Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Book Review: Questioning the (in)dependence of the Court of Arbitration for Sport

Book Review: Vaitiekunas A (2014) The Court of Arbitration for Sport : Law-Making and the Question of Independence, Stämpfli Verlag, Berne, CHF 89,00

The book under review is the published version of a PhD thesis defended in 2013 by Andrew Vaitiekunas at Melbourne Law School. A PhD is often taking stock of legal developments rather than anticipating or triggering them. This was definitely not the case of this book. Its core subject of interest is the study of the independence of the Court of Arbitration for Sport (CAS) – an issue that has risen to prominence with the recent Pechstein ruling of January 2015 of the Oberlandesgericht München. It is difficult to be timelier indeed. More...



The Court of Arbitration for Sport after Pechstein: Reform or Revolution?

The Pechstein ruling of the Oberlandesgericht (OLG) München rocked the sports arbitration world earlier this year (see our initial commentary of the decision here and a longer version here). The decision has been appealed to the German Bundesgerichtshof (BGH), the highest German civil court, and the final word on the matter is not expected before 2016. In any event, the case has the merit of putting a long-overdue reform of the Court of Arbitration for Sport (CAS) back on the agenda. The last notable reform of the structure and functioning of the CAS dates back to 1994, and was already triggered by a court ruling, namely the famous Gundel case of the Swiss Federal Tribunal (SFT). Since then, the role of the CAS has shifted and its practical significance has radically changed (the growth of CAS’s caseload has been exponential). It has become the most visible arbitration court in Switzerland in terms of the number of awards appealed to the SFT, but more importantly it deals with all the high-profile disputes that arise in global sport: think, for instance, of Pistorius, the recent Dutee Chand decision or the upcoming FIFA elections.More...

Sports governance 20 years after Bosman: Back to the future… or not? By Borja García

Editor's note:

Dr Borja García joined the School of Sport, Health and Exercise Sciences at Loughbourough University in January 2009 as a Lecturer in Sport Management and Policy. He holds a PhD in Politics, International Relations and European Studies from Loughborough University (United Kingdom), where he completed his thesis titled ‘The European Union and the Governance of Football: A game of levels and agendas’.

 

In this leafy and relatively mild autumn, we are celebrating two important anniversaries. Recently, we just passed ‘Back to the Future day’, marking the arrival of Marty McFly to 2015. In a few weeks, we will be commemorating the 20th anniversary of the Bosman ruling. Difficult to decide which one of the two is more important. As we move well into the 21st century’s second decade, these two dates should mark a moment to consider innovation. They are perhaps occasions to take stock and reflect how much sport has evolved to reach this new future… or not. More...


The 2006 World Cup Tax Evasion Affair in Germany: A short guide. By Gesa Kuebek

Editor's note:

Gesa Kuebek holds an LLM and graduated from the University of Bologna, Gent and Hamburg as part of the Erasmus Mundus Master Programme in Law and Economics and now work as an intern for the Asser Instituut.


On Monday, 9 November, the German Football Association (DFB) announced in a Press Release the resignation of its head, Wolfgang Niersbach, over the 2006 World Cup Affair. In his statement, Niersbach argued that he had “no knowledge whatsoever” about any “payments flows” and is now being confronted with proceedings in which he was “never involved”. However, he is now forced to draw the “political consequences” from the situation. His resignation occurred against the backdrop of last week’s raid of the DFB’s Frankfurt headquarters and the private homes Niersbach, his predecessor Theo Zwanziger and long-standing DFB general secretary Horst R. Schmidt. The public prosecutor’s office investigates a particularly severe act of tax evasion linked to awarding the 2006 World Cup. The 2006 German “summer fairy-tale” came under pressure in mid-October 2015, after the German magazine “Der Spiegel” shocked Fußballdeutschland by claiming that it had seen concrete evidence proving that a €6.7 million loan, designated by the FIFA for a “cultural programme”, ended up on the account of Adidas CEO Robert-Louis Dreyfuß. The magazine further argued that the money was in fact a secret loan that was paid back to Dreyfuß. Allegedly, the loan was kept off the books intentionally in order to be used as bribes to win the 2006 World Cup bid. The public prosecutor now suspects the DFB of failing to register the payment in tax returns. German FA officials admit that the DFB made a “mistake” but deny all allegations of vote buying. However, the current investigations show that the issues at stakes remain far from clear, leaving many questions regarding the awarding of the 2006 World Cup unanswered.

