted to WPBSA. This still provided for TSN to create and maintain a website for WPBSA, but in addition it provided for TSN to be the sponsor of three tournaments, for three years with an option for two more, and of the Young Players of Distinction Project, for an aggregate payment, originally proposed at £900,000 per year. WPBSA was to provide to TSN for use on the Internet archival material, promotional material and a live computerised results service, and to arrange for a webcam to be installed at all sanctioned events for the transmission of still photographs during play. TSN was to have exclusive audio rights for all sanctioned WPBSA tournaments.
- Not all of this was acceptable to WPBSA. On 11 May a meeting was held to discuss it, attended by Mr Smith and Mr Sinclair for TSN, and Mr Middleton and Miss Walker for WPBSA. As a result of this meeting Miss Walker amended the draft in manuscript and sent it to Mr Sinclair. Among the clauses which were changed were those dealing with WPBSA's provision of material for use on the Internet, which was considerably watered down, and with audio rights, which was to be a non-exclusive grant, and sponsorship, which was now to be of 4 tournaments, for £1 million. Mr Sinclair returned to her a revised draft, which however included a number of new provisions. One of them, clause 3.4, stated that WPBSA was to appoint TSN as its official Internet partner, but went on to provide for the grant to TSN of exclusive audio and video rights for the Internet in relation to all WPBSA sanctioned tournaments, for transmission on the TSN website. It also included a set of provisions headed commercial partnership. Miss Walker sent back a further revision, from which clause 3.4 was deleted, with the note that this had not been discussed let alone agreed, and the commercial partnership provisions also deleted, with a view to their forming part of a separate agreement.
- Mr Sinclair's response to this, by letter dated 25 May, was uncompromising. He said that the wholesale revisions were unacceptable, since they appeared to negate progress which TSN believed had been made in the negotiation. In particular he sought to insist on clause 3.4 as well as on the provisions as regards the commercial partnership. His letter indicates that further discussion would be futile. Notwithstanding this, the next day he sent an email to Miss Walker, saying that he had reviewed and revised the draft and hoped that after discussion with Mr Smith and Mr Doyle they would be able to make progress. On Monday 29 May the main protagonists were all present at an awards event. Mr Middleton, Miss Walker, Mr Smith and Mr Sinclair all met, and reached a compromise over one outstanding issue, as regards the sponsorship deal. Instead of WPBSA having the right to be paid a commission or percentage on sales of certain WPBSA material via the TSN website, the sponsorship money was to be increased from £1 million to £1.1 million. An announcement was made that the parties were having discussions and that a further statement which would be for the good of snooker could be expected soon. On 1 June Mr Sinclair sent Miss Walker a further revision of the Heads of Agreement, which did not reinstate the disputed clause 3.4 or the provisions about commercial partnership. In this form the Heads of Agreement were agreed and signed by the parties later in June - by TSN (Mr Sinclair) on 12 June and by WPBSA on 20 June. On 28 June Mr Sinclair sent a first draft long-form agreement to Miss Walker to follow this up.
- However the matter did not proceed in that way. On 29 June a board meeting of TSN was held, at which the representatives of Warburg Pincus seem to have expressed serious dissatisfaction at the terms which had been agreed. They said that the rights granted should be wider and should be exclusive. Mr Smith then telephoned Mr Middleton, and followed this up with a letter on 3 July, seeking to argue for some revision of the agreement. Then on 5 July Mr Sinclair sent a new version of the draft long-form agreement to Miss Walker. This included provisions giving TSN exclusive audio and video rights for use on the Internet. Miss Walker responded on 7 July with comments in which she rejected the exclusive audio and video provisions as being inconsistent with the Heads of Agreement. Among other things she said they were awaiting a valuation of the exclusive audio rights and she told Mr Sinclair that she would pass this figure on to him so that TSN could consider whether they wanted to bid for these rights. Instead, on the same day Mr Smith sent her an email in which he said that "following long consideration of our position" TSN considered that WPBSA was either unwilling or unable to address the issues which had been raised, and that they therefore had to withdraw from the negotiations.
- That, however, was not the end of the process of negotiation. On 27 July, on the instructions of the board, Miss Walker wrote to Mr Smith to offer TSN the video rights for one year free of charge, on the basis that the following year they would be put out to tender. This was rejected out of hand. Even after that Miss Walker wrote again to Mr Smith asking for clarification of TSN's position. There was no direct response to this. However, on 7 August a meeting took place between Mr Smith and two members of the board of WPBSA without Mr Middleton: Mr Wildman, the chairman, and Mr Ferguson. In the course of this meeting, Mr Smith said that TSN had difficulty dealing with Mr Middleton. On 11 August Miss Walker wrote again to Mr Smith putting forward an offer, on the board's instructions, which would build on the idea of a year free and a payment to be made for the video rights in subsequent years. Mr Smith and Mr Sinclair then arranged to meet Mr Wildman and Mr Ferguson in Leeds on Tuesday 15 August. It was not originally envisaged that Miss Walker would attend, and she was not in the office on the previous day. However, she rearranged her diary and did attend the meeting in Leeds. Mr Sinclair brought with him engrossments of a form of agreement. Miss Walker's impression was that he had hoped that he would be able to get to a position in which the agreement would be signed on behalf of WPBSA by those directors present. That is consistent with his own evidence. She referred to him removing from the engrossments green backing pages which it was his firm's normal practice to include with a document for execution, and doing so surreptitiously. He denied any intent to conceal what he was doing, or to take improper advantage of the directors of WPBSA. Whether they would have been prepared to sign the agreement if Miss Walker had not been there, and whether they would have been asked or pressed to do so, I do not know. But having heard the evidence of Mr Sinclair and Miss Walker, I find that she was justified in thinking that Mr Sinclair wanted to avoid her realising that he had had any hope of getting the agreement signed there and then.
- The form of agreement prepared by Mr Sinclair and brought to that meeting did, among other things, provide for exclusive audio and video internet broadcast rights for TSN. This still created a problem for WPBSA, not least because of its possible impact on negotiations with the BBC, then well under way, for the renewal of the agreement for the television broadcast of snooker tournaments. Miss Walker therefore proposed that these clauses should be qualified by the words "subject to any contractual restrictions imposed on [WPBSA] and agreed by [TSN]". The wording was discussed between Miss Walker and Mr Sinclair in a number of emails up to 29 August, and the parties appeared to be coming close to agreement. Mr Sinclair and Mr Smith knew of the BBC's concern about video transmission on the Internet, and knew that the BBC would require a holdback period in its contract with WPBSA, that is to say a provision whereby any internet video broadcast of a tournament which the BBC was broadcasting would not go out until after a given period of delay. TSN also knew by the end of August that clarification of this was being sought, and that this would be the contractual restriction to which WPBSA was subject and to which TSN would be asked to agree in the context of the proposed provision in the agreement between WPBSA and TSN. A meeting was due to take place between TSN and WPBSA on 1 September, but this was cancelled by TSN at less than 24 hours' notice. On the morning of 1 September Miss Walker was told that TSN required a satisfactory conclusion on the point that day, this point being, as she understood it, the only one outstanding. She spoke to the BBC (to the knowledge of Mr Sinclair) and was encouraged to believe that the point could be resolved quickly. Nevertheless later that day Mr Sinclair sent her an email formally withdrawing from the negotiations, professing that the "diluted rights" offered by WPBSA would "fundamentally and critically reduce their commercial opportunities to recoup their substantial investment in snooker sponsorship" and that there appeared to be "insurmountable and unreconcilable difficulties" to further negotiation.
- In the meantime, on 23 August, Mr Middleton had left the employment of WPBSA. He was not replaced until 16 October when Mr McKenzie took up the post of chief executive. The negotiations had not been renewed before that time, but clearly when Mr McKenzie took up his post the question of relations between WPBSA and TSN was one of the serious outstanding issues for him. On 23 October he suggested a meeting, which took place on 26 October, attended by himself, Mr Doyle, Mr Smith and Mr Sinclair. They had a general discussion about the future of snooker, and Mr McKenzie's ideas about this, rather than about any particular agenda. They agreed to meet again, and did meet on 22 November, and then again on 29 November; the latter meeting was attended by Mr Smith and Mr Sinclair from TSN and Mr McKenzie and Mr Wildman from WPBSA. By that time TSN had decided to mount its own tour, and Mr Wildman and Mr McKenzie were told of this. TSN was careful not to make any kind of formal proposal, because it knew that WPBSA had contracts, including for broadcasting and sponsorship, which it could not just walk away from, and TSN was anxious not to lay itself open to the accusation of having interfered with any of those contracts. Essentially, however, their message at the last meeting was that they would be proposing an independent regulator for snooker, or at least for their own tour, and that WPBSA might consider whether it was prepared to abandon its commercial operations and become simply a regulator of the sport. In the absence of a formal offer or proposal Mr McKenzie had some difficulty in responding, but he or Mr Wildman suggested that it might be helpful for them to meet Warburg Pincus, and such a meeting was set up by Mr Smith and held on 4 December, attended by Mr Young of Warburg Pincus and by Mr Ferguson and Mr McKenzie of WPBSA. Whereas Mr McKenzie thought that this meeting had gone reasonably well, the directors of TSN clearly had a different message from Mr Young, and regarded the opportunity as having been wasted. Nothing came of it.
