Sport before the European Court of Justice – three decisions upholding the primacy of EU law also in the organization of sport

On 21 December 2023, the European Court of Justice ("ECJ") issued three decisions in three separate cases concerning the discretionary power of sports federations to prevent alternative competitions and to otherwise impose requirements that may be inconsistent with European law. It also ruled on the role of the Court of Arbitration for Sport ("CAS") and the Swiss Federal Tribunal in cases involving EU competition law.

In all three decisions, it essentially found against the sports federations in principle, while allowing the possibility of some justifications to be presented by the sports federations. The ECJ decisions are nuanced and offer some recognition of the particular role and legitimacy of sports federations as regulators of the game. Nevertheless, the ECJ has opened the door to the possibility of alternative competitions not organised and exploited commercially by the sports federation itself.

And it has given the message that no domestic court has to respect arbitration clauses requiring arbitration before CAS when matters of EU competition law are at stake. Neither CAS nor the Swiss Federal Tribunal can guarantee respect for the EU's public order.

The background

European Super League¹

In the first case, 12 professional football clubs had intended to establish a new league, the European Super League ("ESL"), to be composed of some of the best European clubs. Concerned about potential conflicts with competitions organised by UEFA, FIFA and UEFA threatened players and clubs participating in the ESL 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 Treaty of the Functioning of the European Union ("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 authorisation and the system of sanctions contained in the UEFA and FIFA Statutes are in breach of EU competition law.

International Skating Union²

In the second case, the International Skating Union ("ISU") had 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 within the meaning of Article 101 TFEU. The ISU appealed the EC's decision before the EU General Court ("GC"). In its judgement of December 2020, the GC in essence upheld the EC's decision and found that the eligibility rules, in particular its penalty system, disproportionately restricted access of third-party organisers of speed skating competitions to the relevant market. This decision was appealed before the ECJ (see our alert here).

Royal Antwerp Football Club³

The third case, Royal Antwerp Football Club, concerned UEFA rules which require clubs participating in UEFA's interclub competitions to have a maximum of 25 listed players, with a minimum of eight players being home-grown, i.e., trained by their club or by another club in the same national association, regardless of their nationality, for at least three years between the ages of 15 and 21. The Brussels Court of First Instance was faced with the question of whether these UEFA rules constitute an infringement of the freedom of movement for workers under Article 45 TFEU and anti-competitive behaviour within the meaning of Article 101 TFEU, which it referred to the ECJ for a preliminary ruling in accordance with Article 267 of the TFEU.

ECJ: FIFA/UEFA and ISU prior approval and sanctions regimes are incompatible with EU internal market and competition rules because they do not include an objective and proportionate framework for access to third-party competitions

The two decisions related to the authorisation and sanction mechanism of international sports federations such as UEFA/FIFA and ISU all concerned the discretionary powers of these federations to prevent alternative competitions from being established with the threat of sanctions, including exclusion from any competition. The ECJ found that such discretionary monopoly power is in violation of EU law. It did not see Article 165 of the TFEU which relates to the Union's role in sport as providing an exception for sport.

Below we highlight a number of the relevant considerations and findings of the ECJ in this respect.

In Superleague, the ECJ recalled at the outset that the practice of sport is subject to European competition law insofar as it constitutes an economic activity. In this context, the ECJ observed that Article 165 TFEU, which specifies Union objectives and ways to achieve them in the field of sport, does not exempt sport from all or some of the other provisions of primary EU law, but that the specificities of sporting activities may need to be "taken into account". (ECJ Superleague, paras 101-106)

This being said, with regard to FIFA and UEFA, the ECJ did find it important to highlight that the considerable social and cultural importance of professional football and great media interest associated with it, together with the fact that it is based on openness and sporting merit, renders it legitimate, in principle, that FIFA and UEFA subject the organisation and conduct of international professional football to common rules intended to guarantee the homogeneity and coordination of competitions, and that this includes ensuring compliance through prior approval of competitions and the participation of clubs and players therein. (ECJ Superleague, paras.142-144)

On this basis, the ECJ held that in the specific context of professional football and the economic activities to which it gives rise, neither the adoption of prior approval and sanctions rules nor their implementation could be categorised as an "abuse of a dominant position" under Article 102 TFEU and anti-competitive by object in violation of Article 101 (1) TFEU.

The same applies, according to the ECJ in Royal Antwerp Football Club, to rules on the organisation of competitions, the participation of sportspersons and, more particularly, to the regulation of essential competition parametres governing how professional football clubs may put together their teams, i.e., imposing a maximum number of players per squad and requiring a minimum number of house-grown players.