The present blog post aims to shed a light on the matter by synthetizing what we do know about the 2006 World Cup Affair and by highlighting the legal grounds on which the German authorities investigate the tax evasion. More...




Blog Symposium: Ensuring proportionate sanctions under the 2015 World Anti-Doping Code. By Mike Morgan

Introduction: The new WADA Code 2015
Day 1: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies
Day 2: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment
Day 3: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code

Editor's note
Mike Morgan is the founding partner of Morgan Sports Law LLP. His practice is focused exclusively on the sports sector. He advises on regulatory and disciplinary issues and has particular experience advising on doping and corruption disputes.

Mike acted on behalf of National Olympic Committees at three of the last four Olympic Games and has represented other sports bodies, clubs and high profile athletes in proceedings before the High Court, the FIFA Dispute Resolution Chamber, the American Arbitration Association and the Court of Arbitration for Sport. More...






Blog Symposium: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code. By Howard L. Jacobs

Introduction: The new WADA Code 2015
Day 1: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies
Day 2: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment
Day 4: Ensuring proportionate sanctions under the 2015 World Anti-Doping Code

Editor's note

Howard Jacobs is solo practitioner in the Los Angeles suburb of Westlake Village, California. Mr. Jacobs has been identified by various national newspapers and publications as one of the leading sports lawyers in the world. His law practice focuses on the representation of athletes in all types of disputes, with a particular focus on the defense of athletes charged with doping offenses.Mr. Jacobs has represented numerous professional athletes, Olympic athletes, world record holders,  and amateur athletes in disputes involving doping, endorsements, unauthorized use of name and likeness, salary issues, team selection issues, and other matters.  He is at the forefront of many cutting edge legal issues that affect athletes, winning cases that have set precedents that have benefited the athlete community. More information is available at www.athleteslawyer.com. More...





Blog Symposium: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment. By Marjolaine Viret and Emily Wisnosky

Introduction: The new WADA Code 2015
Day 1: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies
Day 3: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code
Day 4: Ensuring proportionate sanctions under the 2015 World Anti-Doping Code

Editor's Note
Marjolaine Viret: An attorney-at-law at the Geneva bar, specialising in sports and health law. Her doctoral work in anti-doping was awarded a summa cum laude by the University of Fribourg in early 2015. She gained significant experience in sports arbitration as a senior associate in one of Switzerland’s leading law firms, advising clients, including major sports federations, on all aspects of anti-doping. She also holds positions within committees in sports organisations and has been involved in a variety of roles in the implementation of the 2015 WADC. Her book “Evidence in Anti-Doping at the Intersection of Science & Law” is scheduled for publication in 2015.

Emily Wisnosky: An attorney-at-law admitted to the California bar, she currently participates in the WADC 2015 Commentary research project as a doctoral researcher. She also holds an LLM from the University of Geneva in International Dispute Settlement, with a focus on sports arbitration. Before studying law, she worked as a civil engineer. More...





Blog Symposium: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies. By Herman Ram

Introduction: The new WADA Code 2015
Day 2: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment
Day 3: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code
Day 4: Ensuring proportionate sanctions under the 2015 World Anti-Doping Code

Editor's note
Herman Ram is the Chief Executive Officer of the Anti-Doping Authority the Netherlands, which is the National Anti-Doping Organization of the country. He has held this position since 2006. After working twelve years as a librarian, Herman Ram started his career in sport management in 1992, when he became Secretary general of the Royal Netherlands Chess Federation. In 1994, he moved on to the same position at the Netherlands Badminton Federation. He was founder and first secretary of the Foundation for the Promotion of Elite Badminton that was instrumental in the advancement of Dutch badminton. In 2000 he was appointed Secretary general of the Netherlands Ski Federation, where he focused, among other things, on the organization of large snowsports events in the Netherlands. Since his appointment as CEO of the Anti-Doping Authority, he has developed a special interest in legal, ethical and managerial aspects of anti-doping policies, on which he has delivered numerous presentations and lectures. On top of that, he acts as Spokesperson for the Doping Authority. Herman Ram holds two Master’s degrees, in Law and in Sport Management. More...




