Jockey Club Submission to OFT

Published: 3 September 2003

JOCKEY CLUB DELIVERS ITS SUBMISSION TO OFT

SENIOR STEWARD ISSUES STARK WARNING ABOUT RACING’S FUTURE

The Jockey Club is today submitting a robust response to the provisional findings of the Office of Fair Trading following the Rule 14 Notice delivered to the British Horseracing Board (BHB) and the Jockey Club in April.

In outlining the central themes of the Jockey Club’s submission, the Senior Steward of the Jockey Club, Julian Richmond-Watson, issued a stark warning about the long term implications for the sport of what is proposed by the OFT:

“We are vigorously contesting the OFT’s provisional findings as we believe they have given no weight to the fact that racing is primarily a sport.

“Thoroughbred horseracing is, in its origins, a sport and remains so, although we accept that there are ancillary commercial activities such as breeding and the operation of racecourses. At the heart of the sport is the horse, and the centrally managed series of races which make up a season’s racing. The creation of suitable races to test the horse population is a complex process dependent on a material degree of central organisation by the sport’s Governing Authority, BHB. Such central organisation is the norm in all major horseracing countries in the EU and most further afield.

“The consequences of reducing racing to no more than a free-for-all amongst racecourses would be the destruction of the sport in the form to which it has evolved over some 400 years.

“We maintain that primarily the Orders and Rules which the OFT has challenged are necessary for the purposes of achieving an adequate level of integrity and other key objectives of the sport. Furthermore, we argue that the Jockey Club in its regulatory role is outside the scope of the Competition Act. Case law shows that the competition rules are directed at economic ‘undertakings’. In exercising its regulatory duties, the Jockey Club is not engaged in economic activity of any sort and therefore cannot have infringed the Chapter I prohibition, as alleged by OFT.”

The Jockey Club has submitted this response from its perspective as the Regulator of the sport. In addition it will be making a response jointly with the BHB. The executive summary of the Jockey Club’s submission to the OFT can be viewed in full on the Jockey Club’s website, www.thejockeyclub.co.uk.

3rd September 2003

IN THE MATTER OF THE RULE 14 NOTICE ISSUED BY THE OFFICE OF FAIR TRADING IN RELATION TO THE NOTIFICATION BY THE BRITISH HORSERACING BOARD AND THE JOCKEY CLUB OF
THE ORDERS AND RULES OF HORSERACING

REPRESENTATIONS OF THE JOCKEY CLUB ON PRELIMINARY ISSUES

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EXECUTIVE SUMMARY
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1. The Jockey Club (“JC”) is alarmed by the OFT’s provisional findings as these are potentially very damaging to the sport of thoroughbred horseracing under the Orders and Rules (“Racing under Rules”), in particular, to the key sporting objectives of integrity, meritocracy, solidarity and maintaining the shape of the breed.

2. The JC is, therefore, making this separate Response on preliminary issues to the OFT from its unique perspective as Regulator of the sport, in addition to making a Response jointly with British Horseracing Board (“BHB”), which is the Governing Authority of the sport.

3. The JC makes six main submissions in this Response.

(1) Thoroughbred horseracing is, in its origins, a sport and primarily remains so, as opposed to being an industry, notwithstanding the fact that various commercial activities derive their incomes from this sport.

(2) The sport of thoroughbred horseracing may be described as identifying, through competitive racing, the best horses in each generation, and thereafter developing the ‘shape of the breed’ when these horses go to stud.

(3) The OFT is wrong to regard thoroughbred horseracing as being ‘the supply of British Racing Opportunities by racecourses to racehorse owners’. The racecourse is not the provider of the sport, it provides the venue where races are run.

(4) For the purposes of performing its regulatory functions under the Orders and Rules, the JC is the Regulator of this sport and, as such, is not an undertaking, or an association of undertakings, within the meaning of section 2 of the Competition Act 1998 (“CA 1998”).

(5) The particular Orders and Rules which have been challenged by the OFT are either made or enforced (or both) by the JC as Regulator. These Orders and Rules are necessary for the organisation of, and the achievement of key objectives of, the sport.

(6) The JC, by making or enforcing these Orders and Rules as Regulator, has regard solely to the objectives of the sport, and is not participating in commercial activities generated by the sport, and is therefore outside the scope of section 2 CA 1998.

4. This individual Response of the JC is made in addition to, and to complement, the legal submissions made in the joint Response of BHB and the JC as regards the provisional findings of the OFT.

Summary of reasoning
5. The JC is the Regulator of the sport, applying and enforcing the rules of the sport. The JC exercises its regulatory functions through the Regulatory Board of the JC, or any Standing Committee of the JC to which the Regulatory Board has delegated its duties, powers or functions.

6. In addition, through the Racecourse Holdings Trust (“RHT”) the JC owns or manages 13 racecourses, which offer a mix of Flat and National Hunt racing. RHT was founded in 1964 with a view to saving historic racecourses that would otherwise have been lost to racing. RHT is operated as a separately managed company and its profits are ploughed back into the business primarily through improved racecourse facilities and increased prize money. No dividend has been paid to the JC. The functions of RHT and the Regulatory Board are totally separate.

7. Case law, such as the cases reviewed by the Competition Tribunal in Bettercare Group v Director General of Fair Trading, shows that the competition rules are directed at economic ‘undertakings’. An undertaking is defined as any entity, public or private, incorporated or unincorporated, profit-making or not-for-profit, which carries on business by offering goods or services in a market, in competition, actual or potential, with other entities. To the extent that an entity performs different functions, it may be an ‘undertaking’ as regards some of its functions, but not for others.

8. In exercising its regulatory duties, the JC is not engaged in economic activity, and is not offering goods or services in a market, in competition with any other entity. As the regulator, the JC is enforcing the rules of the sport, drawn up to ensure the integrity and key objectives of the sport of Racing under Rules.

9. The Members of the JC are members in a personal capacity and not as commercial undertakings. The Stewards are appointed having regard to their experience of the sport, but are not commercial undertakings. Therefore the JC is not an association which ‘consists of undertakings of the same general type’ for the purposes of section 2 CA 1998, nor is the JC a body ‘in which economic operators act through a collective structure or common body’.

10. Furthermore, contrary to the view expressed by the OFT, racecourses, owners and riders are not ‘affiliated to the JC through their licences or their regis