Competition law in sports: CVC Capital and Six Nations Rugby
First published by Author on September 04, 2022 in the following categories: Acquisitions Industry Investigations Mergers and tagged with cma | competition law | consumer law | investigations
In March 2021, it was announced that CVC Capital and Six Nations Rugby had come to deal on a 14.3% stake in the Six Nations, for which it reportedly paid a huge £365 million. However, in the wake of this proposed agreement, the Competition and Markets Authority (CMA) saw fit to begin an investigation into whether or not the merger would provoke a decrease in competition within the market.
When major deals occur in any sector, it is natural and routine for the CMA to look into any potential changes to competition which may be caused, so the fact that a CMA investigation was triggered does not necessarily confirm that a breach of competition law has occurred, or that any action will be taken against the organisation under investigation. Such was the case for the CVC Capital deal, which was cleared by the CMA in July.
Nevertheless, it is worth considering why the CMA made the decision to investigate and how it came to its decision, as cases like this can give a valuable insight into how the competition regulator operates in the UK. It is also useful to look at cases like this from the perspective of competition law in sport.
The CVC Capital and Six Nations Rugby deal
Last year, equity giant CVC Capital finalised months of negotiations in a deal for a 14.3% stake in Six Nations Rugby. With this seventh share, CVC Capital invested in each of the six rugby union nations, which together still hold a six-seventh share. It is, therefore, a minority stake for CVC, but the £365m deal brings CVC’s investment in rugby union to over £700m.
CMA investigation into the acquisition
The CVC Capital and Six Nations Rugby deal clearly raised some initial concerns for the CMA, who decided to launch an investigation into the matter to consider whether it was likely to inhibit competition in the sector. On 26th May 2021 the investigation opened, and the CMA invited comments from any interested parties on the likely impact of the agreement.
In particular, the CMA was considering whether the deal constituted a “relevant merger situation” under the Enterprise Act 2002. With its powers as a regulator, the CMA can investigate any significant mergers and, where appropriate, has the power to block a merger. However, the CMA decided not to take such action in the case of the CVC Capital and Six Nations Rugby deal.
Decision on the merger
On 14 July 2021, the CMA cleared the CVC Capital and Six Nations Rugby deal, a decision that looked to be an indication that the competition regulator had concluded that the acquisition was unlikely to disrupt the market in a harmful way.
As advocates of fair competition, we support the CMA’s routine investigations into significant business deals and transactions, as these investigations can lead to important enforcement action in certain cases. The interest when it comes to sporting matters can be quite significant, especially as some professional sports continue to struggle and are looking for new ways to raise revenue.