According to a competition attorney Golf merger faces legal challenges, the contentious new collaboration in golf is in for a “uncomfortable ride” and may experience protracted and expensive court battles across several jurisdictions.
The PGA Tour said last week that it would form a new business organization with the DP World Tour and Saudi Arabia’s Public Investment Fund (PIF), a move that would “unify golf” and put an end to a legal battle between the PGA Tour and LIV Golf, a series supported by PIF.
It has already been questioned if the new agreement would violate competition laws. Senator Richard Blumenthal wrote to PGA Tour CEO Jay Monahan to request a probe into it after the Senate of the United States declared that the PGA Tour’s “sudden and drastic reversal of position concerning LIV Golf” raised “serious questions”.
The PGA Tour claims that this arrangement is not a merger and that PIF did not acquire ownership of the PGA Tour as a result of the purchase. It states that the PGA Tour will maintain majority ownership and control while PIF will invest in this new subsidiary of the PGA Tour.
The PGA TOUR, DP World Tour and PIF announce landmark agreement to unify men’s professional golf.
— PGA TOUR (@PGATOUR) June 6, 2023
The new enterprise must overcome a number of obstacles, according to Andrew Evans, a partner at the law firm Irwin Mitchell.
According to Evans, a legal expert, conflict law or antitrust law, as it is also known, focuses on the economic impact of a merger regardless of its legal form. He stated to the PA news agency that even if the structure for the PGA Tour/LIV merger is not currently known, competition law tends to consider the economic impact of a merger.
Evans, though, thinks that a lot more governments would give golf a look because of how international it is on a business level.
He said;
“”For a global business such as PGA Tour and LIV Golf. There is a lot of potential for regulators in many different jurisdictions to get involved and investigate the merger and, in the worst-case scenario, block the merger,”
Considering the impact on competition and television rights: Merger control guidance and regulatory concerns
Although there are few specifics on how to carry out the merger, I hope the parties have already sought and received merger control guidance.
Evans, a legal expert, states that regulators will express concerns about the potential effects of the deal on competition, both upstream and downstream.
Downstream” impacts might include the impact on broadcasters seeking to buy television rights.
Prior to the merger both PGA Tour and LIV Golf would be in competition with each other to sell their respective television rights, and therefore each imposes a constraint on the other in relation to the price that they can charge as there is an alternative that anyone seeking to buy television rights has.
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