Editor's note: Rusa Agafonova is a PhD Candidate at the University of Zurich, Switzerland   

The Olympic Games are the cornerstone event of the Olympic Movement as a socio-cultural phenomenon as well as the engine of its economic model. Having worldwide exposure,[1] the Olympic Games guarantee the International Olympic Committee (IOC) exclusive nine-digit sponsorship deals. The revenue generated by the Games is later redistributed by the IOC down the sports pyramid to the International Federations (IFs), National Olympic Committees (NOCs) and other participants of the Olympic Movement through a so-called "solidarity mechanism". In other words, the Games constitute a vital source of financing for the Olympic Movement.

Because of the money involved, the IOC is protective when it comes to staging the Olympics. This is notably so with respect to ambush marketing which can have detrimental economic impact for sports governing bodies (SGBs) running mega-events. The IOC's definition of ambush marketing covers any intentional and non-intentional use of intellectual property associated with the Olympic Games as well as the misappropriation of images associated with them without authorisation from the IOC and the organising committee.[2] This definition is broad as are the IOC's anti-ambush rules.

Rule 40 of the Olympic Charter

The famous Rule 40[3] of the Olympic Charter was introduced in 1991 prohibiting competitors[4] from any use of name, image or sports performances for advertising purposes during the Olympic Games and since then has been critised for its disproportionality.

The blanket ban covered all types of advertising during the "blackout" ("frozen") period of almost a month, starting nine days before the Opening Ceremony and ending three days after the Closing of the Games. Any Olympic-related terms varying from quite specific "Olympia" and "games" to more generic "medal", "gold", "pedestal" and to very questionable "summer", "challenge" and "victory" were banned from use in an advertising context. These restrictions are even more drastic knowing that violation of the Olympic Charter can entail temporary or permanent ineligibility or exclusion from the Olympic Games.[5]

Legal challenges

While companies still managed to find loopholes in the regulations,[6] a legal challenge was expected on both sides of the Atlantic. In the US, the antitrust lawsuit against the USA Track and Field and the US Olympic Committee (USOC) brought to the U.S. District Court by a runner Nick Symmonds[7] was dismissed on the basis of the 1978 Amateur Sports Act, which granted an implied antitrust immunity to the USOC.

In Europe, however, the complaint filed with the German Competition Authority (Bundeskartellamt) by the German Athlete Commission and the Federal Association of the German Sports Goods Industry was successful and resulted in a series of commitments undertaken by the German NOC (DOSB) and the IOC, but only German athletes could benefit from it.

Bundeskartellamt refers to the ISU and Kristoffersen cases admitting the protection of the solidarity mechanism as a potential justification for a measure restricting competition, but only "if the financial support granted by the system is sufficiently transparent for the participants who contributed their performance", i.e. when they are "in a position to understand and assess the volume of income generated" and "whether this income, or at least most of it, has in fact been spent to the benefit of those athletes who are disadvantaged in terms of opportunities to participate in the Olympic Games". The Olympic solidarity plan does not attain this high standard of "sufficient transparency".[8] Hence, Rule 40 and its German analogue were preliminarily assessed as violating Art. 102 of the Treaty on the Functioning of the European Union (TFEU) (abuse of dominant position) and Sections 18 and 19 GWB (German Competition Act).

The German decision gave the green light to advertising campaigns by non-Olympic sponsors during the frozen period and replaced the authorisation procedure by the requirement to notify the NOC of the intended campaigns. The list of protected terms was narrowed down, and only sanctions of economic nature, i.e. contractual damages and/or penalties, became admissible.

Reconsidering Rule 40

In summer 2019, the IOC amended Rule 40 for the first time in many years. Its new wording was akin to a 180-degree turn and allowed competitors, team officials and other team personnel to use their person, name, picture, and sports performances for advertising purposes during the Olympic Games as far as the principles determined by the IOC Executive Board were respected.  

NOCs should concretise the rule for their Olympic team in accordance with the Key Principles on the application of by-law 3 to Rule 40 of the Olympic Charter (Tokyo 2020 Key Principles) which give the NOCs some guidance but also leave them a considerable leeway.

In terms of substance, non-Olympic sponsors can now undertake "generic advertising", i.e., campaigns launched at least 90 days before the Event, which create association with the Olympic Games only through an athlete's image, and which should avoid any unusual activity during the Games. What is considered unusual is to be determined on a case-by-case basis.

Regarding the procedure, non-Olympic partners must now only notify in advance the IOC or the respective NOCs of their advertising plans. The NOCs are free to decide on the form and modalities of this notification. It can be a simple notice, such as in Switzerland, a two-step notification (i.e. a pre-registration and a further notification) as in South Africa, or a more complex legal structure consisting of a notification accompanied by a personal sponsor commitment agreement (PSC) concluded by and between an athlete's sponsor and the NOC, as is the case in the USA or in Ireland. In the latter case, the NOC obtains additional contractual guarantees in case of a violation of the Rule 40.[9]

All these discrepancies put athletes on an unequal footing. The commercial rights of those sportspeople who already struggle to find sponsors due to the limited exposure of their sports disciplines might be curtailed even further by the non-attractiveness of their NOCs' regimes in respect to Olympic sponsorship.