- On 6 December (or perhaps on the evening before) TSN issued a Press Release announcing its intention to mount a tour, with a heading "TSN pledges fresh vision for snooker with new world tour". The plan was said to be for a "new and truly global World Snooker Tour, replacing and expanding on the current UK-focussed arrangements". The announcement is short on detail, but did emphasise that none of the events would be sponsored by tobacco companies, as well as mentioning the £10 million backing already obtained, and the fact of TSN's sponsorship of over 40 of the world's top players. It said that TSN would seek to work alongside a new style governing body for snooker, responsible only for regulatory functions, and that discussions were under way with potential candidates for that role including WPBSA. I will discuss the effect of that Press Release on players and on WPBSA generally later. At present I need to bring to a conclusion the account of the contacts between TSN and WPBSA.
- On 12 January 2001 Mr Smith and others met the board of WPBSA at Preston, to make a presentation about the proposed tour. I have seen the material which was presented on that occasion. Among other things it lists 35 players as being under management, though probably this was an overstatement, bringing in not only Cuemasters' managed players but also those with sponsorship contracts from TSN. Mr Smith said that they hoped that all these players would take part in the new tour. The suggestion as regards WPBSA was that it would carry out solely the role of regulator, and that TSN would pay it 5% of the prize fund, or about £300,000, to cover the costs of it doing so. On the evening of 19 January and the following morning there was another long meeting between Mr McKenzie and Mr Smith, in the course of which Mr McKenzie said that WPBSA would not be prepared to become simply a regulator, and mentioned the idea of a kind of joint venture between WPBSA and TSN. Mr Smith said that would not be acceptable to Warburg Pincus. On 22 January Mr McKenzie wrote to Mr Smith stating that the Board of WPBSA were not prepared to relinquish their commercial assets on the basis proposed, but hoping that some other way of working together might be found in future. That was the end of the attempts at negotiation between WPBSA and TSN.
- It is clear that the process of negotiation was frustrating to both sides. Mr McKenzie acknowledged, in some of his public statements after he came on the scene as chief executive, that TSN would have found WPBSA slow to respond. In a sense both parties needed each other, which is why they kept trying again. WPBSA was the governing body, and clearly there would have been major advantages for TSN if they had been able to do a deal of a kind that they wanted in agreement with WPBSA. Equally TSN, through its association with Cuemasters, who represented an important group of leading players, was a major force to be reckoned with in snooker. Mr McKenzie said they were in an extremely powerful position because of the strength of influence they had over their players and players who might be in contact with those players. (Mr O'Sullivan's evidence included good illustrations of the degree of influence and control that Mr Doyle had and exercised over the players whom he managed.) Miss Walker said that in August, when Mr Middleton left, the Board felt under great pressure to do a deal with TSN. She said that WPBSA always had pressure on it, bearing in mind who TSN was and the fact that Mr Doyle was behind TSN: "We had more pressure than with any other commercial entity to do a deal with them, and that is why we conceded and conceded until the end of August". Later on Mr McKenzie feared that TSN's strategy would be to put such pressure on WPBSA that its board would ultimately relinquish its promoter status in favour of the offer made to players as regards the TSN tour. He felt that TSN would be recruiting the majority of the top players to their tour, which would make the WPBSA tour scarcely viable, because the strength of the profile of players on the TSN tour would make that tour more attractive to broadcasters and sponsors, if TSN were able to recruit enough of the top 32 or 64 players. The idea that there might be a split tour, or rather two competing tours, with some players competing in one and others in the other, was very unattractive to all concerned, but was also regarded as impractical, in that no tour would get off the ground without television broadcasting, and two competing tours would not both be broadcast, at any rate on free-to-air television. Thus either WPBSA's tour would continue, with the benefit of its existing broadcasting arrangements, or it would be supplanted by the TSN tour, with new arrangements.
The TSN tour proposal
- Mr Smith said in evidence that, once the negotiations with WPBSA had been halted at the beginning of September, the board of TSN took a period of 6 weeks to work out where to go from there, and then decided to try to mount their own world snooker tour. The first public announcement was by the press release dated 6 December 2000 which I have already mentioned (paragraph 46). The board had taken the decision in principle on 18 October, and presented its plans to Warburg Pincus on 8 November. Following the public announcement, TSN started discussions with broadcasters and with players, having previously mentioned the idea to some players but only in rather general terms.
- The China Open, a ranking tournament, was held from 9 December, and no doubt players involved travelled out to China some days ahead. This was therefore the first time that the main body of leading players had been together after the announcement by TSN. Mr McKenzie was not due to be there, but was asked to and did attend as a matter of urgency in order to talk to players and thereafter to the Press. Mr McKenzie said in evidence, and I accept, that on this and all other occasions he refrained from criticising TSN, which he felt would be inappropriate, but that he did want to be sure that players had the opportunity to consider fairly the respective merits of the WPBSA and TSN proposals. Mr Smith and Mr Sinclair went to the China Open as well, also to talk to players.
- It was some time before TSN was able to put forward more detail for its plans. On 16 January Mr McKenzie addressed a players' meeting in Reading and made it clear that WPBSA would welcome additional events proposed by TSN, but objected to the idea of TSN's tour displacing that of WPBSA altogether. On 26 January WPBSA sent its members a bulletin with the provisional Main Tour dates for 2001/2. The bulletin referred to TSN, and to recent discussion about their proposals. It stated that if TSN (or any other promoter) were able to offer additional events that did not conflict with WPBSA's events and met the sanction requirements, then members were encouraged to take part in them, so long as they also took part in all of WPBSA's events. On another point which I will have to discuss more fully later, the bulletin mentioned advice from Public Relations consultants Hill & Knowlton and approaches to top players to discuss a potential role in implementing the new PR strategy, and that John Higgins had signed the first three year contract for this purpose.
- On 31 January TSN held a meeting with all or most of the players managed by Cuemasters or sponsored by TSN. This was intended to explain what TSN was proposing, and to contrast it with WPBSA's position. It started with a slide headed "The TSN Offer" which included paying £6 million to players, £300,000 to the Board of WPBSA (to fund the regulatory functions) and all the tournament, marketing and development costs. It characterised the WPBSA response as having been to suggest a joint venture in which WPBSA would not take any of the risks but would share in the profit. The presentation went on to identify things that were wrong with snooker as it stood, or could be improved. Among other things it showed that a new ranking system was being planned and studied, with the benefit of independent research. TSN issued a statement on its website after the meeting, saying that its proposals had the backing of 30 top players, that it planned 10 events worldwide, with £6.5 million prize money, and that it had offers of sponsorship subject to arranging television broadcasting. By that date TSN had prepared a second version of what it called its Charter for the Snooker World Series 2001/2, which identified its first objective as to take 100% commercial ownership of snooker. The details included a timetable under which it would sign its first broadcast agreement by the end of February, launch the new identity of 110 Sport and the tour in March and stage the first event of the tour in mid September. It also identified the need for a new governing body as well as a new ranking system.
- TSN had had a first meeting with the BBC on 18 December, and another on 29 January. They had one more on 16 February. They suspected that the BBC's contract with WPBSA contained some sort of a clause under which the BBC could escape from the contract if not enough of the top players took part in WPBSA's tournaments, and they hoped that they could persuade the BBC to broadcast their own tour if they were able to attract enough players for the clause to apply. If the BBC had withdrawn from the contract with WPBSA, as TSN knew, the WPBSA tour would not have been viable, since sponsorship would also have been withdrawn. In the meantime, however, the BBC had issued a public statement on 7 February affirming its intention to abide by its long term contract with WPBSA, under which 210 hours of snooker were to be broadcast each year for 6 years; this agreement had been signed on 8 September 2000, replacing the previous agreement dating back to 1996. Also on 7 February WPBSA wrote to players inviting them to a meeting to be held on 19 February at which they said they would expand on their plans for professional snooker. On the same day Jimmy White, seen as a very important player in terms of his profile, announced that he would join the TSN tour. This was seen as a blow by WPBSA who had been in discussion with him. It was at least partly in response to this that WPBSA persuaded the BBC to make the announcement which I have mentioned, that evening.
