Competition Law in Esports Sponsorship Concentration in China

1. Introduction

Esports sponsorship concentration refers to a situation in which a small number of sponsors, advertising platforms, technology companies, payment providers, beverage brands, hardware manufacturers, game publishers, or media groups control a disproportionately large share of sponsorship opportunities connected with esports leagues, teams, tournaments, venues, streaming platforms, or esports ecosystems.

In China, such concentration can raise issues under the Anti-Monopoly Law (AML) where sponsorship arrangements create or strengthen market power and are used to exclude rival sponsors, competing teams, competing platforms, or downstream commercial partners.

A critical distinction must be made: concentration itself is not automatically unlawful. The legal concern arises when concentration produces or facilitates conduct that eliminates or restricts competition—for example:

exclusive sponsorship agreements covering substantially all major esports events;

tying sponsorship to exclusive streaming or advertising arrangements;

refusal to deal with rival sponsors;

discriminatory access to esports teams or leagues;

bundling sponsorship with game distribution or streaming rights;

exclusionary rebates or loyalty arrangements;

coordination among esports organizers concerning sponsor prices;

acquisitions that consolidate sponsorship, streaming and game-operation markets.

China's approach is particularly important because esports markets may involve multi-sided platforms: game publishers, leagues, teams, players, streaming platforms, advertisers and sponsors may all participate in interconnected markets.

The Supreme People's Court's decision concerning exclusive commercial rights in professional sports provides an especially important framework for analysing esports sponsorship. (IPC Court)

2. Legal Framework

A. Anti-Monopoly Law

The principal legislation is the Anti-Monopoly Law of the People's Republic of China, as amended in 2022.

The principal areas relevant to esports sponsorship are:

1. Monopoly agreements

The AML prohibits agreements between competing undertakings that eliminate or restrict competition.

In esports sponsorship, this could arise where:

two competing leagues agree to use the same sponsor exclusively;

teams agree not to accept sponsorship from a particular rival;

competing sponsorship agencies coordinate prices;

esports clubs divide sponsors by territory or category;

organizers collectively impose minimum sponsorship prices.

The problem becomes particularly serious where the coordination concerns important sponsorship categories such as gaming hardware, telecommunications, energy drinks, automobiles, financial services or online platforms.

B. Abuse of dominant market position

Where an esports organizer, game publisher, streaming platform or integrated technology company has a dominant position, sponsorship practices may be scrutinised as potentially abusive.

Relevant theories include:

Exclusive dealing

A dominant esports platform could require:

"Any sponsor participating in our esports ecosystem must not sponsor competing tournaments."

Such a condition can foreclose competitors from obtaining sponsorship.

Refusal to deal

A dominant league or platform might refuse access to sponsors that simultaneously sponsor a competing esports ecosystem.

Discriminatory treatment

A dominant platform could give preferential sponsorship exposure or advertising inventory to affiliated companies while disadvantaging independent sponsors.

Tying

For example:

sponsorship of a major esports tournament is offered only if the sponsor purchases advertising services from the organizer's affiliated platform.

This could create an additional competition problem where the organizer possesses substantial market power.

3. Why Sponsorship Concentration Is Special in Esports

Esports sponsorship differs from ordinary advertising because sponsorship frequently provides access to a complete ecosystem.

A major esports sponsor may receive:

team naming rights;

jersey branding;

tournament advertising;

streaming exposure;

social-media promotion;

player endorsements;

in-game advertising;

event venue rights;

merchandise rights;

exclusive product categories.

Therefore, one sponsorship agreement may affect several related markets simultaneously.

For example:

Game publisher → esports league → teams → streaming platform → advertisers/sponsors → consumers

If one undertaking controls several layers, sponsorship exclusivity can become an important mechanism for leveraging market power.

4. Relevant Market Definition

Market definition is likely to be the first major issue.

Possible relevant markets include:

A. Esports sponsorship market

The market could potentially be defined as sponsorship services for:

esports generally;

a particular game;

a particular esports league;

professional esports teams;

major esports tournaments.

B. Advertising market

The relevant market might instead concern advertising opportunities reaching a particular demographic.

C. Game-specific sponsorship market

A sponsor seeking access to players of a particular game may have no effective substitute for sponsorship of that game's official league.