Blog Symposium: The new WADA Code 2015 - Introduction

Day 1: The impact of the revised World Anti-Doping Code on the work of National Anti-Doping Agencies
Day 2: The “Athlete Patient” and the 2015 World Anti-Doping Code: Competing Under Medical Treatment
Day 3: Proof of intent (or lack thereof) under the 2015 World Anti-Doping Code
Day 4: Ensuring proportionate sanctions under the 2015 World Anti-Doping Code

On 1 January, a new version of the World Anti-Doping Code (WADC or Code) entered into force. This blog symposium aims at taking stock of this development and at offering a preliminary analysis of the key legal changes introduced. The present blog will put the WADC into a more general historical and political context. It aims to briefly retrace the emergence of the World Anti-Doping Agency (WADA) and its Code. It will also reconstruct the legislative process that led to the adoption of the WADC 2015 and introduce the various contributions to the blog symposium.More...






To pay or not to pay? That is the question. The case of O’Bannon v. NCAA and the struggle of student athletes in the US. By Zlatka Koleva

Editor's note
Zlatka Koleva is a graduate from the Erasmus University Rotterdam and is currently an Intern at the ASSER International Sports Law Centre.

The decision on appeal in the case of O’Bannon v. NCAA seems, at first sight, to deliver answers right on time regarding the unpaid use of names, images and likenesses (NILs) of amateur college athletes, which has been an ongoing debate in the US after last year’s district court decision that amateur players in the college games deserve to receive compensation for their NILs.[1] The ongoing struggle for compensation in exchange for NILs used in TV broadcasts and video games in the US has reached a turning point and many have waited impatiently for the final say of the Court of Appeal for the 9th circuit. The court’s ruling on appeal for the 9th circuit, however, raises more legitimate concerns for amateur sports in general than it offers consolation to unprofessional college sportsmen. While the appellate court agreed with the district court that NCAA should provide scholarships amounting to the full cost of college attendance to student athletes, the former rejected deferred payment to students of up to 5,000 dollars for NILs rights. The conclusions reached in the case relate to the central antitrust concerns raised by NCAA, namely the preservation of consumer demand for amateur sports and how these interests can be best protected under antitrust law. More...



Asser International Sports Law Blog | To pay or not to pay? That is the question. The case of O’Bannon v. NCAA and the struggle of student athletes in the US. By Zlatka Koleva

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

To pay or not to pay? That is the question. The case of O’Bannon v. NCAA and the struggle of student athletes in the US. By Zlatka Koleva

Editor's note
Zlatka Koleva is a graduate from the Erasmus University Rotterdam and is currently an Intern at the ASSER International Sports Law Centre.

The decision on appeal in the case of O’Bannon v. NCAA seems, at first sight, to deliver answers right on time regarding the unpaid use of names, images and likenesses (NILs) of amateur college athletes, which has been an ongoing debate in the US after last year’s district court decision that amateur players in the college games deserve to receive compensation for their NILs.[1] The ongoing struggle for compensation in exchange for NILs used in TV broadcasts and video games in the US has reached a turning point and many have waited impatiently for the final say of the Court of Appeal for the 9th circuit. The court’s ruling on appeal for the 9th circuit, however, raises more legitimate concerns for amateur sports in general than it offers consolation to unprofessional college sportsmen. While the appellate court agreed with the district court that NCAA should provide scholarships amounting to the full cost of college attendance to student athletes, the former rejected deferred payment to students of up to 5,000 dollars for NILs rights. The conclusions reached in the case relate to the central antitrust concerns raised by NCAA, namely the preservation of consumer demand for amateur sports and how these interests can be best protected under antitrust law.