- TSN wished to be able to tell the BBC, at the meeting on 16 February, that they had leading players contractually signed up to their tour. In this respect they received bad news on Friday 9 February when the Daily Telegraph carried a story to the effect that Ronnie O'Sullivan, a player managed by Cuemasters and sponsored by TSN, who had a small shareholding in TSN as well, and who was then ranked 4 (and by the end of the season 2) and one of the biggest attractions in snooker at the time, was going to join the WPBSA tour for the next season rather than the TSN Tour. This led to a meeting which took place at TSN's London offices on Monday 12 February attended by Mr O'Sullivan, his mother, Mr Doyle, Mr Smith and Mr Carroll of TSN. Part of the context of this meeting was that it was being said by Mr O'Sullivan that WPBSA had offered him a very large sum of money to sign a promotional contract. In the course of the meeting the TSN representatives gave him assurances, in particular about sponsorship and broadcasting of the new tour, which led him to agree to sign up to the TSN tour. No document existed which was suitable for that purpose, so a call was made to Mr Sinclair in Scotland, who drafted a one page contract and sent it down to London, where Mr O'Sullivan signed it. The operative terms of the contract were short and simple. TSN was to commence operation of its tour in September 2001, inviting to play on it all the top 64 players according to the rankings as at the end of the 2000/1 season, and Mr O'Sullivan undertook and committed himself, for no additional consideration, to playing exclusively on the TSN tour and to promoting the tour actively and endorsing it. During the next few days TSN secured the signature of 6 other players to such documents: the first and second Claimants, and Stephen Lee, Ken Doherty, Fergal O'Brien and Marco Fu. Issues could arise as to the circumstances in which these documents were signed, having regard to the conflict of interest between TSN as tour promoter on the one hand and (whether itself as such or Cuemasters) as manager on the other, but I do not need to go into those. I should however record that Mr Sinclair gave evidence that all the players who signed these documents were told that they were not intended to be legally binding (which would at least have reduced the impact of any breach of fiduciary duty) but that no other witness, whether from TSN or a player, supported this. Mr Williams, to the contrary, understood that it was binding. When Mr O'Sullivan's solicitors called for an explanation of this document having been given to him to sign without their having the opportunity to review it and advise him, they were not told that the document was not binding. Nor was this said when he sought to extricate himself from the obligation. I do not accept this evidence of Mr Sinclair, which in my judgment undermines his credibility significantly.
- Mr Doyle's evidence about the events of 12 February also merits notice. He was asked a good many questions about this occasion, and demonstrated both an aptitude for avoiding answering the question at all, and considerable vagueness when his answer was to the point. Eventually he gave an answer which I could believe, when he said "I really cannot recall what happened on 12 February truthfully". It would have been more helpful if he had said that at the outset. Before then he had said that he had told Mr O'Sullivan he should consider getting legal advice, and that Mr O'Sullivan had said he did not want it, and he had also said that it was Mr O'Sullivan who asked for a contract to sign. I do not believe any of those statements. I do not suppose that there was any mention of legal advice at all, and I consider that, when Mr O'Sullivan said he would sign up to the TSN Tour, it was Mr Doyle or Mr Smith who thought of asking Mr Sinclair to draft a contract to be signed for the purpose. Other aspects of Mr Doyle's evidence undermine his credibility, for example his recollection of two letters from WPBSA, one to the effect that managers could not attend the meeting on 19 February and the other threatening a loss of ranking points for players who did not sign up to the WPBSA main tour. Neither of these was produced.
- On 14 February TSN wrote to players to explain something more about their proposals, having up to that time concentrated on talking to players in the top 32. They said that 11 of the top 16 players, according to the then current provisional rankings, had declared their commitment to the TSN tour. They sent a copy of the TSN Charter and explained in their letter that in addition they would promote a new players' association. On the next day the TSN website carried a response to WPBSA's announcement of a new £1 million sponsorship from a non-tobacco company, LG Electronics, which asserted that "all the top players" would be on the TSN tour in the next season. On 16 February TSN announced the dates for its tour. It comprised 10 events, with a significant degree of overlap with WPBSA's events, and it was clearly designed to mimic the WPBSA tour in some respects, though with certain new elements as regards venues and events. On the same day TSN had its third and last meeting with the BBC. It seems to have derived some optimism from these talks, but so far as I can see this was entirely misplaced.
- On Monday 19 February WPBSA held its players meeting at Newport. It was a lengthy meeting, addressed not only by the chairman of WPBSA and Mr McKenzie but by representatives from KPMG, Hill & Knowlton (PR consultants) and others including, perhaps most crucially, Mr Rawlinson of the BBC. I have watched a video recording of the entire presentation. Mr Rawlinson reconfirmed the BBC's support for WPBSA and its tour. Having met TSN to hear their proposals, he said, the BBC had no plans to enter into any agreement with them either on an exclusive or a non-exclusive basis.
- As I have mentioned, those players who attended the meeting were given a pack of documents including entry forms for the 2001/2 tour and a new form of rules to which they would be signing up by putting in their entry forms. They were given until 28 February to return their entry forms. Copies of the pack were also sent to all players or their managers.
- On Wednesday 21 February, an invitation event was to start in Malta, which I have already mentioned (paragraph 14 above), lasting until 25 February. This comprised 12 players. Some of those who would be going did not attend the players' meeting for that reason. Copies of the pack were sent to them in Malta. Since one of the Claimants' criticisms of WPBSA is that the deadline of 28 February was unreasonable in particular because of the intervening commitments of players in the Malta tournament, it is worth noting who was involved in that event. Ten of the competitors were on the Main Tour, the two others being local players. Of the ten, five had already signed one page contracts with TSN committing themselves to the TSN tour: the first and second Claimants, and Mr Doherty, Mr Lee and Mr O'Brien. Three others had signed promotional contracts with WPBSA, from which it followed that they would be playing on the WPBSA tour: Mr Higgins, Mr Hunter and Mr Stephens. The two others, Mr Drago and Mr Swail, were both sponsored by TSN, so that it might be supposed that they would incline towards the TSN tour.
- As a result of discussions which took place during the Malta event, the present proceedings were decided on, notified and then launched. The first objective of the Claimants was to secure an extension of the deadline for entry to the WPBSA tour. That was agreed, but it did not assist TSN in securing entrants to their own tour. They had no broadcasting agreement and, for that reason, no prospect of sponsorship. Moreover many players had signed up to the WPBSA tour by 28 February. On 8 March TSN announced that they would not be proceeding with their proposed tour, though they would continue the litigation in the hope of being able to offer a tour in future.
The Malta Grand Prix - WPBSA's sanction
- One of the few issues of primary fact that I have to determine concerns an allegation that WPBSA misused its position as regulator in relation to the conditions of sanctioning the Malta Grand Prix. This is covered by some documentary evidence and by evidence from Mr McKenzie and Mr Balani. The allegation is that WPBSA threatened to withdraw its sanction of the tournament because it was to be broadcast by TSN on the Internet, whereas previously Mr McKenzie had indicated that there would be no problem about this. I do not accept that this is a fair reading of the facts.
- Tournaments had been held in Malta each year since the 1995/6 season, sometimes as ranking events and sometimes not (or sometimes both). The February 2001 event was to be an invitation event, promoted by Mr Balani's company. It required WPBSA's sanction under the then rules. Mr Balani applied for and received the necessary sanction in July 2000. The conditions included a limitation of live or delayed television coverage to local broadcasts. If any additional television coverage was to be arranged WPBSA was to be notified immediately with a request for a further sanction. WPBSA was to provide 6 snooker cloths and 5 sets of snooker balls free of charge, with the promoter being responsible for transport from the UK to Malta. In August the sanction was varied to provide for a change of players. In November Mr Balani came to England and met Mr McKenzie. This was in Bournemouth during the Liverpool Victoria UK Championship, so not before 18 November. They discussed the Malta event. Mr Balani asked for further help from WPBSA and Mr McKenzie agreed to provide a scoring kit and the services of some officials, free of charge. Mr Balani says that he mentioned that he hoped to have the event broadcast on the Internet by TSN and asked if this would be a problem, and he says that Mr McKenzie said that it would not be a problem. Mr McKenzie says that he cannot recall discussing this question in November, but that it was raised in their next meeting in January. He says that he explained that WPBSA and TSN were themselves in negotiation and that if this worked out well, as he hoped, it should not be a problem but he would have to put it to the Board. A Press Conference was held in Malta on 6 December, attended by Mr Wildman, to promote the event. The Press Release says that the televised matches "are expected to be broadcast" on the TSN website. This press release was sent to WPBSA, but no special attention was drawn or given to it or to this particular passage.
