Competition in the world of golf - the PGA Tour and LIV Golf

• Ireland

• Competition, EU and Trade

11-08-2022

The world of golf, as we know it, has been disrupted by the introduction of the new LIV Series golf tour, majority owned by Saudi’s massive $620bn sovereign wealth fund. The LIV Series, pitched (forgive the pun) as a competitor of the long established PGA Tour (formed in 1916 in the US), has been successful in attracting high profile players from the PGA Tour, including Brooks Koepka, Bryson DeChambeau, Phil Mickelson, Dustin Johnson, and with Henrik Stenson even sacrificing his European Ryder Cup captaincy to make the switch.

In accordance with the PGA players’ regulations, PGA members are prohibited from competing at outside events when there is a PGA Tour approved or sponsored tournament taking place at the same time. If a member of the PGA Tour breaches these regulations, the tour may permanently ban a member from playing on the PGA Tour, which the PGA Tour has chosen to do in this instance. Effectively, banning all players who have defected to the new, competing, LIV Tour.

So, where does the world of competition law fit in all this ? Well, the question arises whether the PGA Tour, in banning these players, has engaged in anti-competitive behaviour or anti-trust as it is referred to in the US. Anti-competitive practices are practices that prevent or reduce competition in a market. In this instance, is the PGA Tour taking steps to prevent a competitor to the PGA Tour, the new LIV Tour, from operating ?

Anti-competitive practices are prohibited in most countries, including in Ireland and in the US, and can generally be challenged in two ways. First, in a civil court, like in this instance, with the relevant defected players bringing a lawsuit against the PGA Tour. The players argued that the PGA Tour’s ‘punishment’ of them is an effort to crush competition in order to maintain the PGA Tour’s monopoly in the market. Second, a national competition regulator can investigate these practices, and, the U.S. Department of Justice has also begun a review of the PGA Tour’s business practices in light of the allegations made by the relevant players. The PGA Tour has acknowledged this probe and likened it to a similar probe in 1994 in which it was found not to have broken competition / anti-trust laws.

In the latest chapter of this saga, a number of the defected players were dealt a blow this week when their application for a restraining order to allow them to play in a PGA Tour tournament for a lucrative €75 million bonus was denied. The players argued that, by denying them the ability to play, the PGA Tour was acting in an anti-competitive manner and was causing ‘irreparable’ harm to them. However, in her judgment, Judge Beth Freeman took into account the lucrative compensation the relevant defected players received from the LIV Series and held that this was compensating them for the loss that the players had suffered from not being permitted to play in the PGA Tour, and that this was known and negotiated at the time the LIV contracts were entered into.

It remains to be seen what the ultimate outcome will be from this ‘tug-of-war’ in the professional golfing world, with the financial strength of the LIV Tour pulling against the strength of tradition and history behind the PGA Tour. While the players were denied their application for a restraining order, the final adjudication of the main issues is yet to be determined, and whether the PGA Tour has engaged in an anti-competitive practice by banning the players outright. A number of lawsuits are still in the pipeline from players and the outcome of an investigation by the US Department of Justice will ultimately determine whether the PGA Tour is within its rights to ban the defected players. Until then, this off course golf battle is poised to continue.

The lyrics of the Chris de Burgh classic ‘Spanish Train’ comes to mind – could this be a battle for the soul of golf determined by competition law?

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