D. Digital advertising

Where sponsorship is bundled with livestreaming and platform advertising, the relevant market may overlap with digital advertising.

The narrower the market, the easier it may become to establish substantial market power.

5. Market Power and Sponsorship Concentration

Sponsorship concentration should not be assessed merely by counting sponsors.

Authorities could consider:

sponsorship expenditure;

number of major sponsorship contracts;

audience reach;

exclusive rights;

access to esports teams;

access to tournament inventory;

streaming audience;

player popularity;

game publisher control;

switching costs;

network effects;

contractual duration;

barriers to entry;

availability of alternative esports properties.

A sponsor holding 40% of total sponsorship expenditure does not necessarily possess market power.

Conversely, an esports organizer with only one major tournament may nevertheless possess substantial bargaining power if that tournament is effectively indispensable for reaching a particular audience.

6. Six Important Chinese Case Laws

A difficulty with this subject is that China has not yet developed six reported judgments specifically concerning "esports sponsorship concentration." Therefore, the following cases should be used as direct and analogous authorities. The first two are particularly close to esports; the sports-commercial-rights decision is the strongest authority concerning exclusivity.

Case 1: Osports v. Chinese Super League Company & ImagineChina

Supreme People's Court, (2021) Zui Gao Fa Zhi Min Zhong No. 1790, decided 23 June 2022

Facts

The Chinese Football Association authorised the Chinese Super League Company to develop and operate commercial rights relating to the league.

The league company conducted a public tender for the official photographic partner for the 2017–2019 period.

ImagineChina won the tender and obtained exclusive rights to operate the league's photographic resources.

Osports, which had participated in the tender but lost, subsequently challenged the exclusivity, alleging abuse of dominant market position.

Decision

The Supreme People's Court held that the exclusive nature of sports commercial rights does not itself constitute unlawful monopolisation.

The Court recognised that the league company and ImagineChina possessed a dominant position in the relevant league-photography market, but nevertheless found the exclusive arrangement lawful because:

the underlying sports commercial right was inherently exclusive;

the right had been obtained through lawful authority;

the exclusive licence was awarded through public tender;

the tender process itself introduced competition;

the exclusivity did not produce additional anti-competitive effects.

The Court therefore rejected the abuse claim. (IPC Court)

Relevance to esports sponsorship

This is the most important Chinese precedent for esports sponsorship concentration.

An esports league may legitimately grant:

"exclusive official automobile sponsor rights"

or

"exclusive gaming hardware sponsor rights"

if the rights are legitimately created, competitively tendered and reasonably limited.

But the decision does not mean that every esports exclusivity arrangement is lawful.

If the organizer uses its dominant position to exclude sponsors from competing tournaments, the exercise of the exclusive right could become abusive.

Principle

Exclusive rights are not automatically illegal; abusive exploitation of exclusive rights can be.

Case 2: Shanghai Yaoyu Culture Media Co. Ltd. v. Guangzhou Douyu Network Technology Co. Ltd.

Shanghai Intellectual Property Court

Facts

The dispute concerned broadcasting of the DOTA2 Asia Championships.

Yaoyu claimed that it had obtained exclusive broadcasting rights for mainland China and challenged Douyu's unauthorised real-time broadcasting and commentary.

Decision

The Shanghai Intellectual Property Court treated the unauthorised exploitation of the esports event's broadcasting opportunity as an unfair-competition issue.

The court recognised that esports event broadcasting could constitute an important commercial opportunity for event organisers and that unauthorised exploitation could disturb the competitive order. (Shzcfy)

Relevance to sponsorship concentration

Although this was principally an intellectual-property/unfair-competition dispute rather than an AML sponsorship case, it demonstrates the importance of commercial exclusivity in esports.

The same commercial asset may generate:

broadcasting revenue;

sponsorship revenue;

advertising revenue;

merchandising revenue.

Consequently, a dominant esports operator controlling broadcasting and sponsorship rights may potentially leverage one market into another.

Case 3: SAMR — HUYA/DouYu Merger

State Administration for Market Regulation, 2021

Facts

SAMR prohibited the proposed merger between Huya and DouYu, two major Chinese game-streaming platforms.

The authority found that the transaction would significantly strengthen Tencent's position in China's game-streaming market.