- In my judgment Mr Balani may be right that the discussion took place in November, rather than not until January, but Mr McKenzie is right about the content of the discussion. I do not believe that Mr McKenzie, knowing what he did about the history of dealings with TSN, would have given an unequivocal indication of approval to Mr Balani, whether in late November or in January, to the idea of broadcasting on the TSN website. In my judgment Mr McKenzie said no more than that he hoped that relations between WPBSA and TSN would be such that there would be no problem. He did not say, as Mr Balani mistakenly remembers, that there would in fact be no problem. He certainly did not say that he would arrange for the WPBSA sanction documents to be amended, as Mr Balani had said in his witness statement. He would not have done that without a formal request nor without having obtained the Board's approval. Mr Balani's recollection is also at fault in that he remembered a letter from WPBSA on the point before 8 February 2001, but there was no such letter.
- On 8 February Miss Walker wrote to Mr Balani asking for updated details of broadcasting, and reminding him that a new sanction would be needed for any change. He replied, asserting that a number of points had been put to Mr McKenzie and agreed, and that Mr McKenzie had been going to deal with the question of a new sanction. These included some minor details about the support which WPBSA would give to the event, but also that TSN would broadcast the event on their website. Miss Walker put this to Mr McKenzie for his comment. He disagreed on some of the minor details, and wrote firmly "Not TSN!!" against the proposition of the TSN broadcast. In fact Mr Balani needed a change to the sanction anyway because of a late change in the players. This was issued on 19 February, just in time for the tournament, and did not allow for TSN to broadcast the matches on the Internet. Before this Mr Balani and Mr McKenzie had spoken on the telephone, on 16 February. Mr McKenzie reminded Mr Balani that he had said that whether WPBSA could agree to the TSN webcast would depend on the position as between WPBSA and TSN at the time. Mr Balani accepted that this is what Mr McKenzie said to him in that telephone conversation, and he did not disagree with it at that time. I find that this was not a last minute change of heart, as Mr Shepherd submitted, on the part of WPBSA, going back on something that had already been informally approved, but was consistent with what Mr McKenzie had said from the first.
- Moreover, I also accept that Mr McKenzie had a legitimate reason for objecting, in that WPBSA was supporting the event in material respects, and would not have agreed to do so if it had been known to be an event also supported (through the webcast) by TSN. On a different scale, one would not normally expect Shell to support an event which is also supported by BP. Mr McKenzie said in evidence that it was because of the support that WPBSA was giving that he objected to the proposal; I accept that as a matter of fact, and also as being a reasonable approach.
The revision of the WPBSA rules
- As I have mentioned, part of the package given and sent to players on 19 February was a revised version of the WPBSA rules, which includes the first version of the three rules which are under attack in these proceedings. Part of that attack is based on the proposition that they were introduced deliberately with the aim of improving WPBSA's position in relation to players as against TSN. For this purpose I need to say something about the process of revising the rules, and the position that existed previously.
- Members are bound by the terms of the memorandum and articles of association of WPBSA, by virtue of their membership of the company and the statutory contract under section 14 of the Companies Act 1985. As already noted these contain provision for the board to make rules of discipline which are to bind members. The evidence includes such rules made in 1991 and a further set, originally adopted in 1996 but with amendments made in 1997. The 1991 rules include an equivalent of the sanctioning rule, a rule prohibiting players from wearing any advertisement, and rules dealing with some promotional activity in the course of a tournament. I will deal with the details of these when I come to examine the challenged rules. The 1997 rules contain a slightly different version of the sanctioning rule, much the same about promotional activity, and a quite different regime as regards advertisements. This arose from the fact that in the 1996 BBC contract WPBSA had secured agreement to players wearing up to 2 logos when playing in tournaments broadcast by the BBC. It referred to a Code of Practice in relation to logos, which was itself revised from time to time. The evidence includes versions of the Code of Practice dating from 1996, 1997, 1999 and 2000. In addition to these rules, players were also bound by terms included in the conditions of entry to tournaments.
- One of the tasks that Miss Walker embarked upon when she joined WPBSA was to review and revise the rules. At a board meeting in November she reported that the first stage of this review had been completed, that she would next compare the rules with those of other sports, and last she would prepare a handbook containing all the relevant provisions including the memorandum and articles of association as well as all other rules applying to different aspects of WPBSA's and the players' activities. Thus, this review was not in itself prompted by anything done by TSN. On 16 January she sent a draft of the composite set of rules to the directors and senior management for comment.
- This task was well under way but not complete when discussions between WPBSA and TSN broke down completely, and it was decided to convene a meeting of players at which a presentation would be made about WPBSA's view of the future of snooker, that held on 19 February. It therefore became a matter of urgency to bring the review process to a point at which members could be given a new package of rules, together with the entry form for the WPBSA Main Tour. It is fair to say that this put extreme pressure on Miss Walker, and that she would have wished for more time to devote to the revision. She said in evidence that she regarded the package as a first draft, and that because it would not apply until the start of the new season, there was time in which to reflect further, and take account of comments, and to make any modifications that seemed appropriate. One respect in which the task was plainly incomplete is that the package included the 1997 rules of discipline in their entirety, even though some of those rules had been superseded by new rules in the body of the document, such as those at issue in these proceedings. This was referred to in the covering text of the handbook as issued and approved by the board in March, with an express provision that in the event of any conflict the new rules prevailed. This had been reported to the board, who were also told that new rules of discipline were being drafted. As regards the rules themselves, the board approved and adopted them with the relevant changes already mentioned, to which I will refer later in the context of the particular rules under attack. WPBSA had undertaken to the Claimants not to adopt any new rules without giving 48 hours' notice, so that notice was given and the amended rules were adopted as of 16 March. In turn on 13 May a board meeting approved the deletion of rule A5, subject to the necessary notice being given, which it was, the revocation becoming effective on 16 May.
WPBSA promotional contracts
- Another aspect of the history to which I must devote a little time is the contracts which WPBSA has entered into with some leading players under which they will be paid sums of money in return for committing themselves to given amounts of promotional activity on behalf of WPBSA over each of three years.
- These have caused a good deal of resentment and misunderstanding among players. So far as these proceedings are concerned, their only suggested relevance is to the issues in relation to rule S, as regards promotional work. However, in truth they have nothing at all to do with that, because they are concerned with promotional work outside the scope of tournaments, whereas rule S is solely concerned with what happens in relation to tournaments. Some cross-examination seemed to be directed at whether WPBSA was acting properly, or even intra vires, in entering into these contracts, but that is not an issue in these proceedings.
- It had been the practice of WPBSA to ask players to undertake promotional work outside a tournament on an occasional basis. Generally speaking players were paid £1,000 plus VAT for such occasions: that rate was approved by the board in July 2000. One of Mr McKenzie's ideas for the development of the profile of snooker, when he became chief executive in October 2000, was to develop the profile of a number of players, and thereby to enhance the public perception of and response to snooker. This featured in a paper that he put to his first Board meeting, held on 31 October. In November Mr McKenzie and others prepared a brief for public relations consultants which included a reference to a plan for promoting players and thereby enhancing the profile of the sport itself. At a board meeting on 9 January 2001 it was resolved that Mr McKenzie should negotiate with a limited number of top players with good PR potential for contracts under which they would undertake appearances by way of promotional work, which might be managed through a PR company, in return for payments to be agreed. This was taken further at the next board meeting on 19 January, by which time some players had been approached, and negotiations were well advanced with John Higgins. The criteria for choice of players were the top 4 who were not under contractual restrictions which would prevent them from signing, and those of the next 16 who were free from contractual restrictions and had a good media profile already. This was to be tied in with a new PR strategy which was to be launched shortly with the benefit of advice from consultants.