The ECJ established that the applicable test to determine whether an approval and sanctions regime amounts to a violation of the competition laws of the EU requires an assessment of whether the restrictive power conveyed by such regimes is circumscribed by substantive criteria which are transparent, clear and precise, avoid arbitrary use, and have been set out in an accessible form, prior to their implementation.

The ECJ found examples of such criteria for the sports sector in measures that promote, in an appropriate and effective manner, the holding of competitions based on equality of opportunity and merit. That said, the ECJ found that even where the appropriate criteria are present, they must be such as to ensure that restrictive power is exercised without discrimination and that any sanctions that may be imposed are objective and proportionate. In particular, the ECJ noted that "in order for those criteria and detailed rules to be regarded as being non-discriminatory, it is necessary, given, inter alia, the fact that entities such as FIFA and UEFA themselves carry on various economic activities on the market concerned by their rules on prior approval and participation, that those same criteria and detailed rules should not make the organisation and marketing of third-party competitions and the participation of clubs and players therein subject to requirements which are either different from those applicable to competitions organised and marketed by the decision-making entity, or are identical or similar to them but are impossible or excessively difficult to fulfil in practice for an undertaking that does not have the same status as an association or does not have the same powers at its disposal as that entity and accordingly is in a different situation to that entity".

For sanctions not to be discretionary, "they must be governed by criteria that must not only be transparent, objective, precise and non-discriminatory, but must also guarantee that those sanctions are determined, in each specific case, in accordance with the principle of proportionality, in the light of, inter alia, the nature, duration and seriousness of the infringement found". (ECJ, Superleague, para 155).

The ECJ finds that, where there is no framework providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, precise, non-discriminatory and proportionate, rules on prior approval, participation and sanctions such as those at issue in the main proceedings reveal, by their very nature, a sufficient degree of harm to competition and thus have as their object the prevention thereof". (ECJ, Superleague, para 178).

The ECJ examined if the measures could be exempted from the relevant disciplines as the case law has established is the case for measures justified by the pursuit of one or more legitimate non-economic objectives in the public interest which are not per se anti-competitive in nature, and where the specific means used to pursue those objectives are genuinely necessary for that purpose, and where those means prove to have an inherent effect of restricting or distorting competition which does not go beyond what is necessary, in particular by eliminating all competition. However, the ECJ found that the FIFA/UEFA authorisation system could not be exempted from the disciplines of Article 101 and 102 as the challenged system is a restriction of competition by object and violates Article 102 by its very nature. (ECJ, Superleague, para. 193-188).

The ECJ then examine if nevertheless the justifications of Article 101 (3) could apply. The ECJ acknowledged that a justification could be possible if all the four cumulative conditions of this provision are met but considered that this requires specific demonstration supported by evidence before the referring court. It expressed some doubts about the possibility of providing such a justification in the context of the FIFA/UEFA authorisation and sanctions system, however. In this respect the ECJ found that it will be for the referring court to examine whether the rules on prior approval, participation and sanctions at issue in the main proceedings are such as to have a favourable impact on the various categories of 'users', comprising, inter alia, national football associations, professional or amateur clubs, professional or amateur players, young players and, more broadly, consumers, be they spectators or television viewers. It added a word of warning saying that "It should be borne in mind in that regard, however, that, although such rules may appear to be legitimate, in terms of their principle, by contributing to guaranteeing observance of the principles, values and rules of the game underpinning professional football, in particular the open, meritocratic nature of the competitions concerned, and ensuring a certain form of 'solidarity redistribution' within football, the existence of such objectives, however laudable they may be, do not release the associations that have adopted those rules from their obligation to establish, before the national court, that the pursuit of those objectives translates into genuine, quantifiable efficiency gains, on the one hand, and that they compensate for the disadvantages caused in competition terms by the rules at issue in the main proceedings, on the other". (ECJ, Superleague, paras. 195-196).

Similarly, the ECJ finds the exclusive media rights such as the exclusive power to authorise the broadcast of matches and events including those involving interclub football competitions, whether on audiovisual or other platforms, without any restrictions as to content, time, place and technical aspects, violates EU competition law in principle. (ECJ, Superleague, para 230, 241).