SAMR found that Huya and DouYu had very substantial combined market shares, including more than 70% by revenue and more than 80% by active users in the relevant game-streaming market. (SAMR)

Relevance to esports sponsorship

This is extremely important because esports sponsorship is closely connected to livestreaming.

A platform that controls:

esports broadcasting;

streamer resources;

audience access;

tournament promotion;

advertising inventory;

may acquire substantial bargaining power over sponsors.

A merger that combines major esports streaming platforms could therefore affect the sponsorship market even if the transaction is formally characterised as a streaming transaction.

Principle

Competition analysis in esports must consider adjacent and vertically connected markets.

Case 4: Common Market Dominance — Supreme People's Court, (2021) Zui Gao Fa Zhi Min Zhong No. 1977

The Supreme People's Court has emphasised that determining joint/common market dominance cannot depend solely on market shares.

The Court indicated that authorities should also examine whether multiple undertakings:

behave consistently;

possess economic links;

exercise coordinated market power;

adopt similar commercial strategies.

(Supreme People's Court)

Relevance to esports sponsorship

Suppose several major esports leagues collectively account for most commercially valuable tournaments and simultaneously impose:

identical sponsor restrictions;

identical sponsor pricing;

identical exclusivity periods;

identical restrictions against rival brands.

Their combined conduct could raise concerns even if no single league independently dominates the market.

This is especially important in a concentrated sponsorship market.

Case 5: Maoming Concrete Enterprises — Coordinated Conduct

Supreme People's Court, (2022) Zui Gao Fa Zhi Xing Zhong No. 29

The Supreme People's Court addressed the concept of other concerted practices.

The Court indicated that where competing undertakings display consistent market conduct together with evidence of coordination aimed at eliminating or restricting competition, the conduct can fall within the prohibition on monopolistic agreements. An undertaking may avoid the inference where it provides a reasonable independent explanation for the conduct. (Supreme People's Court)

Relevance to esports sponsorship

Consider five major esports teams negotiating independently with sponsors.

If evidence shows that they secretly agree:

"None of us will accept sponsorship below RMB X million"

or

"We will divide sponsors among ourselves"

the conduct could potentially constitute horizontal coordination.

This would be substantially more problematic than a single team's independent exclusive sponsorship contract.

Principle

Independent sponsorship decisions are lawful; coordinated exclusion or price coordination may constitute a monopoly agreement.

Case 6: Weihe Water Group — Hidden Exclusive Dealing

Supreme People's Court, (2022) Zui Gao Fa Zhi Min Zhong No. 395

The Court examined implicit or indirect exclusive dealing.

It held that a restriction on trading does not necessarily need to be expressed in an explicit contractual clause. Conduct may effectively restrict customers' freedom of choice even where the restriction is indirect. (IPC Court)

Relevance to esports sponsorship

This principle is highly relevant to sponsorship.

Imagine a dominant esports platform telling sponsors:

"You are free to sponsor other tournaments."

But at the same time:

giving better advertising rates only to exclusive sponsors;

reducing platform visibility for non-exclusive sponsors;

denying access to key tournament inventory;

threatening to remove sponsors from affiliated events.

There may be no express exclusivity clause, yet the practical effect may be exclusionary.

Principle

Competition law examines economic substance, not merely contractual wording.

7. Application to Esports Sponsorship Concentration

A. Exclusive sponsorship

An esports league may designate:

"Official Smartphone Partner"

or

"Exclusive Automobile Partner."

Such arrangements are not inherently unlawful.

Following the Osports principle, exclusivity may be legitimate where:

the organizer owns or legitimately controls the commercial right;

the category is clearly defined;

the contract is limited in duration;

sponsors compete for the right;

tendering is transparent;

competitors are not unnecessarily excluded.

B. Excessively broad exclusivity

The risk increases where a contract says:

"The sponsor shall be the exclusive sponsor of all gaming, digital entertainment, telecommunications, hardware and esports activities in China."

Such a clause could potentially cover multiple markets.

The broader the clause, the stronger the need to examine:

market power;

duration;

foreclosure;

alternative sponsorship opportunities;

legitimate commercial justification.

8. Sponsorship Bundling

A particularly important issue is bundling.

Suppose a dominant game publisher tells a sponsor:

"You can become the official sponsor only if you purchase advertising on our streaming platform."