- Mr McKenzie had had discussions already with Mr O'Sullivan and Mr White, both of whom were seen as important players in terms of their public profile. Mr White eventually signed up to the TSN tour, as already mentioned, and I know little about the course of discussion with him. So far as Mr O'Sullivan is concerned, these discussions started at the China Open, and continued with a meeting between him and Mr McKenzie on 27 December, and some later telephone conversations. In the course of these Mr O'Sullivan said that he would like to support WPBSA, but clearly wanted to see whether it could be made worth his while to do so. He had a clear idea of his attraction to the public, and thought that the value of this should be recognised. Mr McKenzie said that the board of WPBSA might be able to offer him a promotional contract, under which he would carry out a given number of appearances for WPBSA outside the scope of tournaments in return for payment. They then discussed figures, and eventually a figure was agreed in principle, which the board approved. Mr O'Sullivan then sought to see whether TSN could do better for him, and he mentioned a figure to Mr Doyle which, unlike the agreed figure and those put forward in negotiation, is in the public arena: it was £1.2 million, over three years. This is not the figure which was agreed between Mr O'Sullivan and Mr McKenzie. TSN was not prepared to offer him that sort of money. In fact Mr O'Sullivan has not yet (or had not at the time of the hearing) entered into a promotional contract with WPBSA. I should also note that when the board agreed to the figure which had been negotiated with Mr O'Sullivan they made the point that every effort must be made to ensure that WPBSA got good value from the contract.
- Other players did sign such contracts: Mr Higgins as already mentioned, and Alan McManus, Matthew Stevens, Peter Ebdon, John Parrott and Paul Hunter. The contracts follow a pattern though their terms are not identical, and the sum payable is not the same in each case. That amount is confidential, and (with some other provisions of these and other contracts) was the subject of a confidentiality regime at the trial. In any event I would not need to mention any of the figures for the purposes of this judgment, or to say anything about them other than that, if expressed as a rate per appearance, they come to more than the previously offered £1,000 rate. Each contract does commit the player to participating in a minimum number of events per year, an event being a playing appearance, training, promotional or media event for the purposes of the promotional, sponsorship, community and public relations activities of WPBSA. It commits the player to providing such services exclusively to WPBSA. The agreement may be terminated if the player is not within a given band of the top players by ranking, or if he ceases to be a member of WPBSA or to play snooker on the WPBSA professional circuit. The justification for paying these players at a rate higher than the £1,000 per event rate previously approved is the entitlement of WPBSA to call on the player and his obligation to undertake up to a given number of appearances. This is much more valuable to WPBSA in its desire to mount a coherent public relations strategy than the mere ability to offer a player £1,000 for an appearance in the hope that he will be free and inclined to accept it.
- Some other highly ranked players, including Mr Williams, felt that if WPBSA was paying top players for this sort of activity, then they too should be receiving the benefits of these contracts. Mr Williams spoke to Mr McKenzie on the telephone about this. Mr McKenzie said that WPBSA would be very happy to offer him a contract but that he understood that Mr Williams' contract with TSN would be inconsistent with this and that it would be illegal for him to offer a WPBSA contract. He suggested that Mr Williams should talk it over with Mr Doyle and come back to him if he was free to enter into a contract with WPBSA. Mr Williams did not in fact take it further. Mr O'Brien made a similar request of Mr McKenzie and got the same response. It is the case that the standard TSN sponsorship contract with its players would have prohibited Mr Williams or any other TSN sponsored player from committing himself to a WPBSA promotional contract. Mr Williams said that he was cross about these contracts because he felt that other players were being paid good money for work which he was also expected to do but had to do free. That is based on a complete misunderstanding of the promotional contracts. He also said that he felt WPBSA were just using these contracts to secure players for their tour, not for any legitimate purpose. Of course, if a player did sign up to such a contract he would be committing himself to play on the WPBSA tour, but it is not a fair accusation to say that WPBSA only thought of and used these contracts in order to buy players for their tour or that the players who entered into them regarded the contracts in that way. They were planned before the TSN tour was announced and were justified for quite other reasons.
The negotiation of the BBC contract in 2000
- One of the rules under attack is that which limits the number of logos which players may wear at WPBSA tournaments. WPBSA says this is justified because the BBC insists on that limit. Mr Shepherd sought to undermine that justification by questioning whether the BBC had in fact insisted on this, and if they had, by suggesting that this was the result of incompetent negotiation on the part of WPBSA. Initially I took the view that this was not an issue that could legitimately be gone into (and said so, incidentally, in paragraph 49 of my ruling on 29 June), but on 9 July (Day 10) after further consideration and submissions I ruled that it could. I therefore allowed cross-examination of Miss Walker and of Mr Coles, Director of Sports Rights and Finance for the BBC, on this point.
- Mr Shepherd suggested that it could not have been a critical point in the negotiations as to whether players were allowed to wear two or more logos, and that the BBC would not have walked away from the negotiating table, thereby losing 210 hours of sports coverage, if WPBSA had sought to insist on a right for players to wear a third or even a fourth logo. Having heard Mr Coles, I am satisfied that the BBC would indeed have done that. Snooker is important to the BBC, but not so important as Mr Shepherd tried to suggest. It appeals to a large audience but one which is, in Mr Coles' phrase, over-served, by which he meant one to which a good deal of daytime television is available, and which the BBC does not have to try hard to reach. I was shown figures in a Mintel report for television coverage of, and interest in, different sports, which showed snooker as being fairly high in the list for several different groups by age, gender and socio-economic group. That is probably a fair indication, though the broadcasting witnesses and Mr Pascoe, WPBSA's sports rights expert, were somewhat sceptical about the reliability of the Mintel statistics in detail. It seems clear that the sport's major following is among those aged 55 and over and, within that group, among the less affluent. As Mr Pascoe said, the audience demographics of snooker are of lesser value to broadcasters, sponsors and advertisers than those of golf or tennis. Moreover Mr Coles explained that, whatever may be the wish of someone such as him, there are overriding editorial policy guidelines, designed to ensure that the BBC complies with its Charter obligations, over which there is no freedom, and that these are currently understood to prohibit more than 2 logos for snooker.
- Mr Shepherd drew a contrast with other sports, such as tennis, rugby or Formula 1 racing, where a large number of logos are used. Mr Coles pointed out that these are all very different from snooker in terms of the arena and the speed and movement involved. It is true that more logos are permitted in tennis, and that from time to time tennis players are seen in close shot and relatively still so that their logos can be seen. But, at any rate at Wimbledon, the logos are smaller than those permitted for snooker, and they are seen against a white background, and most of those that are permitted are for the manufacturer of the item of clothing or equipment. Only two other logos are permitted. At all events, Mr Coles was quite clear in his evidence that the editorial policy guidelines would not have permitted more than 2 logos in snooker. He gave an illuminating example of the application of these guidelines in another sport, namely bowls. There, ingeniously, a logo had been incorporated on the bowls themselves, so that it would be seen very clearly on the television screen when the camera showed a stationary ball. This had not been cleared with the BBC in advance. As soon as it was seen, it came to the attention of the editorial policy staff who told the sports department that this could not be allowed; they in turn protested to the governing body and the offending items were withdrawn at once.
- It was suggested that Miss Walker should have sought in the negotiations to approach the editorial policy adviser directly to see whether this point really was so cut and dried. I am satisfied that this would have been quite inappropriate, even if it had been possible. I have no doubt that WPBSA was right to think that the BBC meant it when they said that the limit of 2 logos was non-negotiable.
The witnesses
- There are not many issues that I have to decide to which the credibility of witnesses is relevant, but it is right that I should say something about some of the factual witnesses, and in particular the main witnesses from 110 Sport and WPBSA. I have already mentioned my reservations about Mr Sinclair and Mr Doyle (see paragraphs 43, 54 and 55). Mr Smith gave an account in his witness statement of the negotiations between TSN and WPBSA which was inaccurate and quite misleading, and had clearly not had devoted to it the care and attention that a witness statement requires. In some other respects too I found his evidence unsatisfactory, for example some aspects of his account of his discussions with Mr McKenzie. By contrast I was impressed by Mr McKenzie and found him by and large a reliable witness, as also Ms Walker. The credibility of another WPBSA employee, Mr Tomkins, was challenged, on the basis of a number of minor factual errors in his witness statement, which he corrected in a revised version. Regrettable as these were, it does not seem to me that they cast doubt on his overall credibility as a witness, and I accept his evidence, as so corrected, as being reliable. The three broadcasting witnesses, Mr Coles, Mr Barwick and Mr Moody, were all helpful and reliable. Both sides tendered witness statements from a lot of players, involving a good deal of repetition. Sensibly, only a few on each side were called for cross-examination, including the first and second Claimants, so that each side's case could be put to some player witnesses on the other side but without too much time being taken up to little purpose. All those who attended were, I am sure, seeking to assist the court to the best of their ability. Some were able to be more helpful than others. No issue of reliability or credibility really arises as regards any of these witnesses, except for Mr O'Sullivan as regards the events of 12 February, as to which I prefer his evidence to that of Mr Doyle.