This being said, the ECJ left the door open to some of the arguments that had been developed in terms of efficiency gains from this arrangement and the impact on the solidarity mechanism which could possibly provide justification of the regime. It considered that these were issues to be demonstrated before the local court and to be assessed by the local court. Contrary to its more sceptic view expressed in the context of the approval and sanctions regime, the ECJ relevantly found that "those arguments appear prima facie to be convincing, given the essential characteristics of the interclub football competitions organised at world or European level. Indeed, the proper functioning, sustainability and success of those competitions depend on maintaining a balance and on preserving a certain equality of opportunity as between the participating professional football clubs, given the interdependence that binds them together, as follows from paragraph 143 of the present judgment. Moreover, there is a trickle-down effect from those competitions into smaller professional football clubs and amateur football clubs which, whilst not participating therein, invest at local level in the recruitment and training of young, talented players, some of whom will turn professional and aspire to join a participating club (see, to that effect, judgment of 16 March 2010, Olympique Lyonnais, C‑325/08, EU:C:2010:143, paragraphs 41 to 45). Lastly, the solidarity role of football, as long as it is genuine, serves to bolster its educational and social function within the European Union". (ECJ, Superleague, para. 235). It nevertheless highlighted that the profit generated by centralised sales of the rights related to interclub football competitions for each category of user – including not only professional and amateur clubs and other stakeholders in football, but also spectators and television viewers – must be proven to be real and concrete.

On essentially the same grounds, the ECJ found in European Super League that the concerned measures are also inconsistent with Article 56 TFEU, which establishes the freedom to provide services given the absence also of a framework for those rules providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate. (ECJ Superleague, para 250, 257).

Similarly, it left the door open for a possible justification, as the ECJ found that "the adoption of rules on prior approval of interclub football competitions and on the participation of professional football clubs and players in those competitions may be justified, in terms of its very principle, by public interest objectives consisting in ensuring, prior to the organisation of such competitions, that they will be organised in observance of the principles, values and rules of the game underpinning professional football, in particular the values of openness, merit and solidarity, but also that those competitions will, in a substantively homogeneous and temporally coordinated manner, integrate into the 'organised system' of national, European and international competitions characterising that sport." (ECJ Superleague, para. 253).

In the ISU case, the ECJ similarly found that the ISU approval and sanctions regimes failed to meet these standards and were therefore in violation of EU competition law. As regards the ISU regime, the ECJ stated that those rules were able to be used to exclude any competing undertaking from the relevant market, completely deprived athletes of the opportunity to participate in third-party competitions, even where they could be of interest to them, for example on account of an innovative format, as well as completely deprived spectators and viewers of any opportunity to attend those competitions. It thus upheld all the findings of the General Court in this respect.

ECJ in Royal Antwerp FC: The home-grown player requirement may be incompatible with EU internal market and competition rules because it risks discriminating but it is for the domestic referring court to examine the evidence regarding a possible exemption or justification

In the case of Royal Antwerp Football Club, the ECJ found that the rules on a minimum number of home-grown players amounted to a violation of the freedom of movement for workers under Article 45 TFEU, because the requirement to have a minimum number of home-grown players was likely to give rise to indirect discrimination at the expense of players from another Member State.

The ECJ acknowledges, however, that there could be a justification for these rules if they are pursuing a non-economic objective and its restrictions are inherent and necessary to the attainment of that objective. It defers to the domestic court to make that assessment but highlights a number of considerations that suggest a favourable disposition to such a justification.

For example, it recalled that "bearing in mind both the social and educational function of sport, recognised in Article 165 TFEU, and, more broadly, the considerable importance of sport in the European Union, repeatedly highlighted by the Court, the aim of encouraging the recruitment and training of young professional football players constitutes a legitimate objective in the public interest" (ECJ Royal Antwerp, para 144). It also stated that as regards the suitability of rules its objective may "justify measures which, without being designed in such a way as to ensure, in a certain and quantifiable manner in advance, an increase or intensification of the recruitment and training of young players, may nonetheless create real and significant incentives in that direction." (ECJ, Royal Antwerp, para 145).

It considered that the suitability of these measures for ensuring the attainment of the aim of encouraging the recruitment and training of young players at local level must be determined by the referring court, having regard to all the relevant factors. The ECJ seemed to be of the view that a more appropriate rule would be to require the club to have a number of club-trained players rather than determining the home-grown nature at the association level. In that regard, it considered that "it is precisely local investment in the training of young players, in particular when it is carried out by small clubs, where appropriate in partnership with other clubs in the same region and possibly with a cross-border dimension, which contributes to fulfilling the social and educational function of sport". (ECJ, Royal Antwerp, para. 148).

In sum, the ECJ found that there is a violation unless it is established that those 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 will not go beyond what is necessary to achieve that objective. (ECJ, Royal Antwerp, para. 150).