Facts and proceedings 

The case is brought before the district court by Ed O’Bannon, a former American basketball player at the University of California, Los Angeles (UCLA).[2] In 2008 he visited a friend’s house, where he saw his friend’s son playing a video game depicting him as a player in a college basketball competition.[3] The producer, Electronic Arts (EA), based video games on the concept of college football and men’s basketball.[4] O’Bannon saw an avatar with a striking resemblance of himself, playing for UCLA with his jersey number 31. He never consented to the use of his likenesses nor did he receive any financial remuneration for its usage.[5] For this reason, O’Bannon filed a lawsuit against the NCAA (National Collegiate Athletic Association) and the CLC (Collegiate Licensing Company) for using his NILs for commercial purposes.[6] The main argument supported by his legal counsel was that the NCAA restrictions on compensation for student athletes beyond university scholarships impose a limitation on trade under Section 1 of the Sherman Antitrust Act.[7] In June 2014 the claims based on antitrust law found a solid ground and the case was sent to the district court.[8] The court at first identified two markets where the NCAA rules can have a significant impact, namely the college education market and the group licensing market.[9] Afterwards, it applied the three-step Rule of Reason test in order to determine whether the NCAA restrictions on compensation for the usage of NILs violate antitrust laws.[10] After weighting the anticompetitive and procompetitive purposes of those rules, the court took the decisive third step in pursuit of less restrictive alternatives available to the NCAA in the attainment of its final goal – preserving the nature of amateur college games.[11] It ruled that there are two alternative routes, which preserve amateurism and, at the same time, protects the NILs rights of college athletes: stipends to the full cost of attendance or deferred payments as portions of the license agreements concluded between third party licensing companies and universities upon completion of their college education.[12] The NCAA objected to the district court’s decision on the ground that the court in the Board of Regents[13] declared the NCAA rules a matter of law and compensation norms, falling outside of the scope of a commercial activity, and therefore not covered by the Sherman Act. Finally, the association claimed that the plaintiffs failed to demonstrate injury as a result of the restrictions on compensation.[14] The Court of Appeal for the 9th circuit ruled on the case as follows.

 

The judgment of the Court of Appeal for the 9th circuit

Preliminary questions

The court started the legal discussion by answering to some preliminary legal questions before ruling on the substance. It rejected the notion that Board of Regents automatically renders the NCAA’s rules valid as a matter of law.[15] In fact, “a restraint that serves a procompetitive purpose can still be invalid under the Rule of Reason”.[16] Thus, procompetitive rules are not necessarily deemed lawful.[17] Moreover, rules designed to promote competitiveness “surely affect commerce” and, therefore, fall under the scope of the Sherman Act, according to the reasoning of the Court of Appeal in the 9th circuit.[18] Finally, the court disagreed with NCAA in finding that the plaintiffs have no standing for failing to demonstrate the injury inflicted by the compensation rules.[19] On the contrary, the plaintiffs have shown willingness and readiness by video game producers to pay for their NILs rights have they possessed these rights, which means that the requirement of antitrust injury in this case is satisfied.[20]

Rule of Reason test

Judge Bybee then continued with the application of the Rule of Reason as assessed in relation to the restrictive measures towards compensation of student athletes.


1. Anticompetitive effect

The court concluded that the NCAA’s rules have an anticompetitive effect on the college education market and invalidated the association’s arguments.[21] It further examined whether the rules produce a procompetitive effect on the market and concluded that the district court has indeed undermined the importance the NCAA pays with regard to the preservation of amateurism in college competitions.[22]


2. Procompetitive purposes

Henceforth, the court outlined two procompetitive purposes of the NCAA’s restrictions: integrating academia with athletics and fostering the popularity of NCAA by promoting amateurism.[23] Nonetheless, it was highlighted that not every restrictive rule preserves the nature and distinctive character of college amateur sports.[24] For this reason, it should be examined whether there are any substantially less restrictive measures available to attain the goals intended by NCAA.[25]