The relevant economic markets
- For the purposes of the parts of the claim which are based on articles 81 and 82 of the EC Treaty and on the Competition Act 1998, I must now address the question of what relevant markets there are, and then whether WPBSA has market power in any such market or is in a dominant position in any. In this exercise I have had the benefit of the evidence of the respective economics experts, Dr Veljanovski for the Claimants and Dr Walker for WPBSA, as well as that of Mr Pascoe for WPBSA about dealings in relation to sports rights, and also of reference to a number of publications by the European Commission and the Office of Fair Trading, as well as some decisions of the European Court of Justice. I have derived some assistance from the expert witnesses, though in the case of each of the economists there are important features of their evidence that I cannot accept.
- The first task is to identify in ordinary commercial terms what markets are involved, and then to determine according to the relevant legal principles and the evidence whether any and if so which of these is a relevant market. The Claimants allege four markets (see paragraph 23 of the Particulars of Claim, taken with the Further Information given):
- a market for organising and promoting snooker tournaments;
- a market for sponsoring snooker tournaments and advertising at them;
- a market for broadcasting snooker tournaments; and
- a market for players to compete with each other and earn money from snooker.
- The Defendants admitted that there is a market for organising and promoting snooker tournaments (Defence paragraph 28(1)) but then withdrew that admission, their expert having expressed the view that there was no such market (see paragraph 30 above).
- It seems to me that, in ordinary commercial terms, there plainly is a market for organising and promoting snooker tournaments. This involves a number of different commercial activities. One is to secure the participation of snooker players. Another is to seek to secure a contract for the broadcast of all or part of the tournament. A third is to try to secure sponsorship or other advertising at or in relation to the tournament. A fourth, which is no doubt important for television and for the players, so that there is a live audience, but is not economically comparable to the others, is to sell tickets to the public to attend the events. The last of these I can ignore, not least since I had no evidence at all about it. Bearing in mind the challenged restrictions about logos and promotional work, and the evidence as to sponsorship contracts, it could be said that there is also a market for players to sell personal advertising rights, whether by way of the wearing of logos or undertaking personal appearances to promote some business or other activity, but this would be ancillary to the principal activity of players which is to compete with others for prize money or other rewards.
- From the point of view of the player, whether one considers him as seller (of his services) or as buyer (of the services of a tournament organiser), he is dependent on tournament organisers, since without tournaments he will have no opportunity to exercise his skills for profit. Equally a tournament organiser depends on players, since the players are the essential basic ingredient of the tournament. However, whereas a tournament organiser would have skills and resources that could be applied to other activities, snooker players are not likely to have transferable skills.
- As regards the tournament organiser, that undertaking needs to secure the participation of players, and to sell the rights to broadcast and to sponsorship and other advertising. Players are dependent on tournament organisers but broadcasters and sponsors are not. They can choose whether to broadcast snooker, or other sports, or indeed other material altogether, or, in terms of sponsorship, whether to sponsor a snooker tournament, another professional sporting event, or some quite other activity. Since sponsorship in this respect is presumably no more than a particular form of advertising, they could choose to advertise in a different way instead. It is the case that a large majority of sponsorship money for snooker tournaments has come, and still does, from tobacco companies, for whom advertising outlets have been and are being reduced. But I do not see that this puts snooker in a unique position as regards tobacco, so as to affect the definition of the relevant market. At all events I had no evidence to show that this would be justified.
- Thus, the so-called market for organising and promoting snooker tournaments seems to be an over-simplification. Analogies between goods and services may be misleading, but there are, in a sense, two different aspects to this market, that is to say, the acquisition of the ingredients or raw materials, and the sale of the product: as "buyer" the tournament organiser is in a market in relation to players; as "seller" it is in a market in relation to broadcasters, sponsors and other advertisers, and the paying public who attend events. I had evidence about broadcasting, and a little about sponsors of tournaments, but none about the paying public.
- The first criterion in deciding whether a particular suggested market is a relevant one for competition law purposes is as to demand substitutability: is there another product which is a close substitute in the eyes of purchasers for that which is the subject of the suggested market? As between snooker players and tournament promoters, there is clearly no substitute, as far as the players are concerned, for the services of promoters. As between broadcasters and promoters, on the other hand, I am satisfied by the evidence that broadcasters do have close substitutes for snooker tournaments, namely other sporting events, even if I disregard, as not being a really close substitute, other entertainment material. It seems to me that the same is true of sponsors as well.
- I find that there is a relevant market for competition law purposes, namely the market as between snooker players and the promoters of snooker tournaments. Dr Walker for the Defendants would not accept that this was a market, but this depended on his analysis of WPBSA's position as being one which does not involve an economic activity. In turn this is based on his view of WPBSA as being an intermediary or agent for the players as a whole, not as a promoter of tournaments on its own account. In my judgment the status of WPBSA is irrelevant; what matters is its activities. While WPBSA is of course a players' association, represents the players and is accountable to them rather than to outside shareholders, it would be wrong to ignore the fact that, in organising and promoting tournaments, it is doing exactly that which the few other promoters also do, and which 110 Sport wishes to be able to do, namely to secure the participation of players and to sell broadcasting and sponsorship rights, for profit. Of course WPBSA does not make a profit for its own sake or for distribution to shareholders; it makes it in order to be able to expand its operations, to promote the sport and to return funds to players by way of prize money, but what it does with its money does not matter for this purpose. I therefore reject the contention that WPBSA is not involved in a market at all, because of its nature, and hold that there is a relevant market, namely that as between professional snooker players and the organisers and promoters of professional snooker tournaments.
- Mr Shepherd submitted that, in this market, WPBSA is dominant, and at any rate has market power, relying on the large proportion of the actual tournaments, whether measured by number or by prize money, which WPBSA's tournaments represent. Mr Goulding took issue with this, and argued that it is too simple just to look at the share of the market that WPBSA has. One must see whether there are real barriers to entry which prevent others taking part in the market.
- As regards the meaning of a dominant position, I have the help of several decisions of the European Court of Justice, some paragraphs from one of which I will quote:
"The dominant position thus referred to relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers.
Such a position does not preclude some competition, which it does where there is a monopoly or a quasi-monopoly, but enables the undertaking which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop, and in any case to act largely in disregard of it so long as such conduct does not operate to its detriment. .... The existence of a dominant position may derive from several factors which, taken separately, are not necessarily determinative but among these factors a highly important one is the existence of very large market shares. ....
Furthermore although the importance of the market shares may vary from one market to another the view may legitimately be taken that very large market shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position. An undertaking which has a very large market share and holds it for some time ...... is by virtue of that share in a position of strength which makes it an unavoidable trading partner and which, already because of this secures for it, at the very least during relatively long periods, that freedom of action which is the special feature of a dominant position": Hoffmann-La Roche v. Commission Case 85/76 [1979] ECR 461, paragraphs 38, 39 and 41.
- WPBSA has as its members virtually 100% of all professional snooker players worldwide, and certainly 100% of those active in the United Kingdom and Ireland.
- WPBSA has promoted (recently) all tournaments that have counted for ranking, and has sanctioned all other tournaments.
- No snooker tournament could take place (until the repeal of rule A5) anywhere in the world which involved members of WPBSA without WPBSA's consent.
- The WPBSA Main Tour has for many years been seen as the principal series in professional snooker.
- The prerequisite for playing on the Main Tour has always been membership of WPBSA.
- In the vast majority of cases the vehicle for entry into the Main Tour has been the challenge tour, also promoted and controlled by WPBSA.
- WPBSA has as a matter of policy never sanctioned a tournament which would have taken place or been broadcast anywhere in the world at the same time as a WPBSA tournament or broadcast.
- In order to secure WPBSA's sanction for a tournament a rival promoter was required to disclose to WPBSA in advance a good deal of information about the event.
- Nearly 80% of the annual prize money has come from WPBSA events.
- WPBSA has a substantial measure of influence over the snooker calendar.
- Events promoted by WPBSA are by far and away the most important in terms of participation, ranking, prestige and money.
- Through its agreements with broadcasters and sponsors, WPBSA has enjoyed the lion's share of the income of professional snooker from broadcasting and sponsorship.
- WPBSA's income far outstrips that of any other promoter from snooker.
- WPBSA has the only recognised ranking system in the world for professional snooker.
- There is virtually no aspect of promotion, regulation, discipline, sanctioning, ranking and broadcasting of snooker which WPBSA does not either control or influence to an appreciable degree.
