Competition law in sports: the EUCJ strikes back

Competition law in sports

The European sports market is about to experience a tidal wave of welcome change, in relation to how its sports federations and associations lay out their rules to ‟pay and play” in European sports competitions. From the right to set up a Super League in European football and a new organiser of skating competitions other than the International Skating Union, to the right for players who are not ‟home-grown players” to be included in European tournaments, the European Union Court of Justice has changed the rules of the sports’ game, via its three judgments handed down on 21 December 2023.

During the Paris arbitration week 2022, the topic of competition law in sports came up, and to my awareness, at the Accuracy event, on 29 March 2022. For the first time, I was made aware that both the French Competition Authority (‟Autorité de la concurrence”) and the European Union (‟EU”) authorities, are determined to make sports federations and structures way more accountable for their anticompetitive behaviours and abuses of dominant position. While the talk on sports and competition law, at the Accuracy webinar, was fuzzy and incomplete, at best, it did stay with me as a topic worth investigating further, since sports is an economic activity and, as such, must comply with the provisions of article 101 of the Treaty of the Functioning of the European Union (‟TFEU”), which relate to the prohibition of agreements having for object or effect the prevention, restriction or distortion of competition within the EU internal market.

So, it was a great and welcomed surprise when, at the end of 2023, I heard that the European Union Court of Justice (‟EUCJ”) had handed down not one, but three, judgments, on the same day, clearly delineating behaviours and regulations, from sports federations, which were not OK, and even forbidden, from a competition law standpoint.

Let’s dive in, shall we?

1. The EUCJ gives green light to football Super League

The most important (and longest, by a wide margin) judgment handed down by the EUCJ, on 21 December 2023, was European Superleague Company SL v Fédération Internationale de football association (‟FIFA”) and Union of European Football Associations (‟UEFA”).

1.1. Facts

As explained in my seminal article on women’s football, FIFA is the top international governing body of association football in the world. UEFA is one of the six continental bodies of governance in association football, focused on the European continent, of course. Both FIFA and UEFA are associations governed by private law having their headquarters in Switzerland, for tax purposes.

Article 2 of the FIFA statutes (the ‟FIFA statutes”) sets out that FIFA’s objectives include, inter alia, ‟to organise its own international competitions”, ‟to draw up regulations and provisions governing the game of football and related matters and to ensure their enforcement” and ‟to control every type of association football by taking appropriate steps to prevent infringements of the FIFA statutes, regulations or decisions of FIFA or of the laws of the game” at the world level.

UEFA, as one of the six continental confederations recognised by FIFA, undertakes to comply, inter alia, with the FIFA statutes, regulations, directives and decisions of FIFA. And any ‟association which is responsible for organising and supervising football” in a given European country may become a member of FIFA, provided, inter alia, that it is already a member of UEFA, and that it also undertakes beforehand to comply with the FIFA statutes, regulations, directive and decisions of FIFA. Such national football associations, which are currently members of FIFA, have the obligation, inter alia, to cause their own members or affiliates to comply with the FIFA statutes, regulations, directives and decisions of FIFA, and to ensure that they are observed by all stakeholders in association football, in particular by the professional leagues, clubs and players.

Article 22 of th FIFA statutes, entitled ‟Confederations”, provides, inter alia, that ‟each confederation (including UEFA) shall have the following rights and obligations (…) to ensure that international leagues or any other such groups of clubs or leagues shall not be formed without its consent and the approval of FIFA”.

Article 67 of the FIFA statutes, entitled ‟Rights in competitions and events”, sets out that:

  • FIFA, its member associations and the confederations are the original owners of all the rights emanating from competitions and other events coming under the respective jurisdiction, without any restrictions as to content, time, place and law. These rights include, among others, every kind of financial rights, audiovisual and radio recording, reproduction and broadcasting rights, multimedia rights, marketing and promotional rights and incorporeal rights, such as emblems and rights arising under copyright law”, and
  • the Council (i.e. the strategic and oversight body of FIFA) shall decide how and to what extent these rights are utilised and draw up special regulations to this end. The Council shall decide alone whether these rights shall be utilised exclusively, or jointly with a third party, or entirely through a third party”.

Article 68 of the FIFA statutes, entitled ‟Authorisations to distribute”, provides that ‟FIFA, its member associations and the confederations are exclusively responsible for authorising the distribution of image and sound and other data carriers of football matches and events coming under their respective jurisdiction, without any restrictions as to content, time, place and technical and legal aspects”.

