In two separate non-binding opinions in Super League and International Skating Union issued on 15 December 2022, Advocate General Rantos concluded that sports federations can – under certain circumstances – impose pre-authorisation requirements on third party events without violating EU competition law.
Key takeaways
- The legality of most sporting federations' rules will be judged based on whether in practice they generate anti-competitive effects. The rules at issue in the cases were not per se illegal under competition law.
- The effects test looks at whether third parties are unduly denied access to the market.
- Sports federations can adopt rules with potentially anti-competitive effects without violating EU competition law, but those rules must pursue legitimate objectives in a proportionate manner.
- Sports federations may have a pre-approval system to protect their economic and non-economic interests but need to ensure that the application of this system does not impose disproportionate restrictions on competition, which is to be determined taking into account the factual, legal and economic context.
- The "European Sports Model" sets out legitimate objectives (pyramid structure; open competitions; financial solidarity) that can outweigh the anticompetitive effects of rules laid down by sports federations.
Super League case: the background
Initiated in April 2021, the European Super League ("ESL") included 12 professional football clubs that wanted to establish a new league composed of some of the best European clubs. The clubs participating in the ESL would continue to participate in the competitions organised by UEFA. Concerned about potential conflicts with competitions organised by UEFA, FIFA and UEFA threatened players and clubs with sanctions, including disqualification from participating in any of its tournaments. FIFA and UEFA have, essentially, a dual function of regulating and organising European football competitions. Their rules provide that any third party football competition needs to be pre-authorised by them.
The ESL organisers complained to a Madrid court that UEFA and FIFA were in breach of Articles 101 and 102 TFEU. In May 2021, the Madrid court referred the case to Luxembourg and asked the ECJ to give a ruling on whether the system of prior authori''sation and the system of sanctions contained in the UEFA and FIFA Statutes are in breach of EU competition law.
AG opinion: FIFA and UEFA’s prior approval and sanctions regimes are not per se incompatible with EU competition law as they are in line with legitimate objectives given sport’s special nature; whether the system has anti-competitive effects needs to be examined in light of the specific factual, legal and economic context.
AG Rantos indicates that UEFA's pre-authorisation and sanction rules are not per se illegal under Article 101(1) TFEU because they pursue legitimate objectives in a proportionate manner.
First, AG Rantos refers to the sport's special "social and educational function" and the "European Sports Model" that are both reflected in Article 165 TFEU.1 He stresses the relevance of these factors when analysing whether UEFA’s rules pursue legitimate objectives. The European Sports Model is based on a pyramid structure, ranging from amateur sport to elite professional sport, and is characterised by open competition and financial solidarity.2 AG Rantos considers that the sports federations such as UEFA play a key role in this model from an organisational perspective as they guarantee respect for and uniform application of the rules. He also notes that the fact that UEFA is both the regulator and a commercial actor organising international competitions raises a risk of conflict, but that alone does not suffice to establish a violation of competition law. Accordingly, AG Rantos argues that the pre-approval rules' legitimacy is established because UEFA's and FIFA's objectives are aligned with the principles of the European Sports Model.3 He points in this respect to their objectives of mai'ntaining open competition and a competitive balance between clubs.
Second, AG Rantos examines whether the restrictions are inherent and directly related to the legitimate objective being pursued. He finds this to be the case. In particular, AG Rantos states that the ESL could undermine the legitimate objectives pursued by UEFA and FIFA, which is why FIFA's and UEFA's refusal to allow clubs to participate in the ESL could be regarded as inherent to FIFA’s and UEFA's objective.4 He refers in this respect to the negative impact that the ESL may have on the domestic leagues that ESL participants would continue to participate in, as their participation may undermine the relevance of these competitions and create imbalances since the ESL clubs will be guaranteed participation in the lucrative ESL while other clubs do not. He also points to the lack of "pan-European" nature of the ESL, which would be contrary to that European sport model. According to the AG, both the pre-authorisation and sanctions systems are necessary to attain the uniform application of the rules and common standards in football tournaments to preserve the European Sports Model.
Third, the AG suggests that it would be a different scenario if the ESL was a true breakaway league and not a league in which the participating clubs also wished to participate in the "UEFA ecosystem" while acting in direct competition with UEFA in the most lucrative segment of that system of European football. According to the AG, the ESL clubs cannot benefit from their rights and advantages within UEFA without complying with UEFA’s rules and obligations.5 It is in line with competition law for UEFA to protect its own economic interests and prevent such dual membership that would risk weakening UEFA significantly.6 AG Rantos distinguishes the situation in this case from the case discussed below relating to the International Skating Union (ISU) by explaining that the ESL is not a competition that would not impact the international calendar or otherwise affect the existing governance structure and organisation of the sport.