- WPBSA had "effective control of the players" and used rule A5 in order to influence players' choices.
- WPBSA has a competitive advantage over competitors as regards promoting tournaments, getting sponsorship, selling broadcasting rights and access to players.
- As promoter and regulator, and with its broadcasting and sponsorship contracts, WPBSA was in a position of considerable advantage over any other competitor for the services of snooker players.
- Mr Goulding emphasised that, in determining whether an undertaking had market power or was dominant, the restriction which is challenged must be left out of account, and that therefore the effects of the sanctioning rule were to be ignored. He also submitted that the barriers to entry into the market on the part of other would-be promoters of tournaments were low. Dr Veljanovski agreed that they were low in all ordinary financial respects. That which he identified as a barrier to entry was the regulatory role of WPBSA, and nothing else, nor did he identify any aspect of that role other than rule A5.
- To this Dr Walker responded that WPBSA is itself replaceable. It has no pre-determined status as the regulator of professional snooker. It was set up by agreement of the players of the time in 1982, and it could be replaced, or joined, by another organisation if enough of the players so decided. He pointed out that part of the TSN tour proposal was that there would be a new style regulator, albeit that it might have been WPBSA in a new, more limited role. That would negate the submission that the regulatory role presents a real barrier to entry.
- I accept that WPBSA could be replaced as regulator, or that a second regulator could be set up, unsatisfactory as that would be with the result of a split sport. I am not satisfied, however, that it could be replaced with any degree of ease or over the sort of timescale (one year) which seems to be regarded as relevant in the context of barriers to entry. The fact that TSN had plans which involved a new regulator does not show that these plans were realistic or that this aspect of them would have been achieved within that sort of time.
- However, the fact that WPBSA is the regulator does not of itself amount to a barrier to entry, which must depend on how the regulatory power has been exercised, ignoring for this purpose rule A5. The fact that all snooker players are members of WPBSA does not necessarily create a barrier to entry; that depends on what restrictions are involved in membership.
- Mr Shepherd submitted that WPBSA had the advantage of a "first mover", which is recognised as a possible source of barriers to entry, in the nature of strategic advantages, by OFT Guideline 415 at paragraphs 5.9 onwards. However Dr Veljanovski did not suggest that these were relevant barriers to entry in this instance, and it seems to me that some of the factors which Mr Shepherd particularly identified, such as that WPBSA had contracts with broadcasters and sponsors, cannot themselves constitute barriers to entry, any more than the fact that an existing supplier of a given service does it very well, efficiently and cheaply would amount to a barrier to entry, in the relevant sense.
- WPBSA clearly has a high share in the market for the supply of players' services, whether as regards the number and significance of the events or in terms of prize money. This of itself raises a presumption that WPBSA has market power, and a dominant position in the relevant market. That conclusion may be shown to be wrong, for example if there are low barriers to entry. I can accept that WPBSA's existing contracts with broadcasters and sponsors do not amount to barriers to entry, and that the real problem is with WPBSA's regulatory role. I accept that in principle WPBSA is replaceable as regulator, though not quickly or easily. I can disregard rule A5, since to include it in the assessment would make it impossible to decide whether the imposition of that rule offends against the relevant legislation. I note that Dr Veljanovski does not identify any other particular aspect of the regulation imposed by WPBSA which does constitute a barrier to entry, and nor does Mr Shepherd. The result might seem to be that there is no real barrier to entry under WPBSA's rules (apart from A5) and that therefore there is no market power or dominant position. However, it seems to me that such an approach is too analytical, and concentrates wrongly on particular elements in the overall situation. The question whether an undertaking has or has not got market power in relation to a particular identified market, or is in a dominant position in that market, is to be answered by looking at the entire context. Otherwise there is a risk of not seeing the wood for the trees. Given the special importance of the very high market share which WPBSA has, and in the light of the circumstances of the market overall, including those mentioned in paragraph 92, a conclusion that WPBSA does not have market power nor a dominant position seems to me to defy common sense. I am conscious that, on the part of a non-specialist tribunal (unlike DGIV of the European Commission or the Office of Fair Trading) it may be dangerous to rely on common sense, because of the risk of a large element of subjectivity. But it seems to me that it must be right to categorise WPBSA as having market power in the market for the supply of players' services in snooker tournaments, and indeed as being dominant in that market. Accordingly I consider that the admission which WPBSA originally made in its Defence and Counterclaim and then withdrew (see paragraph 30 above) was right, subject to a more exact definition of the market in question, as set out in paragraph 89 above. Whether WPBSA acted in breach of either article 81 or 82 (or section 2 or 18) I will consider in relation to each rule or practice in question.
The contractual effect of the February and March versions of the rules
- First, however, I should deal with the contractual effect of the successive versions of the rules as they stand, and subject of course to the Claimants' challenge. The rules put forward in February did not take effect under the memorandum and articles, because the board had not adopted them. They therefore had effect by way of bilateral contracts between each player who agreed to enter the 2001/2 Main Tour at that stage, on the one hand, and WPBSA on the other. Neither of the individual Claimants did then. They were not affected by these rules. Such members as did enter the Main Tour then were necessarily deciding not to play on the TSN tour, even if it happened. They could not therefore complain of any effect that these rules would have in preventing them from playing on the TSN tour, because that would not have been open to them. Equally, as it seems to me, even if 110 Sport has the necessary standing to challenge the rules (which I will assume) it could not sensibly do so when these rules were only effective in relation to players who agreed voluntarily to submit to them by joining the WPBSA Tour for 2001/2. While, therefore, I will consider the February versions of the rules, it seems to me that the March versions are much more important, because those affected all WPBSA's members contractually, including the first and second Claimants, by virtue of the articles of association.
Rule A5: sanctioning
- The first rule which is challenged by the Claimants appeared as A5 in the February set of rules, and was amended in the March rules. Section A deals with Qualification and entry to tournaments. Rule 5, in the February version, was as follows:
"5.1 Members are not permitted to enter, participate or play in any tournament, match or game of snooker (other than the Tournaments) or cuesports without the prior written consent of World Snooker.
5.2 Players shall not, without the prior consent of World Snooker, participate in any kind of snooker, cuesport or other event including any promotional events (in any location) (except a Tournament) whilst a Tournament is being played."
- This cannot be understood without reference to some of the definitions. "Tournaments" mean only WPBSA's tournaments, and "Players" are the participants in a particular Tournament.
- The March version is differently drafted. It omits reference to cuesports and it deals with the subject matter of rule 5.2 above rather differently. It is as follows:
"5.1 Members shall not enter or play in any snooker tournament, event or match without the prior written consent of the Board other than:
5.1.1 Any snooker tournament event or match (both qualifying and final rounds) owned and staged by World Snooker; and/or
5.1.2 Any snooker tournament, event or match (both qualifying and final rounds) sanctioned by the Board in accordance with the principles set out in the sanctioning policy document of 12 March 2001.
5.2 Members shall not require the consent of the Board to enter and play in any exhibition / promotional / testimonial event or match provided that such event or match will not be arranged
5.2.1 until the dates for tournaments events or matches owned and staged or sanctioned by World Snooker have been fixed for the relevant season
5.2.2 so that it adversely affects any tournament event or match owned and staged or sanctioned by World Snooker."
- This rule had effect only as of the 2001/2 season, which is treated as having started on the day after the end of the concluding event of the 2000/1 season, namely the World Championships, so in May 2001. The facts which I have already described about the tournament held in Malta in February this year show that events were already subject to a requirement of being sanctioned before the current season. I was shown two previous versions of the relevant rule. In the 1991 rules of discipline it was as follows:
"3. Except with the prior written consent of the Council, no member may participate in any tournament or game of snooker or billiards which is transmitted by live or pre-recorded television pictures to or within the following countries: United Kingdom, Republic of Ireland, Belgium, Canada, Australia, Hong Kong, Singapore and Malaysia."
- In the 1996 rules of discipline, the rule was as follows:
"4(a) Except with the prior written consent of the Board, no member shall participate in a tournament or game of snooker or billiards any part of which is transmitted by live or pre-recorded television pictures to or within a country in respect of which the Association has a contract for the transmission of such pictures."
- The 1991 rule was at least specific about the countries which were relevant, though whether a member could play in another tournament would depend on the scope of television coverage of the event, which might perhaps not be determined finally until a late stage, or could at any rate change, not necessarily predictably. The 1996 rule was also related to television coverage, but required players to know or find out in which countries the Association had contracts for the televising of pictures of snooker tournaments. The 2001 rule, in both its forms, is more general, since it requires WPBSA's consent to be given in every case (apart from events covered by 5.2 in the March version). That, however, has to be understood in the context of the principles of sanctioning, which were laid down in March 2001 in a document, but according to the evidence had for years been applied in essentially the way that is summarised in the document.