Similarly, the UEFA statutes (the ‟UEFA statutes”) grant monopolistic rights to the UEFA, in terms of consenting to the formation of clubs and leagues in Europe, owning the rights emanating from football competitions, in particular broadcasting rights, in Europe, and of having the sole jurisdiction to organise or abolish international competitions in Europe in which Member Associations and/or their clubs participate. 55 national football associations are currently members of UEFA.

Article 51 of the UEFA statutes provides that:

  • no combination or alliances between UEFA Member Associations or between leagues or clubs affiliated, directly or indirectly, to different UEFA Member Associations, may be formed without the permission of UEFA”, and
  • ‟a Member Association, or its affiliated leagues and clubs, may neither play nor organise matches outside its own territory without the permission of the relevant Member Associations”.

Now that the legal framework scene is set, let’s have a look at why, on earth, the EUCJ had to take a decision relating to the FIFA statutes and UEFA statutes.

Well, it so happens that, at the initiative of a group of professional football clubs, established:

  • in Spain (Club Atletico de Madrid, Futbol Club Barcelona and Real Madrid Club de Futbol);
  • in Italy (Associazione Calcio Milan, Football Club Internazionale Milano and Juventus Football Club), and
  • in the United Kingdom (Arsenal Football Club, Chelsea Football Club, Liverpool Football Club, Manchester City Football Club, Manchester United Football Club and Tottenham Hotspur Football Club),

the European Super League Company was incorporated in Spain (the ‟Super League”).

To execute the Super League project, it was planned to incorporate three other companies tasked with: (i) management of the Super League from a financial, sporting and disciplinary perspective; (ii) exploitation of the media rights related to that competition; and (iii) exploitation of the other commercial assets related to that competition.

The Super League project was based on a shareholder and investment agreement providing for the conclusion of a set of contracts binding each of the professional football clubs participating or eligible to participate in the Super League, and the three above-mentioned companies to be established, having as their object, inter alia, to set out the detailed rules under which those clubs were to assign to the Super League their media and commercial rights to that competition and the remuneration for that assignment. Among other things, that shareholder and investment agreement made it a suspensive condition to obtain either the recognition of the Super League international competition by FIFA or UEFA, and confirmation of its compliance with the FIFA statutes and UEFA statutes, or the legal protection from the competent administrative or judicial authorities to enable the professional football clubs having the status of permanent members to participate in the Super League without that affecting their memberships of, or participation in, the national football associations, professional leagues or international competitions in which they had been involved. To that effect, that shareholder and investment agreement provided, inter alia, that FIFA and UEFA were to be informed of the Super League project.

Predictably, FIFA and UEFA were not amused when they were made aware of the Super League project, therefore blocking any ability to move forward such Super League Project.

1.2. Procedure

The main proceedings have arisen out of a commercial action, including a petition for protective measures without an inter partes hearing, brought by the Super League before the Spanish ‟Juzgado de lo Mercantial de Madrid”, against FIFA and UEFA.

That legal action was brought following the launch of the Super League project and FIFA’s and UEFA’s opposition to that project.

Consequently, the Juzgado de lo Mercantial de Madrid” decided to stay the proceedings and to refer the following questions to the EUCJ for a preliminary ruling:

  • (1) Must article 102 TFEU (about abuse of dominant position) be interpreted as meaning that such article prohibits the abuse of a dominant position consisting of the stipulation by FIFA and UEFA in their statutes that the prior approval of those entities, which have conferred on themselves the exclusive power to organise or give permission for international club competitions in Europe, is required in order for a third-party entity to set up a new pan-European club competition like the Super League, in particular where no regulated procedure, based on objective, transparent and non-discriminatory criteria, exists, and taking into account the possible conflict of interests affecting FIFA and UEFA?
  • (2) Must article 101 TFEU (about breach of competition) be interpreted as meaning that such article prohibits FIFA and UEFA from requiring in their statutes the prior approval of those entities, which have conferred on themselves the exclusive power to organise or give permission for international competitions in Europe, in order for a third-party entity to create a new pan-European club competition like the Super League, in particular where no regulated procedure, based on objective, transparent and non-discriminatory criteria, exists, and taking into account the possible conflict of interests affecting FIFA and UEFA?
  • (3) Must articles 101 and/or 102 TFEU be interpreted as meaning that those articles prohibit conduct by FIFA, UEFA, their member associations and/or national leagues which consists of the threat to adopt sanctions against clubs participating in the Super League and/or their players, owing to the deterrent effect that those sanctions may create? If sanctions are adopted involving exclusion from competitions or a ban on participating in national team matches, would those sanctions, if they were not based on objective, transparent and non-discriminatory criteria, constitute an infringement of articles 101 and/or 102 TFEU?
  • (4) Must articles 101 and/or 102 TFEU be interpreted as meaning that the provisions of articles 67 and 68 of the FIFA statutes are incompatible with those articles in so far as they identify UEFA and its national member associations as ‟original owners of fall of the rights emanating from competitions … coming under their respective jurisdiction”, thereby depriving participating clubs and any organiser of an alternative competition of the original ownership of those rights and arrogating to themselves sole responsibility for the marketing of those rights?
  • (5) If FIFA and UEFA, as entities which have conferred on themselves the exclusive power to organise and give permission for international club football competitions in Europe, were to prohibit or prevent the development of the Super League on the basis of the above-mentioned provisions of their statutes, would article 101 TFEU have to be interpreted as meaning that those restrictions, on competition qualify for the exception laid down therein, regarding being had to the fact that production is substantially limited, the appearance on the market of products other than those offered by FIFA/UEFA is impeded, and innovation is restricted, since other formats and types are precluded, thereby eliminating potential competition on the market and limiting consumer choice? Would that restriction be covered by an objective justification which would permit the view that there is no abuse of a dominant position for the purposes of article 102 TFEU?
  • (6) Must articles 45 (about freedom of movement for workers), 49 (about freedom of establishment of EU nationals), 56 (about freedom to provide services) and/or 63 (about freedom on the movement of capital) TFEU be interpreted as meaning that, by requiring the prior approval of FIFA and UEFA for the establishment, by an economic operator of an EU member-state, of a pan-European club competition like the Super League, a provision of the kind contained in the FIFA and UEFA statutes constitutes a restriction contrary to one or more of the fundamental freedoms recognised in those articles?

After an extremely conservative, partial and short-sighted opinion handed down by the EUCJ’s advocate general Rantos on 15 December 2022, the EUCJ saw the light and handed down, one year later, the following judgment on 21 December 2023:

  • the practice of sports, and in particular, the exploitation of broadcasting rights, etc., constitutes an economic activity and is therefore subject to the provisions of EU law applicable to such activity;
  • the rules adopted by sporting associations come within the scope of the TFEU and, in particular, EU competition law provisions set out in the TFEU;
  • article 101 TFEU and article 102 TFEU are applicable to entities which are established in the form of associations which have as their purpose the organisation and control of a given sport, as well as to associations of undertakings, such as FIFA and UEFA;
  • FIFA and UEFA both carry on economic activity consisting in the organisation and marketing of international football competitions and the exploitation of the various rights related to those competitions. Thus, in so far as they do so, FIFA and UEFA are both undertakings. They both also hold a dominant position, or even a monopoly, on the relevant market;
  • FIFA and UEFA have granted themselves regulatory and control powers and those rules confer on those two entities not only the power to authorise the setting up and organisation, by a third-party undertaking, of a new interclub football competition on EU territory, but also the power to control the participation of professional football clubs and players in such a competition, on pain of sanctions;
  • those various powers of FIFA and UEFA are not placed within a framework of either substantive criteria or detailed procedural rules suitable for ensuring that they are transparent, objective and non-discriminatory. There is therefore an abuse of dominant position pursuant to article 102 TFEU;
  • FIFA and UEFA have adopted and implemented rules which are making subject to their prior approval the setting up, on EU territory, of a new interclub football competition by a third-party undertaking, and controlling the participation of professional football clubs and players in such a competition, on pain of sanctions, where there is no framework for those various powers providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate. These rules constitute a decision by an association of undertakings having as its object the prevention of competition, in breach of article 101 TFEU;
  • the conduct of FIFA and UEFA cannot be justified by any exemption pursuant to article 101(3) TFEU or other provisions of the TFEU, and
  • the FIFA and UEFA rules are also in breach of article 56 TFEU as they are an obstacle to freedom to provide services, limiting access to any newcomer. Such rules are not justified by a legitimate objective in the public interest and do not provide for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate.

Therefore, the FIFA statutes and the UEFA statutes on prior approval of interclub football competitions, such as the Super League, are contrary to EU law.

While that judgment does not mean that the Super League project must necessarily be approved, it is however for the Commercial Court in Madrid to ascertain whether these abusive FIFA and UEFA statutes might nevertheless benefit different stakeholders in football, for example, by ensuring a solidarity-like redistribution of the profits generated by those rights.

