The Commerce Commission today released a draft determination stating that on the information currently available to it, it would not authorise the New Zealand Rugby Football Union's (NZRFU) proposed player transfer arrangements.

An authorisation would give the arrangements legal protection against a player, union or anyone else taking court action over them if they thought they breached the Commerce Act.

Commission Chairman Dr Alan Bollard said that as a professional sports organisation, the NZRFU is covered by the same laws as other New Zealand businesses.

The Act prohibits arrangements among competitors that substantially lessen competition, prevent competitors acquiring goods or services, or involve price fixing.

However, it allows otherwise prohibited arrangements to be authorised if the Commission is satisfied that public benefits from the arrangements outweigh their detriments to competition.

Dr Bollard said the Commission's preliminary view is that in this case benefits do not outweigh detriments.

The draft determination is not the Commission's final decision. The NZRFU and interested parties now have a clear indication of how the Commission views the proposed arrangements, and have time to make written submissions and provide further information at a conference. The Commission expects to make its final decision by about December 17.

The Act requires the NZRFU's application to be treated in the same way as an application from any other business would be. In considering an authorisation, the Commission must determine what the relevant markets are. In this case they are:

  • the market for providing and acquiring the rights to premier rugby union player services (this is the relationship between unions - unions can trade their rights to have certain players representing them)
  • the market for providing and acquiring premier rugby union player services (this is the relationship between players and unions)
  • the market for providing and acquiring sports entertainment services

The market focused on by the Commission is that relating to the relationship between the provincial unions for the trading of rights to use player services.

The Commission's preliminary view is that the cap on the number of players a union can acquire, the transfer fees it must pay and the restriction of transfers to November only, all substantially lessen competition.

The cap on player numbers prevents competing unions acquiring player services and the cap on transfer fees is a form of price fixing.

The Commission preliminary conclusions are that both detriments and benefits from the arrangements are small, and it is not satisfied that benefits outweigh detriments.

In relation to the other markets, the Commission's preliminary view is that the relationship between players and the provincial unions involves a series of employment contracts between players, the provincial unions and the NZRFU.

Employment contracts are excluded by law from the Commerce Act and the Commission has therefore not given consideration to the impact of the arrangements on this market.

The Commission considered that the arrangements will not lessen competition in the sports entertainment market.

Copies of the draft determination are available from reception at the Commission's Wellington office, 7 floor, Landcorp House, 101 Lambton Quay.

Timetable of Commission process:

by November 6

NZRFU and interested parties to make submissions on draft determination

by November 13

experts employed by NZRFU and interested parties to make submissions on draft determination

November 18-20

conference to give NZRFU and interested parties opportunity to provide further information and the Commission to ask questions

by about December 17

Commission to release final decision

Media contact:Chief Investigator Commerce Act Geoff Thorn

Phone work (04) 498 0956, home (04) 526 4267

Communications Officer Vincent Cholewa

Phone work (04) 489 0920, home (04) 479 1432

A five page summary of the draft determination follows.