Fourth, AG Rantos made a differentiation between the sanctions against football clubs taking part in the ESL and the players, such as by prohibiting them from participating in the national teams that participate in UEFA national team competitions (like the EURO tournament). It would be disproportionate to target sanctions involving exclusion of players who had no involvement in the project in question.7 By contrast, competition law did not prevent threats of sanctions against clubs which participate in a new competition that would risk undermining the legitimate objectives of the federations of which the clubs are members.8
Despite expressing his opinion on the question of the proportionate nature of the pre-approval system and the threat of sanctions, AG Rantos defers to the domestic court the appreciation of the facts on the record to establish whether it is of the view that the pre-approval system and the threatened sanctions are proportionate in light of the factual, legal and economic context, including the specific characteristics of the ESL. The domestic court in Madrid may well hold a different and less negative view of the ESL, which could lead to a different outcome of this effects analysis. AG Rantos did not find any additional grounds of concern under Article 102. The dual role of UEFA being a regulator and an organiser at the same time is not in itself an abuse of a dominant position or otherwise contrary to EU competition law.9 Indeed, a forced separation between the regulatory and commercial activities of a sports federation would risk being inconsistent with the European Sports Model in particular with respect to the financial solidarity objective.10
International Skating Union case: the background
The International Skating Union ("ISU") has a dual function to regulate figure and speed skating and organise international ice skating events. All speed and figure skaters affiliated with national federations that are members of the ISU are subject to the ISU’s pre-authorisation system, including so-called "eligibility rules". The rules state that taking part in unauthorised competitions will lead to sanctions for these athletes. In December 2017, the European Commission ("EC") found that these rules had the object of restricting competition. The ISU appealed the EC’s decision before the EU General Court ("GC"). In its judgment of December 2020, the GC in essence upheld the EC's decision (see our alert here).
AG Opinion in International Skating Union: AG Rantos recommends setting aside the GC judgment as the GC wrongly concludes that ISU restricted competition by object
AG Rantos clarifies that although the rules laid down by sports governing bodies are not exempt from competition law, they can fall outside of Article 101 (1) TFEU if the rules’ restrictive effects are inherent and proportionate to legitimate objectives sought.11
The GC had found a restriction of competition by object based on the ISU’s broad discretion to refuse authorisation of ice skating events organised by third parties. In contrast, AG Rantos argues that the ISU’s theoretical capability to refuse third-party ice-skating events is not enough to classify the conduct as a restriction of competition by object.12 Instead, the mechanism’s compatibility with EU competition law can be only established based on an analysis of whether it produced anti-competitive effects in practice.13 In other words, whether or not a sport federations’ rules are anti-competitive will be judged on the basis of the effects that such rules have on a relevant market, not on the basis of their wording.
As in Super League, AG Rantos notes that the dual role of the ISU of being a regulator and organiser at the same time does not in itself entail an infringement of Article 101 (1) TFEU.14 AG Rantos agrees that the pursuit by a sports federation, such as ISU, of its own economic interests is not anti-competitive in and of itself. It is problematic only if the sport federation unjustifiably deprives a competitor from accessing the market.15
AG Rantos proposed that the case be referred back to the GC to carry out an analysis of whether the rules produced anti-competitive effects.
Concluding remarks
We are only at half time. AG Rantos’ opinions are not binding on the ECJ, which will have the last word. That said, it is statistically likely that the ECJ will follow them as it does in around 80% of all ECJ cases. Moreover, the final word may actually rest with the domestic courts which may well have a different view on some of the factual and legal issues that determine the all-important effects-related proportionality analysis.
The two opinions taken together make the following fundamental points with respect to the relationship between EU competition law and sports:
- Sports governing bodies often have dual roles of both a regulator as well as an organiser of sports events. The conflicting nature of such roles is not anti-competitive in itself.
- Protection of sport federations’ economic interests is also not, as such, anti-competitive.
- A special approach may be taken to the world of sport under EU competition law because of the recognition of the European Sporting Model in EU primary law.
- Overall, the two opinions would make it more difficult for a third-party to challenge the rules and decisions of the incumbent sports bodies.
1 Paragraphs 27–30 of the Super League opinion.
2 Paragraph 30 of the Super League opinion.
3 Paragraph 93 of the Super League opinion.
4 Paragraph 110 of the Super League opinion.
5 Paragraphs 106 and 107 of the Super League opinion.
6 Paragraph 108 of the Super League opinion.
7 Paragraph 146 of the Super League opinion.
8 Paragraphs 118 and 123 of the Super League opinion.
9 Paragraph 134 of the Super League opinion.
10 Paragraph 136 of the Super League opinion.
11 Paragraphs 39 and 42 of the opinion in Case C-124/21 P (“ISU opinion”).
12 Paragraphs 71, 72 and 73 of the ISU opinion.
13 Paragraph 73 of the ISU opinion.
14 Paragraph 48 of the ISU opinion.
15 Paragraph 104 of the ISU opinion.
Diego Garcia Adanez (White & Case, Legal Trainee, Brussels) contributed to the development of this publication.
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