3. Substantially less restrictive alternatives

The appellate court concurred with the district court on the first alternative, namely the grants-in-aid up to the full cost of attendance. The court for the 9th circuit stated that “the district court did not clearly err in its judgment”[26] and “indicated that raising the grant-in-aid cap to the cost of attendance would have virtually no impact on amateurism”.[27] In fact, “there is no evidence that this cap will significantly increase costs”,[28] since NCAA already granted permission to schools to fund athletes to the full cost of attendance.[29] Nevertheless, the court rejected cash compensation beyond college scholarships to athletes on the ground that if amateur sportsmen receive a payment, they lose their amateur status.[30] The central question which needs closer attention is whether payments to amateur athletes promote amateurism more than the lack of any such remuneration.[31] The court, thus, contended that the comparison between smaller and larger sums and their respective impact on the market is irrelevant, since this is not a point of discussion in this analysis: it would not crystalize whether “paying students small sums is virtually as effective in promoting amateurism as not paying them”.[32] It further rejected the analogy with professional baseball and the Olympic Games, when in 1970s there was a strong opposition against the raising salaries of baseball players and the Olympic Committee permitted the participation of professional athletes in the Games.[33] The court, however, did not agree with this line of reasoning, since the Olympics have not been so impacted by the introduction of professionalism as college sports would be.[34] Finally, the imposition of a 5000-dollar yearly ceiling of deferred payments to college athletes lacks solid argumentation.[35] Neal Pilson, a former sports consultant at CBS and an expert witness for the NCAA, did not opine on how cash compensation relates to the promotion of amateurism and his ‘offhand comment’ does not grant sufficient support for such a revolutionary turnover in the NCAA’s practice.[36] Consequently, the deferred payment alternative failed the Rule of Reason test and was, thus, rejected.[37]

On these grounds, the court concluded that a stipend beyond sports scholarships up to the full amount of college attendance is a substantially less restrictive measure, which withstands the Rule of Reason test, while the cash compensation argument failed the assessment. 


Commentary

This judgment demonstrates a remarkable, yet confusing line of reasoning followed by the appellate court. On the one hand, albeit already affirmed by the NCAA itself, the decision confirms the right of schools to provide compensation up to the full amount of attendance to college athletes. On the other hand, however, the court could have outlined more clearly the instances in which an athlete can qualify for such full compensation and those cases in which student athletes risk violating their legal status of amateurs. A clear example of the court’s reluctance to give more specific guidelines with regard to this subject matter is the rejection of the argument raised by the district court in relation to the compensation received by college tennis players. Although they still qualify as amateurs, tennis competitors earn arguably around 10,000 dollars yearly in prize money.[38] The court conveniently circumvented this argument without stating opposing views or contesting the afore-mentioned statement. It directed its full attention on how the substantially less restrictive measures can contribute to the promotion of amateur college sports instead. In fine, there are two legal points that need further examination. Firstly, amateurism is a relevant concept as long as it relates to consumer demand in antitrust claims.[39] The question at step 3 should, thus, be reformulated to whether less restrictive alternatives are virtually effective in preserving consumer interest in college sports as those prohibiting extra compensation to amateur athletes.[40] In this respect, popular demand by consumers should be the decisive factor in antitrust cases within the sports sector. Secondly, what should also be taken into more careful consideration is that the court on appeal has skipped an essential step in the Rule of Reason analysis and, thus, arguably misapplied the concept.[41] Upon identification of less limiting measures for the attainment of the main goal, one has to balance the harm those alternatives might produce against the benefits there might be if such measures were not implemented. This final stage is necessary as to provide an objective cost-benefit analysis of a legal rule, which in turn determines whether it withstands the reasonableness test. Had the court applied the Rule of Reason in such a manner, the outcome of the case would have potentially differed significantly; the court would have weighted the cost of paying cash compensation to student athletes for their NILs rights against the lack of such additional educationally unrelated payment in the attainment of the NCAA’s final aim, namely preserving amateurism in college sports. [42]  Rather, as Chief Judge Thomas stated in his opinion, it is important to underline that, in the light of US antitrust rules, it is the preservation of popular demand for college sports which should be the key factor in the legal analysis of competition issues in such a scenario.[43]

