Irish Competition Authority Decisions

1. A sponsorship agreement between ACC Bank plc, (“ACC”), and the Leinster Branch of the IRFU, (“the Leinster IRFU”), was notified to the Authority by ACC, on 19th of December, 1996. The notification requested a certificate under Section 4(4) of the Competition Act or, in the event of a refusal by the Authority to issue a certificate, a licence under Section 4(2).

2. The notification concerns a sponsorship agreement between ACC and the Leinster IRFU whereby, in return for payment, the Leinster IRFU agrees to display certain advertisement features/logos of ACC on its grounds and on items of clothing.

3. ACC is a company registered in the state having its registered offices at Upper Hatch Street, Dublin 2. The business of ACC is banking and financial services.

4. The Irish Rugby Football Union ( the “IRFU”) is the governing body for the game of rugby in Ireland. The Leinster IRFU is one of its four constituent branches (which correspond to the four provinces of Ireland). Local rugby clubs are affiliated to their provincial branch of the IRFU. The IRFU and its respective provincial branches organise rugby competitions.

(c) The product and the market

5. The relevant market for purposes of this notification is the market for corporate sponsorship for sporting organisations and sporting events in Ireland. The ‘sellers’ in this market are sporting bodies. The ‘buyers’ are organisations seeking to promote their businesses through sponsorship of sporting events.

6. Under the terms of the arrangement, the Leinster IRFU undertakes to display certain logos of ACC, to the exclusion of competitors of ACC, for a fee. The duration of the agreement is limited to the 1996/1997 and 1997/1998 rugby seasons.

7. Clause 2.1.1 of the agreement gives details of the types and locations of advertising signage to which ACC has rights. Those advertising positions containing elements of exclusivity are as follows:

(i) On one face of the prismatic signs on each gable end of the main pitch of the Leinster IRFU at Donnybrook ACC is provided with advertising space. During these periods the Leinster IRFU will not sell advertising space on either of the other two faces of these prismatic signs to any other financial institution.

(ii) ACC is provided with on-pitch stencilled signage on the main pitch at Donnybrook and the Leinster IRFU will not allow any other financial institution to advertise in this position.

(iii) ACC is provided with signage on the terrace railings at both ends at the Lansdowne Road pitch for European competition matches. The Leinster IRFU will not allow any other financial institution to advertise in these positions.

8. Clauses 2.1.2 and 3.6 of the agreement grants ACC the exclusive right to place its logo and/or an agreed design on the clothing worn and kit used by teams of the Leinster IRFU.

9. Clause 2.1.6 grants to ACC the exclusive right to be named as official sponsors in connection with certain activities of the Leinster IRFU.

10. Clause 3.5 provides that the Leinster IRFU will not obtain sponsorship from any other financial institution without the express written permission of ACC while the Agreement is in force.

11. ACC state that the agreement does not have as its effect or its object the distortion of competition for sponsorship in Ireland. The Agreement provides that ACC is the “primary corporate sponsor” of the Leinster IRFU, not its sole corporate sponsor. The Leinster IRFU grants ACC certain exclusive sponsorship rights but remains free to obtain sponsorship from any sources other than financial institutions.

12. ACC contends that nothing in the agreement affects sponsorship of rugby organisations at local or national level. ACC’s sponsorship here is only one of a multitude of sponsorship opportunities available to sporting organisations in Ireland. Once the agreement is terminated, the rights granted to ACC in this agreement will be available to any potential sponsor.

13. The agreement does not restrict, prevent or distort competition between financial institutions in the State. Any financial institution is free to sponsor any sporting body, including any rugby organisation or competition other than the Leinster IRFU and teams affected by this agreement. The same type of exposure is available to other financial institutions through other sporting bodies.

14. Section 4(1) of the Competition Act, 1991, as amended, states that “all agreements between undertakings, decisions by associations of undertakings and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition in goods or services in the State or in any part of the State are prohibited and void.”

15. Section 3(1) of the Competition Act, 1991, defines an undertaking as “a person, being an individual, a body corporate or an unincorporated body engaged for gain in the production, supply or distribution of goods or the provision of a service.” The Leinster IRFU is an unincorporated association engaged for gain in the administration of rugby football in Leinster. ACC is a company engaged for gain in the provision of a range of financial services. Therefore, the notified arrangements constitute an agreement between undertakings.

16. The Authority believes that the notified arrangements do not prevent, restrict or distort competition. This position is consistent with previous Authority decisions on agreements relating to the commercial sponsorship of sporting activities (see Decision No. 421, CA/425/92E - Adidas/FAI; and Decision No. 423, CA/208/92E - Gallaher/Snooker). The commercial sponsorship of sporting activities, by way of sponsorship of tournaments or organisations, contributes significantly to the provision and development of sporting activities in the State. A market for the commercial sponsorship of such activities has developed. Given the relatively short term duration of the arrangements here and the small segment of the market affected, the exclusive nature of the arrangements does not distort competition. Rivals of ACC remain free to sponsor other sporting activities (of which there is no shortage) or to bid for the exclusive sponsorship rights of the Leinster IRFU following the termination of the arrangement. None the provisions of the notified arrangement offend against Section 4(1).

17. In the Authority’s opinion, ACC and the Leinster IRFU are undertakings within the meaning of Section 3(1) of the Competition Act and the notified arrangements constitute an agreement between undertakings. In the Authority’s opinion the arrangements do not have, as their object or effect, the prevention, restriction or distortion of competition within the State or any part of the State.

18. The Competition Authority has issued the following certificate:

The Competition Authority certifies that, in its opinion, on the basis of the facts in its possession, the Sponsorship Agreement between ACC Bank plc and the Leinster Branch of the IRFU, (notification no. CA/31/96), notified on 19th December, 1996 under Section 7 does not offend against Section 4(1) of the Competition Act.

For the Competition Authority

William Prasifka

Member

1 April 1998