Chwen Chin Professional Baseball Co., Ltd. and five other professional baseball companies were complained for their concerted action by agreement to limit activities related to the teams' operations; using a life time contract to impose improper restrictions of players' freedom to change teams

Chinese Taipei

Case:

Chwen Chin Professional Baseball Co., Ltd. and five other professional baseball companies were complained for their concerted action by agreement to limit activities related to the teams' operations; using a life time contract to impose improper restrictions of players' freedom to change teams

Key Words:

professional baseball, player contracts

Reference:

Fair Trade Commission Decisions of February 19, 1997 (the 277th Commission Meeting) and 4 June 1997 (the 292nd Commission Meeting); Letter (86) Kung T'ai Tzu No. 850 6895-006

Industry:

Entertainment (8705)

Relevant Laws :

Articles 7 and 14 of the Fair Trade Law; Article 2 of the Enforcement Rules of the Fair Trade Law

Summary:

1. By virtue of its unique nature as professional sports, professional baseball has a number of special characteristics that distinguish it from the general type of commercial activity. Under the law of the United States, judicial precedents have long had professional baseball exempt from antitrust law. However, such U.S. exemption is unique, and no other professional sports engaging in interstate commerce in the U.S., for example interstate commerce involving soccer, boxing, basketball and ice hockey, has ever been granted such exemption.

With respect to Japan, according to a member of the Japanese Fair Trade Commission, the [activities of the] Japanese Professional Baseball League do not implicate questions of competition order and thus the Japanese Fair Trade commission does not intervene. However, where there are issues concerning protection of work related rights of players, the agency in charge is Japan's Ministry of Labor, which is similar to that Chinese Taipei's Council for Labor Affairs, and the Japanese Professional Baseball League is regulated by an agency similar to the Ministry of Education in Chinese Taipei. In European countries there are no such exceptions to the competition laws.

2. On the issue of alleged violation of the Fair Trade Law by six baseball companies [teams] that signed the inter-team baseball agreement, the investigation revealed that four teams signed the agreement when the Chinese Professional Baseball League was established in 1989 and two more companies [teams] signed the agreement in 1993 when joining the League, which brought the total to the current number of six teams. The Purpose of the agreement was to maintain the fundamental nature of professional baseball in view of the unique characteristics of this professional sport. To some extent this was reasonable. Article 2 of the agreement in question states "...there shall absolutely be no withdrawal from the league except with the unanimous consent of all the other teams." Article 9 of the name same agreement states: "... the transfer of a team shall be make with the consent of the league commission." The purpose of these provisions was not to prevent other teams from competing on the basis of price. The formation of the League was more like the formation of a limited company, which relies heavily on the cooperation among shareholders. Member teams in the League have to be bound one another in order to have ball games within the League, Therefore, the league argued that this kind of concerted action was engaged in out of necessity and should not be subject to the provisions on concerted activity or combinations under the Fair Trade Law. Article 7 of the aforementioned agreement provides: "When a team, in accordance with article 14 of the attached professional player contract, terminates its contractual relationship with a specified player, no other team shall hire such player." Article 4 provides: "In accordance with the standard terms that all member players have signed in the player contract attached hereto" The purpose of these kinds of terms and conditions was to maintain discipline, which was both appropriate and necessary to the establishment of the League. However, the professional league has been established for eight years. The provisions of Articles 7 and 4 cited above are no longer necessary for the league in today's environment, on the contrary, do have affected the competitiveness of the teams and appear to contravene the spirit of the Fair Trade Law. Nevertheless, the Chinese Professional Baseball League has used these agreements since 1989, and they have become a kind of industry practice. Therefore, the Commission asked the respondents in this action to study the system used in other countries, such as the U.S. and Japan, and propose an alternative system that complies with the spirit of the Fair Trade Law by 30 September 1997.

3. With regards to the agreement signed by the players and the teams, in the 86th Commission Meeting, the Commission decided that with respect to claims that the Brother Elephants Baseball Club violated work rights: The relationship between a player and the team is an employment relationship based on Articles 482 through 489 of the Civil Code. A player is not a "product" as the term "Product" used in the Fair Trade Law, nor is what a player provides a "service" under the Fair Trade Law. Thus a player is not an "enterprise" as contemplated by the Fair Trade Law and that law will not be applicable. However, this may change as society itself changes and industry evolves. The FTC may decide at some point that a player is a "product" or an "enterprise". It has been four years since the FTC made the decision for the 86th Commission meeting and during that time professional baseball has rapidly developed and professional players are more like "products" every day. Nevertheless, currently the contract issues between the players and their teams are still civil matters, and they are not the types governed by the Fair Trade Law.

4. Mercuries Professional Baseball Club and another company [team] terminated the player agreement with the complainant and included a number of restrictions upon termination. If the terms were negotiated and agreed to by the parties, and not against public interest or other mandatory provisions of law, the agreement should be valid. The agreements between the complainants and their original teams were negotiated freely (the undertakings of the complainants are in the file for reference). Nor is there any concrete evidence that the purpose of the original agreement was intended to prevent the entry of new teams or new leagues into the market. There were, after all, only two players who filed a complaint and it is thus difficult to make a case stand that the activities were likely to obstruct free competition or were otherwise patently unfair. Thus, the conduct between Mercuries and the other team on the one hand, and the two complainants on the other, is a matter of private dealings between parties under private law and does not violate Articles 19(vi) or 24 of the Fair Trade Law.

Appendix:
Chwen Chin Professional Baseball Co., Ltd Uniform Invoice No.:23461392
Mercuries Professional Baseball Club Uniform Invoice No.: 23607471
President Professional Baseball Team Co Uniform Invoice No.: 23534457
Time Sports Recreation Corp. Uniform Invoice No.: 86470233
Brother Elephants Baseball Club Uniform Invoice No.: 86724519
Sinon Professional Baseball Co., Ltd. Uniform Invoice No.: 84251901

Summarized by Wen Shih-chiang
Supervised by Lin Yu-ch'ing

＊: For information of translation, click here

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