OTTAWA, March 31, 2008 - National Hockey League policies on ownership transfers and franchise relocations do not contravene the Competition Act, the Competition Bureau announced today after the conclusion of an investig gation.
The Bureau's inquiry focused on whether the NHL's policies regarding transfers of ownership and relocation of franchises constituted an anticompetitive practice.
"We are confident that the NHL's policies are not anticompetitive," said Richard Taylor, Deputy Commissioner of Competition. "We conducted an extensive investigation which established that the NHL's policies were directed at furthering legitimate interests of the NHL, and not to prevent competition. This concludes our investigation of the matter."
The Bureau initiated its inquiry following media reports that raised concerns as to whether the NHL was engaging in anticompetitive conduct in respect of Canadian businessman Jim Balsillie's attempted acquisi tion of the Nashville Predators. To determine the facts, the Bureau conducted interviews and obtained relevant records, such as emails and letters, from numerous parties, including prospective purchasers and vendors of NHL franchises, and NHL governors and senior officials. The Bureau also reviewed the NHL's Constitution, By-Laws and applicable policies. In addition, the Bureau considered the circumstances relating to Mr. Balsillie's attempt to purchase the Pittsburgh Penguins franchise in 2006.
The NHL's actions and policie s were reviewed under the abuse of dominance provisions of the Competition Act. The Bureau found no evidence that the NHL engaged in any anticompetitive acts. The Bureau concluded that the policies impleme nted by the NHL regarding transfers of ownership and relocations of teams serve to further legitimate business interests, such as preserving team rivalries, attracting a broader audience, and encouraging i nvestment in sports facilities by local municipalities.
The Bureau's investigation established that under the NHL's rules and procedures, the proposed relocation of a franchise to Southern Ontario would require a majority vote by the NHL Board of Governors. The NHL would not permit any single team to exercise a veto to prevent a franchise from enteri ng into Southern Ontario.
The Bureau also examined the seven-year non-relocation covenant that may be contained in a Consent Agreement that prospective owners enter into with the NHL. Such a covenan t requires the owner not to seek to relocate the franchise for a period of seven years from the date of the agreement. The Bureau's review confirmed that this type of covenant has been applied by the NHL in numerous transactions, and serves to further leg itimate league interests, such as assuring spectators, corporate sponsors, municipalities and others that the owner is committed to the success of the franchise within its existing local territory.
Where there is evidence of abuse of dominance, re medies available to the Bureau include applying to the Competition Tribunal for an order prohibiting the firm or firms from engaging in anticompetitive conduct.
For more information on the Bureau's decision, please see the technical backgrounder.
The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and en abling informed consumer choice.
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