Contracted Participation in E-Sports Leagues
1. Introduction
Over the last decade esportshas evolved from being merely a form of entertainment to a multi-billion dollar global industry.
In Turkey, alongside international organizers such as Riot Games, ESL, PUBG Mobile, Valorant, and EA Sports, professional leagues have been established under the umbrella of the Turkish Esports Federation (TESFED).
However, the legal structure of esports organizations has different dynamics compared to traditional sports. The fact that participation requirements are determined by platform owners restricts the teams' freedom of contract and raises the issue of intervention by competition law
This article will examine the competition law implications of participation agreements in e-sports leagues, Law No. 4054 and regulations in EU law; abuse of dominant position, proportionality test , and exemption conditions will be discussed.
2. Contractual Participation System in E-Sports Leagues
2.1. League Structure
Esports leagues are typically organized by the game's owner (e.g., Riot Games, Blizzard, Valve).
Because these companies hold the intellectual property rights to the game, they have the sole authority to determine the league's rules, participation requirements, and prize system.
This a federation-like authority , holds the decisive position.
Therefore, the relationship between the league organizer and the teams a private law contract .
2.2. Participation Agreements
Participation agreements typically include the following elements:
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Participation fee or deposit,
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Trademark usage and publishing rights,
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Player transfer restrictions,
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Obligation to comply with league rules,
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Penal and sanction provisions.
Many of these agreements contain clauses such as exclusivity and the prohibition of contract assignment . This can lead to restrictions on competition at both vertical (organizer-team) and horizontal (between teams) levels.
3. Applicability of Law No. 4054
3.1. Nature of the Enterprise and Enterprise Association
Article 3 of Law No. 4054 defines any natural or legal person engaged in economic activity as an "undertaking".
Therefore, both gaming companies, e-sports teams, and organizing platforms are considered "undertakings".
E-sports leagues, being structures where enterprises are organized according to specific rules, are considered associations of enterprises . Therefore, the participation conditions set by the organizer may fall under Article 4054, Article 44, as a decision of an association of enterprises
3.2. Article 4: Agreements Restricting Competition
In participation agreements;
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The ban on teams participating in other leagues,
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Restricting the freedom of players to transfer,
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The participation fee is determined unilaterally
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The exclusive transfer of the game's broadcasting rights to the organizer
If such provisions exist, they constitute agreements that restrict competition . The Competition Board's E-Sports League Decision No. 2021/07-106 also examined such contracts and granted exemptions under certain conditions.
4. Dominant Position and Vertical Constraint Analysis (Article 6 of Law No. 4054)
The organizing company holds a unique position in the market as the owner of a particular game.
For example, Riot Games, being the sole rights holder of the "League of Legends" brand, the related product market .
In this situation:
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It is not possible to compete with a different game
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There is no possibility of teams switching to an alternative platform
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Player contracts are directly tied to this structure.
Therefore, a game owner setting league rules may constitute abuse of dominant position under a vertical agreement (Article 6 of Law No. 4054). The following behaviors are particularly risky in this context:
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Tying:
Teams are forced to use only the broadcasting platform specified by the organizer. -
Discrimination:
Special invitations, preferential sponsorships, or revenue distribution to certain teams. -
Extreme conditions:
The participation fee is set disproportionately high.
5. Competition Board's Decision No. 2021/07-106 on E-Sports
In its investigation into allegations of competition restrictions in e-sports organizations in 2021, the Competition Board reached the following conclusions:
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Participation restrictionsare proportionate as long as they are imposed to maintain sporting balance.
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Player transfer bansare acceptable if they are limited to a seasonal period.
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Exclusivity agreementsare illegal if they prevent the formation of alternative leagues.
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Income-sharing mechanismsshould be subject to the principles of transparency and proportionality.
This decision demonstrates that esports is partially subject to the “sporting exception” in competition law, but does not enjoy absolute immunity.
6. EU Competition Law and CJEU Case Law
6.1. ISU (International Skating Union) Decision (C-124/21 P)
The European Court of Justice has found the ISU's rule prohibiting athletes from competing in other organizations to be restrictive of competition .
This decision sets a direct precedent for esports:
provisions that prevent players from participating in other leagues disproportionate restrictions .
6.2. Meca-Medina Decision (C-519/04 P)
The CJEU has stated that sports regulations are subject to competition law; however, they can be deemed lawful after passing the proportionality test if they aim to "protect sporting integrity." This test also applies to e-sports leagues.
6.3. ESL and Riot Games Reviews
In 2020, the European Commission assessed the collaboration between ESL and Riot Games under competition law, emphasizing that player transfer restrictions were legitimate for the purpose of sectoral balance ; however, continuous monitoring was necessary to prevent the risk of foreclosure
7. CAS (Court of Arbitration for Sport) Perspective
Esports is not yet fully integrated into the CAS system; however, Lex Sportiva principles.
In its decision 2015/A/4206 (Trabzonspor v. UEFA), CAS emphasized the principle of "sporting equality" to ensure fair competition.
This principle also applies to esports leagues:
Participation agreements that favor certain teams, prevent the entry of new teams, or create models that are "closed to franchise systems" are contrary to the principle of fair competition.
8. Exemption (4054 m.5) and Proportionality Test
Although esports contracts seemingly restrict competition, they may qualify for exemption under Article 5 of Law No. 4054 if the overall purpose of the system is to ensure sporting stability, quality standards, and security . In this case, the following four conditions must be met simultaneously:
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Providing economic or technical development:
Professionalization of the league organization, strengthening of technical infrastructure. -
The result is beneficial to the consumer (viewer):
Improved broadcast quality and viewer experience. -
Competition should not be restricted more than necessary:
Player freedom should be preserved. -
The key aspect of the competition remains the same:
the existence of alternative leagues.
Violation of these conditions will cause the contracts to fall outside the scope of the exemption and constitute a direct violation of competition law.
9. Regulatory Proposals for the Turkish Esports Sector
The following regulations can be proposed for the full integration of esports into the Turkish legal system:
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TESFED Competition Guide:
The federation's publication of a binding competition guideline that oversees club-organizer relations. -
Standard Participation Agreement:
A transparent contract model that establishes common minimum rules across all leagues. -
Player Rights Declaration:
Protection of players' rights regarding free agency, wages, and transfers. -
Data Transparency:
Open reporting of tournament revenues, prize pools, and sponsorship income. -
Independent Dispute Resolution:
Establishment of an "E-Sports Arbitration Board" similar to CAS within TESFED.
These steps will both professionalize the Turkish esports sector and increase international investor confidence.
10. Conclusion
As esports leagues rapidly grow as one of the most dynamic areas of the digital economy, the fundamental principles of competition law remain valid in this field as well. Participation agreements become unlawful under Articles 4 and 6 of Law No. 4054 when they lead to disproportionate restrictions based on the grounds of "the order of the game."
The future of esports on a legal balance .
In this context, cooperation between the Competition Authority, TESFED (Turkish Esports Federation of Turkey), and gaming companies is of strategic importance for the sustainability of fair competition.
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