This may combine:

esports sponsorship;

digital advertising;

streaming services.

Where the undertaking is dominant, such bundling could potentially amount to leveraging market power into an adjacent market.

9. Sponsorship and Streaming Concentration

The Huya/DouYu decision demonstrates why streaming cannot be ignored.

SAMR specifically considered:

market shares;

user numbers;

streamer resources;

copyright/licensing barriers;

entry barriers.

The authority concluded that the transaction could further strengthen Tencent's dominance in game streaming. (SAMR)

For esports sponsorship, this means a competition authority could potentially ask:

Who controls access to the audience?

If one platform controls both the most important esports tournaments and the dominant streaming audience, its bargaining power over sponsors may become substantially greater.

10. Sponsorship Foreclosure

Foreclosure occurs where an arrangement prevents rivals from obtaining commercially meaningful sponsorship opportunities.

For example:

Dominant esports platform

↓

exclusive sponsorship agreement

↓

major brands prohibited from sponsoring competitors

↓

competitors lose access to important sponsors

↓

higher entry barriers

↓

reduced competition.

This becomes particularly serious where the exclusive sponsor contracts cover most valuable tournaments for a long period.

11. Duration as a Competition Factor

A one-year sponsorship agreement is generally less problematic than a ten-year arrangement.

Long-term exclusivity can:

prevent rival tournaments from attracting sponsors;

increase entry barriers;

deprive new leagues of financing;

reduce innovation;

reinforce network effects.

Therefore, duration should be considered alongside market share and foreclosure.

12. Sponsorship Concentration and Entry Barriers

Esports has significant network effects.

A new tournament needs:

teams;

players;

viewers;

broadcasters;

sponsors.

But sponsors may prefer tournaments that already have large audiences.

This creates a feedback loop:

Large audience → major sponsors → better prize money → better teams → larger audience

Consequently, concentrated sponsorship can reinforce incumbent tournaments.

Competition authorities should therefore distinguish between:

Efficient concentration

A successful tournament attracts sponsors because it provides superior audience reach.

Exclusionary concentration

An incumbent tournament prevents sponsors from supporting rival tournaments through contractual or coercive restrictions.

The first is generally a product of competition.

The second can raise competition concerns.

13. Role of Game Publishers

Chinese esports markets often involve game publishers with significant control over the underlying game.

A publisher may control:

tournament licensing;

intellectual-property rights;

player/team participation;

broadcasting;

sponsorship categories;

advertising;

game-operation data.

If the publisher also operates an esports league, sponsorship restrictions can have greater competitive consequences.

The Huya/DouYu decision illustrates why the relationship between game-operation services and game-streaming services may be relevant to competition analysis. (SAMR)

14. Vertical Competition Concerns

A typical esports structure might be:

Game Publisher
↓
League Organizer
↓
Teams
↓
Streaming Platform
↓
Sponsors/Advertisers

A company operating at multiple levels can potentially engage in vertical foreclosure.

For example:

Game publisher + tournament organizer + streaming platform + advertising platform

could make it difficult for independent tournaments to compete for sponsorship and audiences.

15. Consumer Welfare

Although sponsors are the immediate commercial counterparties, competition law ultimately considers competitive effects.

Sponsorship concentration may indirectly affect consumers through:

fewer esports tournaments;

less innovation;

reduced streaming choice;

poorer production quality;

higher advertising prices;

reduced prize pools for competing teams;

reduced opportunities for new esports entrants.

Therefore, the analysis should not stop at whether a sponsor paid a high price.

16. Legitimate Business Justifications

An esports organizer may justify exclusivity on grounds such as:

Brand protection

Preventing direct competitors from simultaneously presenting themselves as official partners.

Advertising coherence

Avoiding conflicting sponsors within the same product category.

Investment incentives

Sponsors may invest more heavily where they receive meaningful exclusivity.

Event financing

Exclusive sponsorship can help organizers secure predictable revenue.

Consumer clarity

One official sponsor per category may prevent confusion.