At the end of the day, the NCAA’s dilemma is solved by the appellate court by exempting the association from further financial obligations towards college athletes. Both parties have 90 days after the release of the court’s decision to “weigh their options” for appeal before the Supreme Court.[44]


[1] Edward O'Bannon, Jr. v. National Collegiate Athletic Association (the NCAA) and Electronic Arts, Inc and Collegiate Licensing Company (CLC) 14-16601 (2015) [hereinafter referred to as ‘O’Bannon v NCAA (2015)’]; O’Bannon v. NCAA 7 F. Supp. 3d 955 (N.D. Cal. 2014) [hereinafter referred to as ‘O’Bannon v. NCAA (2014)’].

[2] Ibid, p 12.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Section 1 of Sherman Antitrust Act of 1890 15 U.S.C. states that ‘every contract, combination… in restraint of trade or commerce’ should be prohibited.

[8] O’Bannon v NCAA (2015) (n 1), p 14.

[9] O’Bannon v. NCAA (2014) (n 1), paras 956-968.

[10] Ibid., paras 984-1009.

[11] Ibid., paras 1005-1006.

[12] Ibid.

[13] NCAA v. Board of Regents of the University of Oklohoma 468 US 85 (1984).

[14] O’ Bannon v. NCAA (2015) (n 1), p 25.

[15] Ibid., p 26.

[16] Ibid., p 31.

[17] Ibid., p 32.

[18] Ibid., p 36: “We simply cannot understand this logic. Rules that are “anti-commercial and designed to promote and ensure competitiveness” […] surely affect commerce just as much as rules promoting commercialism.”

[19] Ibid., pp 37-43.

[20] Ibid., p 43.

[21] Ibid., pp 47-48.

[22] Ibid., pp 48-52.

[23] Ibid., p 51.

[24] Ibid., p 52.

[25] Ibid.

[26] Ibid., pp 54.

[27] Ibid.

[28] Ibid., p 56.

[29] Ibid.

[30] Ibid., p 57: “But in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs”.

[31] Ibid., p 56: “The question is whether the alternative of allowing students to be paid NIL compensation unrelated to their education expenses, is “virtually as effective” in preserving amateurism as not allowing compensation.”

[32] Ibid., pp 58-59.

[33] Ibid., p 59.

[34] Ibid.

[35] Ibid., p 60.

[36] Ibid: “But even taking Pilson’s comments at face value, as the dissent urges, his testimony cannot support the finding that paying student-athletes small sums will be virtually as effective in preserving amateurism as not paying them.”

[37] Ibid., p 63 : “The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.

[38] O’Bannon v. NCAA (2014) (n 1), para 1000.

[39] Chief Judge Thomas, concurring in part and dissenting in part, p 68.

[40] Ibid.

[41] Carrier M (2015) How Not to Apply the Rule of Reason: The O’Bannon Case. Rutgers University School of Law – Camden. http://ssrn.com/abstract=2672256. Accessed 20 October 2015.

[42] O’ Bannon v. NCAA (2015) (n 1), p 59: “The district court adverted to testimony from a sports management expert, Daniel Rascher, who explained that although opinion surveys had shown the public was opposed to rising baseball salaries during the 1970s, and to the decision of the International Olympic Committee to allow professional athletes to compete in the Olympics, the public had continued to watch baseball and the Olympics at the same rate after those changes”.

[43] Supra n 39, Chief Judge Thomas: “Rather, we must determine whether allowing student-athletes to be compensated for their NILs is ‘virtually as effective’ in preserving popular demand for college sports as not allowing compensation”.

[44] Tracy M and Strauss B, Court Strikes Down Payments to College Athletes (The New York Times.com, 30 September 2015). http://www.nytimes.com/2015/10/01/sports/obannon-ncaa-case-court-of-appeals-ruling.html?_r=0. Accessed 2 October 2015.

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