Antitrust Lawsuit Could Mean Governing Bodies Can't be the Only Event Owners | Sports Destination Management

Antitrust Lawsuit Could Mean Governing Bodies Can't be the Only Event Owners

May 15, 2019 | By: Mary Helen Sprecher
Outcome of One Case Could Have Large-Scale Ramifications

California’s a big state but some pundits are still calling this a David and Goliath battle. Three Olympic and world champion swimmers (Hungary’s Katinka Hosszu and the United States’ Tom Shields and Michael Andrew) have filed an antitrust suit in California challenging governing body FINA’s control of organizing competitions.

The suit was filed in the wake of FINA’s work to shut down an independent meet in to be held in Turin, Italy, in 2018; FINA used the threat of banning competitors as a weapon and the Turin meet was subsequently cancelled. The planned event, the 2018 Energy for Swim meet, involved organizers of a proposed International Swimming League (ISL), which aims to operate outside FINA’s control and pay higher prize money.

“ISL takes swimmers seriously, not like FINA,” Hosszu, a three-time gold medalist at the 2016 Rio de Janeiro Olympics, said in a statement. “My passion has always been to push swimming in the direction where swimmers are partners of the governing body, not just Muppets.”

(Side note: “Muppets.” Hope you were prepared for that slap, FINA.)

According to an article by Associated Press, lawyers in San Francisco for the swimmers said they “believe a professional league that will compensate its best athletes and better reward them for a lifetime’s worth of hard training and sacrifice is long overdue.”

According to the site, SwimSwam, ISL organizers filed a separate and simultaneous suit against FINA for anticompetitive conduct. “The lawsuit claims violations of the Sherman Antitrust Act of 1890, which forbids organizations from engaging in anti-competitive behavior. The Sherman Act resulted in the breakup of Standard Oil and AT&T, among other organizations. Attorneys for the plaintiffs also claim tortious interference with contractual relations or prospective economic relations, for collusion to unreasonably restrict competition, and for monopoly.

The lawsuits seek injunctive relief and monetary damages for the named plaintiffs and for all class members, which could include dozens of pro swimmers from around the world who signed contract. The class, if accepted, would not be limited to just Americans, even though the suit is filed in the United States.”

And, note plaintiffs, the suit was only undertaken after FINA demanded a $50 million fee to approve ISL events.

Both suits are pending in the U.S. District Court for the Northern District of California. And FINA only stated that it had “taken note of the filings.” It also stated, “FINA will nonetheless give the filings our full attention and mount a robust defense if required to do so. As always, FINA remains open to proposals that would genuinely enhance — rather than conflict with — the current and planned competition calendars.”

A precedent has already been set, and it’s not in the Muppetmaster’s FINA’s favor. In a similar case heard in 2018, Dutch speed skaters won a European Commission ruling in Brussels against the Swiss-based International Skating Union (ISU). The skaters had wanted to compete in a South Korean-organized event in Dubai but – as with the FINA event – were threatened with bans.

The IOC is also taking heat – though it is not named in the suit. After that organization expressed its concern over the “proliferation” of sports events and “pressure from commercial entities on the existing sports model,” the IOC came under fire for representing governing bodies’ interests rather than those of athletes.

“Neither of the two lawsuits challenge FINA’s authority to operate as the gatekeeper of the Olympic Games,” the swimmers’ lawyers told AP. “Rather, they allege that FINA unlawfully wields that power to prohibit swimmers from participating in non-FINA events or in any events that FINA does not formally approve.”

The world swim body asked for a $50 million payment spread over 10 years to permit the ISL to operate, the plaintiffs claim.

“FINA earned about $118 million in gross revenues from all aquatics events in 2016 and 2017,” the lawyers’ statement said, claiming only 12.5 percent was paid out in athlete prize money.

In late 2018, SwimSwam noted, an analysis by Stefano Bastianon,an Italian legal expert, suggested the FINA bans on athletes who participated in the Energy for Swim 2018 event won’t hold up in European courts, based on sports-related precedents. Bastianon wrote that the European Commission doesn’t often intervene in cases involving sport governance, but noted that in the case of the skating event, the significance of the fact that the Commission did rule – and rule the way it did – “cannot be underestimated.”

Links are located here for futher information on the full lawsuits filed by Shields, Andrew and Hosszu and from the ISL.

The ramifications of an independent organization being able to host international competition are important to event owners both inside and outside the U.S. since it can open the door to not only more events but new events. It will also challenge event owners to come up with methods for offering sanctioning of and promotion of events that do not create burdens on event owners that would result in further court challenges.

Tom Shields, an Olympic gold medalist, is a lead plaintiff and the named plaintiff in the lawsuit. He says that he has dreamed for years of seeing the sport expand to include a professional league. “We are closer now than ever before to making that dream come true,” he said. “But that dream is being blocked by FINA.”

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