And now, the floodgates are opened, and the Super League project can finally move forward in Europe.

2. EUCJ finds International Skating Union rules breach antitrust law

The second most important judgment handed down by the EUCJ, on 21 December 2023, was International Skating Union (‟ISU”) v European Commission and others (‟EC”).

2.1. Facts

The ISU is also an association governed by private law which is headquartered in Switzerland. It describes itself as the only international sports federation recognised by the International Olympic Committee in the field of figure skating and speed skating (‟Skating”).

The members of ISU are Skating national associations, whose members or affiliates are in turn associations and clubs to which, in particular, professional athletes practising those sporting disciplines as an economic activity belong.

Article 1(1) and article 3(1) of the ISU statutes (the ‟ISU statutes”) provide that the aim of the ISU is to regulate, administer, govern and promote Skating throughout the world. At the same time, the ISU carries out an economic activity, consisting in particular of organising international Skating events and exploiting the rights associated with those events.

ISU has set up some prior authorisation rules, which set out the procedure to follow in order to obtain advance authorisation to organise an international Skating competition. These prior authorisation rules apply to both national associations that are ISU members and any third-party entity or undertaking.

Also, the ISU has set up some eligibility rules, which determine the conditions in which athletes may take part in Skating competitions. Those eligibility rules provide that such competitions must, first, have been authorised by the ISU or its members and, second, comply with the rules established by the ISU.

Mr Tuitert and Mr Kerstholt, two professional speed skaters residing in the Netherlands, belonging to the Koninklijke Nederlandsche Schaatsenrijders Bond (‟KNSB”), the Royal Netherlands Skating Federation, which is a member of the ISU, submitted a complaint to the EC in which they claimed that the prior authorisation rules and eligibility rules laid down by the ISU infringed articles 101 and 102 TFEU.

On 8 December 2017, the EC adopted the decision at issue (the ‟EC decision”), which considered that:

  • the ISU is an ‟association of undertakings”, and
  • the prior authorisation rules and eligibility rules were ‟decisions of associations of undertakings”,

within the meaning of article 101(1) TFEU.

The EC decision also considered that the ISU prior authorisation rules and eligibility rules had as their object the restriction of competition on the relevant market, as they prevented potential organisers of international Skating events in competition with ISU events, from entering that market and also restricted the possibility for professional skaters to take part freely in such events.

The EC decision further considered that such ISU rules were not justified by legitimate objectives and inherent in the pursuit of those objectives. Nor do the ISU rules benefited from any exemption, pursuant to article 101(3) TFEU.

The EC decision requested that the ISU bring the infringement established in that decision to an end, on pain of periodic penalty payments. Such measures that it required the ISU to take to bring an end to that infringement should in particular consist of, first, adopting prior authorisation criteria which are objective, transparent, non-discriminatory and proportionate, and, second, setting up suitable procedures for prior authorisation and sanctions, and third, amending the arbitration rules so as to ensure the effective review of decisions made at the end of those procedures.

2.2. Procedure

By application lodged at the registry of the general court of the EU on 19 February 2018, the ISU brought an appeal action for annulment of the EC decision.

On 16 December 2020, the EU general court handed down a judgment under appeal, in which it held, in essence, that the EC decision was not vitiated by illegality in so far as it related to the ISU’s prior authorisation rules and eligibility rules, but that it was unlawful in so far as it related to the ISU arbitration rules.

The ISU appealed to the EUCJ, claiming that it should:

  • set aside the judgment under appeal in so far as it dismissed in part the action at first instance;
  • annull the EC decision to the extent that it had not already been annuled by the judgment under appeal, and
  • order the EC and interveners at first instance to pay the costs incurred both at first instance and on appeal.

In its judgment handed down on 21 December 2023, one year after another hyper-conservative, rather useless and very partial opinion from EUCJ’s advocate general Rantos, the EUCJ decided that:

