Questions Raised Over Marketing Restrictions on Olympic Athletes
It has been reported that the European Commission met with officials from the International Olympic Committee (IOC) in November to discuss rules that restrict athletes’ marketing activities during a ‘blackout’ period around the Olympic Games.
The meeting follows a recent ruling in Germany, which found that certain IOC restrictions breached antitrust rules and unlawfully limited athletes’ ability to earn money from sponsors. Following commitments given by the German Olympic Sports Confederation (DOSB) and the IOC to loosen the rules on German athletes, it is understood that the European Commission may consider extending this approach to the rest of the EU.
The European Commission meeting also comes shortly after a group of British athletes, including Mo Farah, Katarina Johnson-Thompson, Laura Muir and Adam Gemili, sent a Letter Before Claim to the British Olympic Association threatening legal action over its blackout rules.
On the eve of next year’s Olympic Games in Tokyo, the ability of athletes to engage in their own marketing – and the right of event sponsors to protect their investment – will come under significant scrutiny. National Olympic Committees, athletes and the companies that support them will all be watching carefully.
Rule 40 and its implementation
The restrictions on marketing during Olympic events are established at global level but implemented nationally. Rule 40 of the Olympic Charter establishes the principle that athletes’ ability to use their name and image in advertising during the Olympic Games is restricted.
It falls upon national Olympic Committees, however, to decide how this is interpreted and enforced.
Prior to 26 June 2019, Rule 40 of the Olympic Charter provided that:
“Except as permitted by the IOC Executive Board, no competitor […] may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games.”
The rule applies during the so-called blackout period starting nine days before the opening of the Olympic Games and ending three days after the closing ceremony.
Following a ruling in Germany that found the restrictions to be anticompetitive (see below), the IOC relaxed Rule 40 to a degree. It now reads:
“Competitors […] who participate in the Olympic Games may allow their person, name, picture or sports performances to be used for advertising purposes during the Olympic Games in accordance with the principles determined by the IOC Executive Board.”
Antitrust ruling in Germany
The case in Germany began in April 2017, when the Bundeskartellamt (the German national competition authority) responded to complaints that the restrictions under Rule 40 were anticompetitive. Following a lengthy investigation, the authority found that by enforcing the advertising restrictions on athletes, the IOC and the German national Olympic Committee (the DOSB) abused their dominant position in breach of Article 102 of the Treaty on the Functioning of the European Union. The authority deemed the restrictions disproportionate, and beyond what was necessary to prevent illegal advertising.
The IOC and DOSB entered into commitments to relax the application of Rule 40 in Germany, which became binding in February 2019. This was presented by the Bundeskartellamt as a victory for athletes:
“While athletes are the key figures of Olympic Games, they cannot benefit directly from the IOC’s high advertising revenue generated with official Olympic sponsors. However, as the games mark the height of their sporting careers, self-marketing during the games plays a very important role. Our decision grants German athletes more leeway when it comes to marketing themselves during the Olympic Games…”
The specific terms of the settlement included the following:
Ending the requirement to notify advertising activities three months in advance of the Games;
Allowing athletes to use terms such as “Medal, Gold, Silver, Bronze” for promotional purposes;
Permitting certain competition and non-competition images to be used for promotion (providing the images do not contain Olympic symbols); and
Permitting social media activity involving the recognition of sponsors during the Games.
Although these commitments above only applied in Germany – and in principle only benefitted German sportspeople – the ruling had a wider impact. As noted above, the IOC amended Rule 40 to allow athletes to take advantage of sponsorship opportunities in certain circumstances, rather than placing a blanket prohibition on advertising during the Games.
However, the IOC retains discretion to determine the scope of the rule, since athletes must behave “in accordance with the principles determined by the IOC Executive Board.” It also remains up to the national Olympic committees to determine how this is implemented in practice.
A game-changer in the UK?
In November, a group of Team GB athletes, including Sir Mo Farah and Katarina Johnson-Thompson, sent the British Olympic Association (BOA) a letter threatening court proceedings over the BOA’s interpretation of Rule 40.
The BOA introduced new Rule 40 guidelines in October 2019 (following the German case and the IOC’s amendment). The guidelines allow athletes to send one generic ‘thank you’ message to sponsors during the Games, and continue to limit the way non-Olympic brands can use their sponsored athletes in promotions while the Games are underway.
The British athletes allege that the BOA’s guidelines are anticompetitive and will lead to a significant loss of revenue at the most profitable time in their careers. They have argued that the rules should be relaxed, consistently with the German guidelines (to which they specifically refer).
Should a case proceed, it is likely to hinge on whether the BOA can show that the restrictions on athletes are “objectively justified”: in other words, that they do not go beyond what is necessary to achieve a legitimate goal.
In the German investigation, the IOC and DOSB argued that Rule 40 sought to pursue the following three objectives:
Preserving the financial stability and sustainability of the Olympics;
Preserving the value of the Olympic brand to finance the Olympic solidarity model; and
Preventing the excessive commercialisation of the Olympic Games to ensure the focus is on athletes and competitions.
The German authority recognised that the first of these objectives, in particular, is legitimate. Ensuring that the Olympic Games take place on a regular basis requires funding, which is facilitated in large part by sponsorship. In order to attract and maximise sponsorship revenues it is legitimate for the Games organisers to prevent ambush marketing, which requires restrictions on marketing by athletes. The authority was less persuaded, however, by arguments based on the solidarity model (distributing revenues between athletes and committees worldwide) and preventing excessive commercialisation.
On the other side, the British athletes will argue that the rules, even if they do serve a legitimate objective, are more restrictive than necessary and an unreasonable restraint of trade.
Although the European Commission has taken no action so far – nor has it confirmed the reported IOC meeting – it is very possible that it will intervene soon. As well as being the EU-wide antitrust authority, the Commission also considers that it has a special duty to ensure consistency between Member States. It may be uncomfortable about a possible scenario in which German and British athletes are subject to one set of rules, and French and Spanish (for example) to another.
In any event, it is almost certain that there will be further debate, and potentially legal proceedings, between now and the opening ceremony in Tokyo on July 24th, 2020.