Competition and Consumer Law / Sports Law Update - FINA seeks to stamp out “unauthorised” swimming competitions

Commercial Law
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Thomas A Shields et al v FINA 

On-going – not yet concluded:

Case 3:18-cv-07393-JSC Document 72 Filed 12/16/19

The Fédération Internationale de Natation (FINA) is recognised by the International Olympic Committee as the international governing body for swimming and other aquatic sports.  As such, FINA is responsible for establishing and organising the rules of competition for swimming at the Olympics, and it sets the qualifying criteria for swimmers to participate in the Games.  It also claims the power to ban from the Olympics (or from Olympic qualifying events) any swimmer who participates in non FINA-sanctioned or approved swimming events.

The International Swimming League Ltd (ISL) is a company based in Switzerland attempting to organise and promote innovative, teams-based, professional international swimming events around the world.

ISL entered into discussions with USA Swimming with a view to organising and promoting a professional swimming event.  Olympic gold medallist Thomas Shields, world record holder Michael Andrew, and three-time Olympic gold medallist Katinka Hosszu (together, Athletes) were each potential participants at the ISL run event.

ISL also entered into negotiations with FINA about the terms on which such an event would be held.  Discussions broke down after FINA demanded event ownership, naming rights, and the payment of $50M over 10 years. USA Swimming then broke-off discussions with ISL after FINA threatened sanctions against any member federation if they participated in ISL events.

ISL and the Athletes have commenced proceedings in the US District Court (Northern District of California) against FINA alleging anticompetitive conduct (in breach of US antitrust law). The Athletes appear on their own behalf and on behalf of “swimmers who comprise the input market for top-tier swimmers who have competed on the sport’s highest stages or have otherwise performed at a high-enough level that they can earn invitations to premiere competitions and draw lucrative sponsorships”. In summary, ISL and the Athletes argue that FINA breached federal antitrust (competition) law by using its control over Olympic aquatic sports to determine the terms of compensation for international swimming events outside of the Olympics and FINA sanctioned competitions.  In doing so, the plaintiffs allege that FINA engaged in anticompetitive conduct by, essentially, using its monopoly power.

FINA sought to have the claim struck-out by arguing that the Court did not have jurisdiction over FINA, and on the basis that FINA was not caught by the relevant antitrust provisions. In particular, FINA argued that the Court did not have “personal jurisdiction” over it as a non-resident of the USA. 

However, the Court sided with the plaintiffs, who successfully argued that FINA had at least “minimum contacts” within the forum. That is, the plaintiffs established that:

  • FINA purposefully directed its activities, consummated some transactions within the forum, or purposefully availed itself of the privilege of conducting activities in the forum; and
  • their claim was one that arose out of or related to FINA’s forum-related activities.

FINA’s communications with USA Swimming about the latter endorsing participation in ISL events was held to constitute particularly significant evidence of the foregoing.

Those two factors having been satisfied, it remained open for FINA to nonetheless argue that the Court’s exercise of jurisdiction would be unreasonable. FINA argued that the exercise of jurisdiction was unreasonable (because, for example, it has no physical presence in the USA), but the Court did not agree and so FINA’s application failed.

Australia, and many other countries, has competition laws that prohibit anti-competitive conduct in some circumstances, and so there is little doubt that the outcome of this case may be relevant in Australia and more broadly.  While it is not clear when the final hearing will occur, given it has been on-foot for over 12 months, the case is likely to be heard and determined this year.

The case comes at an interesting time for international swimming. FINA has just elected a new president, Husain Al Musallam; and many of the world’s highest profile swimmers have recently launched the International Swimmers Alliance (ISA): an independent organisation with a mission to improve the social and economic standing of its members.  The ISA may well push for prize money at future Olympics and a better revenue sharing deal for athletes going forward, like those enjoyed by international football and professional basketball.

Adam Rollnik Headshot 2019
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Adam Rollnik practises in commercial law

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