These justifications are particularly relevant under the reasoning of Osports, where the Supreme People's Court placed weight on the competitive tendering process and legitimate commercial rationale. (IPC Court)

17. When Sponsorship Concentration Becomes High Risk

The risk is substantially higher where the following factors coexist:

18. Compliance Framework for Chinese Esports Businesses

An esports organizer should:

define sponsorship categories precisely;

avoid unnecessarily broad exclusivity;

conduct competitive tendering for major commercial rights;

document objective selection criteria;

limit exclusivity temporally;

avoid tying unrelated services;

avoid discriminatory treatment of competing sponsors;

avoid agreements among rival teams concerning sponsor prices;

conduct competition-law review before major acquisitions;

preserve evidence demonstrating legitimate commercial reasons.

19. Key Legal Test

A useful examination framework is:

Step 1 — Define the relevant market

Is the market:

all sports sponsorship?

esports sponsorship?

game-specific sponsorship?

league-specific sponsorship?

digital advertising?

Step 2 — Determine market power

Examine:

market shares;

audience;

sponsorship inventory;

game rights;

streaming rights;

network effects;

entry barriers.

Step 3 — Identify the conduct

Is it:

exclusivity?

tying?

refusal to deal?

discriminatory access?

coordinated pricing?

merger/concentration?

Step 4 — Assess foreclosure

Ask:

Can competing esports organizers realistically obtain alternative sponsors?

Step 5 — Examine justification

Consider:

brand protection;

investment incentives;

event financing;

consumer clarity;

tendering.

Step 6 — Assess competitive effects

Consider:

exclusion;

reduced entry;

reduced innovation;

reduced consumer choice;

increased prices.

20. Important Distinction: Sponsorship Concentration ≠ Monopoly

The central principle is:

A concentrated sponsorship market is not automatically an unlawful monopoly.

The Osports judgment is particularly important because the Supreme People's Court expressly distinguished an inherently exclusive commercial right from abusive conduct involving that right. The Court held that the existence of a monopoly position created by the intrinsic exclusivity of a sports commercial right is not itself the prohibited conduct. (IPC Court)

Therefore, in an esports context:

Exclusive sponsorship right
↓
not automatically unlawful

but

Exclusive sponsorship right + dominant position + exclusionary effects
↓
potential AML concern.

21. Overall Assessment

Chinese competition law does not prohibit esports sponsorship concentration merely because sponsorship becomes concentrated in one organizer, sponsor or platform.

The more important question is how that concentration is created and exercised.

The strongest Chinese authority, Osports v. Chinese Super League, establishes that an exclusive sports commercial right can be legitimate where it arises from a lawful right and is competitively allocated. (IPC Court)

However, the Huya/DouYu merger demonstrates that China's competition authorities are willing to intervene where concentration in interconnected digital and gaming markets threatens to strengthen dominant market power. (SAMR)

Accordingly, an esports sponsorship arrangement becomes particularly problematic where a dominant game publisher, league or streaming platform uses exclusive sponsorship contracts to foreclose rival tournaments, prevent competing sponsors from accessing the market, tie sponsorship to unrelated services, or coordinate sponsorship prices.

Conclusion

The Chinese legal position can therefore be summarised as:

Legitimate exclusivity is permissible; exclusionary exploitation of market power is not.

For esports, the principal competition-law danger is not the mere concentration of sponsors but the use of sponsorship exclusivity as a mechanism for leveraging dominance across games, tournaments, streaming, advertising and digital-platform markets.

Core Cases to Remember

Osports v. Chinese Super League Co. & ImagineChina, (2021) Zui Gao Fa Zhi Min Zhong No. 1790 — exclusive sports commercial rights.

Shanghai Yaoyu Culture Media v. Guangzhou Douyu Network Technology — esports broadcasting and commercial exploitation.

SAMR — HUYA/DouYu merger — concentration in game streaming and Tencent's vertical ecosystem.

Common Market Dominance case, (2021) Zui Gao Fa Zhi Min Zhong No. 1977 — assessment of common dominance.

Maoming Concrete Enterprises, (2022) Zui Gao Fa Zhi Xing Zhong No. 29 — concerted practices.

Weihe Water Group, (2022) Zui Gao Fa Zhi Min Zhong No. 395 — implicit/indirect exclusive dealing.

Exam takeaway: The best authority for esports sponsorship exclusivity is the Osports case, while HUYA/DouYu is the strongest analogue for understanding how esports, streaming and platform concentration can interact under China's modern antitrust regime. (IPC Court)