The Federation of the European Sporting Goods Industry (Fesi) is calling for common regulations all over the European Union on the use of the sponsors’ brand names and logos in connection with the Olympic Games following a positive response by the German Cartel Office to a challenge by the German sporting goods industry federation, BSI, against the regulations imposed by the International Olympic Committee (IOC).
At stake is the application of Rule 40, paragraph 3, of the Olympic Charter, which bans all kinds of individual advertising activities by the participants in the Olympic Games during a so-called “frozen period” that runs from nine days prior to the event to three days after it. BSI announced last month that it had obtained a substantial relaxation of the ban for German Olympic athletes and the communication that they and their sponsors could make on German media, in German or English.
BSI had asked the German Cartel Office in April 2017 to support the argument that the IOC’s Rule 40 was infringing the contractual relations between the athletes and their sponsors and other commercial partners. After an investigation that lasted two years, the German anti-trust authority concluded that the IOC and the German Olympic Committee (DOSB) were abusing their dominant market position by hindering the athletes’ commercial freedom through Rule 40.
Last Feb. 27, the German anti-trust authority stopped its anti-trust proceedings after certain commitments made by the IOC and the DOSB. Starting immediately and through at least the 2026 Winter Olympic Games, German athletes can be greeted or congratulated by their sponsors on all kinds of German media, including social media, even those that have an international reach, as long as they also address primarily the German public or Germany as a country. They are already permitted to communicate with their friends, family and supporters.
The parties have also agreed that these forms of advertising would also be permissible during the “frozen period” if they are done without any Olympic reference, which was not allowed before. Olympic athletes will no longer have to get prior approval from the DSOB to engage in individual advertising actions at other international events like the Wimbledon tennis tournament or the Tour de France. Furthermore, any infringements would result in economic sanctions for the athletes. Before, they could be excluded from the Olympic Games or deprived of their medals – something that is now technically still possible with non-German athletes.
BSI and Fesi want to go now one step further to get the matter clarified at the European level. For one thing, the current situation entails an unequal treatment of German citizens and those of Austria and other countries that belong to the European Union, thus de facto infringing EU legislation.
In view of this and other considerations, Fesi is asking the anti-trust authority of the European Commission to clarify and harmonize the situation in the most effective way, eventually through an infringement procedure against the IOC, in the interest of all EU citizens and their commercial partners and other economic operators.
Fesi and BSI state that there is an urgent need for action, possibly well before next year’s Olympic Games in Tokyo, because the various National Olympic Committees in the EU impose very different types of restrictions on national athletes. In some countries, the advertising activities of Olympic athletes from other countries are completely prohibited, even at parallel events like the Wimbledon tournament, if they are not previously approved by the national bodies.
BSI and Fesi are going as far as asking for the pure and simple removal of the third paragraph of IOC Rule 40, as there is no evidence that the sponsors of the Olympic Games are asking for this kind of protection, and thus the regulation is not really necessary for the financing of the Games. They are primarily financed by the hosting country as well as the local municipalities, drawing billions of dollars from the taxpayers.
During the 2013-16 period, the top sponsors of the Games contributed a total of $1,003 million to total revenues of $7,798 million for the IOC from its summer and winter events. For the IOC, the biggest source of revenues was the sale of TV rights, which involved expenses of $4,157 million by the broadcasters, followed by revenues of $2,638 million from the sale of tickets, licenses and contracts with minor sponsors.
Welcoming the decision of the German Cartel Office, Frank Dassler, president of Fesi, said that the sporting goods industry in Europe was being faced with an “inconsistent situation…that violates the principle of non-discrimination within the European Union.” He concluded: “It is simply not practical nor fair to ask the Olympic athletes to start individual negotiations with their National Olympic Committees. Therefore, we invite the European Union to bring a coherent and persuasive solution for the concerned parties prior to the upcoming Olympic Games in Tokyo 2020, by evaluating the compliance of IOC Rule 40 paragraph 3 with EU legislation.”