  • the practice of sports constitutes an economic activity and, as such, is subject to th provisions of EU law applicable to such activity, in particular EU competition law under the TFEU. Therefore, Skating is subject to EU competition law;
  • ISU rules have as their object and/or effect the prevention, restriction or distortion of competition, within the meaning of article 101(1) TFEU;
  • in so doing, the ISU rules prevent the growth of competition in the Skating sector, to the detriment of consumers, by limiting production, product or alternative service development or innovation;
  • moreover, the ISU rules, which do not prevent the risk of abuse of dominant position, confer a power to ISU – an undertaking in a dominant position -, infringe article 102 TFEU;
  • the ISU rules are able to be used to allow or exclude from the Skating market any competing undertaking, even an equally efficient undertaking, or at least restrict the creation and marketing of alternative or new competitions in terms of their format or content. In so doing, the ISU rules also completely deprive athletes of the opportunity to participate in those competitions, even where they could be of interest to them, for example on account of an innovative format, while observing all the principles, values and rules underpinning the sporting discipline concerned. Ultimately, the ISU rules are such as to completely deprive spectators and viewers of any opportunity to attend those competitions or to watch a broadcast thereof;
  • consequently, the first ground of appeal must be rejected;
  • the ISU prior authorisation rules and eligibility rules had at their object the restriction of competition. Such ISU rules must be subject to a framework so as to ensure that they are transparent, objective, non-discriminatory and proportionate;
  • consequently, the second ground of appeal must be rejected;
  • the exclusive and mandatory arbitration mechanisms, provided for by the ISU rules, are not a generally accepted method of resolving disputes and cannot be justified in the light of the need to ensure the uniform and effective application of the rules established by the ISU for all athletes practising Skating. The ISU arbitration rules reinforced the infringement of EU law connected with the existence of such powers because that judicial review was entrusted to a court established in a third country (i.e. CAS), thus outside the EU and its legal order and that, according to the case-law of CAS, such arbitration awards could not be reviewed in the light of EU competition rules, in particular articles 101 and 102 TFEU. This situation afforded legal immunity to ISU, in light of EU competition law, in the exercise of its decision-making and sanctioning powers, to the detriment of persons who may be affected by the lack of a framework for those powers and the discretionary nature which derives therefrom;
  • the ISU cannot, in doing so, limit the exercise of rights and freedoms conferred on individuals by EU law, which include the rights that underlie articles 101 and 102 TFEU;
  • thus, the EU general court erred in law by merely finding that the ISU arbitration rules may be justified by legitimate interests linked to the specific nature of the sport, and
  • the first ground of appeal raised by the EC and Mr Tuitert and Mr Kerstholt is therefore well-founded in its entirety. Consequently, the judgment under appeal must be set aside in so far as it annulled in part the EC decision, to the extent that the EC decision concerns the ISU arbitration rules.

Et voila! Third-party Skating competitions are going to be allowed, from now on, in the world, or, at least, the EU.

3. Rules of UEFA and the Belgian football association on ‟home-grown players” could be contrary to EU competition law

In a similar manner than in the first judgment handed down on 21 December 2023 by the EUCJ, this court finds that the UEFA and Belgian football association’s rules which provide that:

  • professional football clubs participating in international interclub football competitions organised by UEFA must include a maximum number of 25 players on the match sheet, which itself must include a minimum number of players categorised as ‟home-grown players” (‟HGP”), and
  • HGP are players who, regardless of their nationality, have been trained by their club or by a club affiliated to the same national football association for at least three years between the ages of 15 and 21,

may be in breach of EU competition law.

More specifically, the EUCJ finds that the Belgian referring court must check whether the HGP rules:

  • have as their object or effect the restriction, prevention or distortion of competition, in breach of article 101(1) TFEU;
  • may benefit from an exemption to the application of article 101(1) TFEU, if it is demonstrated, through convincing arguments and evidence, that all of the conditions required for that purpose are satisfied in compliance with article 101(3) TFEU, and
  • are in breach of article 45 TFEU (relating to free movement of workers) because they require each club participating in football competitions to enter in the list of its players and to include on the match sheet a minimum number of players trained in the territorial jurisdiction of UEFA, unless it is established that the HGP rules are suitable for ensuring, in a consistent and systematic manner, the attainment of the objective of encouraging, at local level, the recruitment and training of young professional football players, and that they do not go beyond what is necessary to achieve that objective.

So now, national courts in the EU member-states have a framework to assess whether the rules of the sports federations and associations, located on their ground or in Switzerland (such as FIFA, UEFA and ISU), breach EU competition law, in particular as far as restriction of competition, abuse of dominant position and restriction to the freedom of movement of workers, and/or to the freedom of providing services, are concerned. The floodgates are now open, and I expect a lot of litigation going on, in the next five years, in the sports’ industry, from clubs and players, to keep federations and associations on their toes and force them to change their monopolistic and autocratic ways.

Crefovi’s live webinar: Competition law in sports – the EUCJ strikes back – 10 January 2024

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