Finally, the IOC recommends that NOCs adopt monetary rather than sporting measures to sanction violations.[10] But recommendations are non-binding, while it seems that such a crucial issue as sanctions should be covered by a uniform rule more than anything else.

Conclusion

Athletes have, at times in history, been precluded from fully monetising their economic potential during the most important - and the most marketable - moments  of their careers, which themselves are relatively short. The amended Rule 40 has been welcomed as a big achievement and fits well with the overall trend for athletes' growing engagement in policy-making processes and the increasing role of competition law in shaping sports governance. However, it seems that Rule 40 is not yet at its final destination. To get there, it should find the balance between the individual athlete’s right to generate income in relation to their sporting career and the collective interest in protecting the solidarity model. It is indeed important to remember that there are many athletes, including those at the grassroots level, who are supported by the solidarity mechanism rather than by sponsors' financial backing.

Conversely, while the concept of the Olympics has not been distorted by allowing professionals to compete in the Games, why would it be inadvisable to reconsider the idea of commercialisation of sport? The outbreak of COVID-19 and the postponement of the 2020 Tokyo Olympic Games drew attention to the insecurity of athletes in many senses, and the relationship between an athlete and a sponsor acquired a deeper significance: despite the uncertainties of the sports calendars, epidemiologic regimes, and impossibility of long-term planning, the parties - or rather the partners - maintained mutual support and shared common values. 

All regulatory instruments should be adjusted accordingly. Rule 40 as it existed before 2019 appeared archaic. When it entered into force, neither the internet nor social media existed. As of today, Twitter and especially Instagram have shaped a new paradigm of hashtags, likes, reposts, and followers.[11] 

Rule 40, as it exists in 2021, leaves a risk of unequal implementation due to the fact that NOCs and athletes' associations have different degrees of bargaining power across the globe and, in the absence of a uniform clause imposed by the international regulator, give divergent interpretations to the scope of the rule. The country-to-country approach can sometimes allow for necessary flexibility in order to ensure optimal implementation of the regulations, in particular, regarding compliance with the national legislation of each state. However, some issues, such as the sanctioning regimes, should be handled in a centralised and harmonised way.

The German example has set the trend, but many NOCs may be reluctant to follow it. In this respect, the European Commission may play an important role in reconciling athletes' economic interests and the SGBs' interests with due consideration to the specificity of sport. It remains to be seen how the situation will be resolved outside the European Union. Meanwhile, during the period from 13 July to 10 August 2021, we will most likely witness a dramatic change in advertising as the new Rule 40 will be applied. It is possible that the focus on sports competitions will be slightly diluted by additional commercial ads, but even this scenario seems appealing after the silence of quarantine. 

[1] The geographic market for the organisation and exploitation of the Olympic Games has been defined as worldwide. See Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17 (25 February 2019), para. 56. The version in English is available at https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/Missbrauchsaufsicht/2019/B2-26-17.pdf?__blob=publicationFile&v=2. Accessed on 30 May 2021.

[2] Brand Protection Guidelines, Tokyo Organising Committee of the Olympic and Paralympic Games, Version 5.0. February 2020, Pt. 6. Ambush Marketing.

[3] Here and hereafter: Rule 40 refers to Bye-law 3 to Rule 40 of the Olympic Charter.

[4] In 2003, the rule was expanded to coaches and officials.

[5] Olympic Charter, Rule 59 (2.1).

[6] For example, in the pre-London-2012 campaign “Find Your Greatness”, Nike shows athletes from the towns named London situated in the US, Canada, Jamaica, and Nigeria and never mentions London in the UK. 

[7] Gold Medal LLC v. USA Track & Field, 187 F. Supp. 3d 1219, 1222 (D. Or. 2016).

[8] Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17, 25 February 2019, para. 103.

[9] McKelvey Steve, Grady John, Moorman Anita M., Ambush Marketing and Rule 40 for Tokyo 2020: A Shifting Landscape for Olympic Athletes and Their Sponsors, Journal of Legal Aspects of Sport, 2021, 31, pp. 94 – 122.

[10] Commercial Opportunities for Athletes. Rescheduled Olympic Games Tokyo 2020 (in 2021), p. 14. Frequently Asked Questions for Athletes.

[11] It is, for example, the key tool for fans' engagement. See Ennis Sean (2020) Understanding Fans and Their Consumption of Sport. In: Sports Marketing. Palgrave Macmillan, Cham, pp 75-100.