- The March 2001 document starts with the proposition that it is WPBSA's object and intention to support the development of tournaments staged by others, so as to provide additional playing opportunities, and therefore to sanction such tournaments whenever possible. It makes the further point that by sanctioning a tournament, WPBSA is endorsing it, and must satisfy itself that it is and will be properly organised and run and that players' interests are protected, and also that such an event will not adversely affect tournaments owned and staged by WPBSA to the detriment of members and the sport. That is why WPBSA requires a good deal of information in advance about the tournament which it is asked to sanction. That is one aspect of the rule to which Mr Shepherd takes objection on behalf of 110 Sport. More importantly, however, he focusses on paragraphs 4 and 5 of the policy document. These are as follows:
"4. To ensure the proper working, organisation and administration of the sport of snooker as a whole and to ensure that Members give a degree of priority to World Snooker organised tournaments (which are part of the ranking system or which are significant representative tournaments such as the Champions Cup and the Nations Cup) as is necessary to organise and run the sport, World Snooker will not normally sanction a tournament on dates and at times which conflict with the dates and times for such World Snooker tournaments involving players who are participating in such World Snooker tournaments.
5. Notwithstanding the principle set out in paragraph 4, for the benefit of the sport of snooker as a whole World Snooker needs to maximise revenue from the audio-visual exploitation of its organised tournaments. Accordingly World Snooker will not normally sanction a tournament, the audio-visual rights to which will be transmitted at the same time and within the same territory (either live or on a delayed basis within as limited a window as World Snooker can secure by agreement with its broadcasters) as rights to any World Snooker organised tournament are being transmitted live."
- It is right to consider the rule together with the sanctioning policy, which I accept as being fairly summarised, for present purposes, in the March document. I think it is also right to consider the history of the rules. Mr Shepherd pointed out that if a provision is void under competition law, it cannot be saved by showing that it has been in force for years. That is no doubt true. But the history of the rule is likely to form part of the broad factual context which has been held to be what is relevant to be taken into account: see Technique Minière [1966] ECR at page 250; Delimitis v. Henninger Brau Case C-234/89 [1991] ECR I-935 at paragraphs 19 to 26. Mr Goulding submitted that because the Claimants do not challenge the validity of the prior versions, they could not be heard to say that equivalent new provisions are invalid. He relied on Panayiotou v. Sony Music Entertainment [1994] EMLR 233. In that case the Claimant (George Michael) had been a party to a series of agreements with the Defendant, and challenged a 1988 agreement as being in restraint of trade, but did not so challenge its predecessor entered into in 1984. In that situation I can see the force of a submission that, in considering the bilateral contractual relations between the parties, where the prior agreement was not challenged it had to be taken as valid. The present case is materially different. 110 Sport's challenge, and that of the individual Claimants, is to the acts of WPBSA in relation to what was to happen after the end of the 2000/1 season, and it is that which was to be regulated by the new rules. In those circumstances it seems to me that it would have been irrelevant to attack the earlier rules. I would have required great persuasion to have allowed time at the trial to be devoted to the issues that would have arisen as regards the earlier rules, with the consideration that would have been necessary of the circumstances existing in 1996 when they were adopted. Mr Michael's action took the best part of 6 months to try, whereas the present trial was crammed into 20 days in order that it should be finished before the end of the Trinity sittings. I am therefore not prepared to draw any particular inference from the fact that the earlier rules are not challenged. Mr Goulding mentioned that the 1991 rules had been referred to and cleared by the Director General of Fair Trading under the Restrictive Trade Practices Act; that, too, seems to me to be of no assistance on the question whether the new rules infringe the 1998 Act or articles 81 and 82 of the Treaty.
- Mr Shepherd says that rule A5 is a very plain abuse of a dominant position, or anti-competitive exercise of market power. Even with the sanctioning policy, it takes as a given the dates of WPBSA's events, and does not permit any challenge to those.
- Of course WPBSA's events do not occupy the whole year, even allowing players a reasonable close season in the summer for holidays. However, the calendar is constrained by a number of factors. One, evidently, is that players need time for recovery and practice between tournaments, as to which Mr Ebdon gave clear and convincing evidence. Another is that tournaments are arranged in order to fit in with broadcasting schedules and therefore so as not to conflict with other major sporting events which are televised. Mr Sinclair said quite frankly that that was why TSN's proposed tour corresponded so closely with the normal pattern of the WPBSA tour and with that which had been announced for 2001/2. The rival tour would fit in equally well with the established pattern of broadcasting snooker, so that, if the BBC were persuaded to broadcast TSN's events instead of those of WPBSA, they would not require any adjustment of the television schedules. For these reasons, the scope in the calendar for events which could be the subject of a sanction from WPBSA in addition to and not conflicting in date with the WPBSA Main Tour and other established sanctioned events is undoubtedly limited.
- Mr Goulding sought to justify the rule as being reasonably necessary in order to support the broadcasting and sponsorship revenues of snooker for the benefit of all members, and as not being appreciably anti-competitive. The latter point depended on the BBC having in fact decided to prefer to continue to broadcast the WPBSA tour. That is true, but seems to me to put the thing the wrong way round. The fact that the BBC will broadcast the WPBSA tour makes participation in that tour so attractive to players that they will choose to play in it. Indeed Mr Goulding submitted that it was the BBC's decision that rendered the TSN tour unviable, rather than any act of WPBSA. The real question is whether WPBSA should be entitled to use its regulatory power in order to entrench its position and help to ensure that it continues to have the broadcast contracts in future that it has now. Mr Coles was asked about rule A5 and paragraph 5 of the sanctioning policy document. He clearly regarded it as welcome, helping him to have confidence that the best players would be in the tournaments which the BBC would be broadcasting, though he did not regard it as a very serious risk that another promoter would run a successful tournament clashing directly with one which the BBC was broadcasting.
- When the sanctioning rule was introduced originally, in 1991, one of its functions was to protect players by ensuring that other events were properly organised and conducted. For example an event had occurred previously where prize money was awarded but not paid; this led to WPBSA's requirement of a deposit of the prize money of the tournament as a condition of its sanction. Factors of this kind are still relevant, but were rightly not substantially relied on before me as justifying the rule, since they could not by themselves support paragraphs 4 and 5 of the March 12 policy document about sanctioning.
- Having considered with care the submissions on this point, both in written form and those made orally, I agree with Mr Goulding that the February version of rule A5 is not open to objection on any of the various grounds relied on, because of its limited contractual status; briefly, it only bound those who signed up to the WPBSA Main Tour, and it did not prevent those players from doing anything significant which they would have been free to do, consistently with having agreed to play on that tour. However, I accept Mr Shepherd's submission that the March rule A5 was void. As I have said, I consider that WPBSA had market power and was in a dominant position in the relevant market, and I hold that the imposition of rule A5 in the March rules was in breach of both sections 2 and 18 of the 1998 Act, and therefore void. So far as section 2 is concerned, it may not be the object of rule A5 to prevent competition, but its effect is to do so, by limiting the sources to which players can have recourse in order to earn their livelihood, and to do so to an appreciable effect in the United Kingdom. Nor is this rule limited to what is legitimate on the part of an undertaking with a dominant position.
- Inasmuch as the restriction might affect trade between Member States, because tournaments are held in Ireland, and have been and may again be held in Germany, Belgium and other Member States, articles 81 and 82 are also relevant. As it seems to me the only question about infringement of these articles is whether there is an appreciable effect on trade between Member States. In view of my holding of infringement of the Act this may not matter greatly, but it seems to me that the effect might be appreciable, and therefore the articles are infringed.
- On that basis it is not necessary to consider the March rule as regards the doctrine of restraint of trade. I will deal with this point only briefly. The provision clearly is an agreement in restraint of trade, so it depends on whether it can be justified as being reasonable for the protection of legitimate interests of WPBSA. The analogy with Greig v. Insole [1978] 1 W.L.R. 302 shows that WPBSA has a legitimate interest, as the governing body of the sport of snooker, which it is entitled to protect, so the question would then be whether the provision is no more than is reasonably required to protect that interest. Mr Goulding submitted that, in a case concerned with the regulation of a sport, unlike other cases, it was for the party attacking the restriction to show that it was unreasonable, rather than the other way round. He relied for this on the decision of Carnwath J in Stevenage Borough Football Club v. Football League unreported 24 July 1996. I do not think anything turn