As was the case in Superleague, the ECJ limits the role and relevance of Article 165 TFEU reflecting what is sometimes referred to as the European Sports Model. It found that Article 165 "need not be integrated or taken into account in a binding manner in the application of the rules on the interpretation of which the referring court is seeking guidance from the Court, irrespective of whether they concern the freedom of movement for workers (Article 45 TFEU) or competition law (Article 101 TFEU)" and more broadly that Article 165 TFEU must not "be regarded as being a special rule exempting sport from all or some of the other provisions of primary EU law liable to be applied to it or requiring special treatment for sport in the context of that application". (ECJ, Royal Antwerp, para. 69).

This being said, it did point to the important social role of sport and considered that as per Article 165, an assessment of the consistency of sports related rules with EU law "may involve taking into account, for example, the nature, organisation or functioning of the sport concerned and, more specifically, how professionalised it is, the manner in which it is practised, the manner of interaction between the various participating stakeholders and the role played by the structures and bodies responsible for it at all levels, with which the Union is to foster cooperation, in accordance with Article 165(3) TFEU". (ECJ, Royal Antwerp, para 73).

Similarly, when examining the possible violation of EU competition law, the ECJ defers to the referring domestic court to assess whether the home-grown rules constitute a restriction of competition by object or effect, but seems to be expressing some sympathy for these rules.

For example, the ECJ considered that "the specific characteristics of professional football and the economic activities to which the exercise of that sport gives rise suggest that it is legitimate for associations such as UEFA and the URBSFA to regulate, more particularly, the conditions in which professional football clubs can put together teams participating in interclub competitions within their territorial jurisdiction". (ECJ, Royal Antwerp, para. 104).

It also noted, in line with the Superleague decision, that "[t]he sport of football is not only of considerable social and cultural importance in the European Union … but also generates great media interest; its specific characteristics include the fact that it gives rise to the organisation of numerous competitions at both European and national levels, which involve the participation of very many clubs and also that of large numbers of players. In common with other sports, it also limits participation in those competitions to teams which have achieved certain sporting results…, with the conduct of those competitions being based on matches between and gradual elimination of those teams. Consequently, it is, essentially, based on sporting merit, which can be guaranteed only if all the participating teams face each other in homogeneous regulatory and technical conditions, thereby ensuring a certain level of equal opportunity". (ECJ, Royal Antwerp, para 105). And stated finally that "the real conditions which characterise the functioning of the 'market' constituted, from an economic point of view, by professional football competitions explain that the rules which can be adopted by associations such as UEFA and the URBSFA, and more particularly those relating to the organisation and proper functioning of competitions that are governed by those associations, may continue to refer, on certain points and to a certain extent, to a national requirement or criterion. From a functional point of view, that sport is characterised by the coexistence of interclub competitions and competitions between teams representing national football associations, the composition of which may legitimately be subject to compliance with 'nationality clauses' due to the specific nature of those matches (see, to that effect, judgment of 15 December 1995, Bosman, C‑415/93, EU:C:1995:463, paragraphs 127 and 128 and the case-law cited)." (ECJ, Royal Antwerp, para. 106).

The ECJ thus concluded that it will be for the referring court to take into consideration the economic and legal context in which the rules at issue were adopted, together with the specific characteristics of football, and to assess whether the adoption of those rules had the objective of restricting the clubs' access to those resources, of partitioning or re-partitioning markets according to national borders or of making the interpenetration of national markets more difficult by establishing a form of 'national preference. (ECJ, Royal Antwerp, para. 110).

The ECJ also deferred to the referring court to decide whether these rules could not be exempted from the discipline of Article 101 (1) TFEU for measures taken in the pursuit of legitimate non-economic objectives that have a restrictive effect which is necessary and inherent in the attainment of that objective. It suggested that the domestic court should be "taking into account, in that context, the objectives put forward in particular by the sporting associations at issue in the main proceedings, which consist in ensuring the uniformity of the conditions in which the teams participating in interclub football competitions governed by those associations are formed and encouraging the training of young professional football players." (ECJ, Royal Antwerp, para. 117).

Also, in terms of a possible justification under Article 101 (3), the ECJ deferred to the domestic court but again appeared to express some sympathy for the rules. (ECJ, Royal Antwerp, paras. 128 – 134). For example, it pointed out that under the second condition for a justification, "according to which the conduct at issue must have a favourable effect for users, whether professionals, intermediate consumers or final consumers, in the different sectors or markets concerned, it should be emphasised that, in the present case, the 'users' include, first and foremost, professional football clubs and the players themselves. Added to that, more broadly, are the final 'consumers' who are, in the economic sense of the term, the spectators or television viewers. As regards the latter, it cannot be excluded a priori that the interest that some of them have in interclub competitions depends, among other factors, on the place of establishment of the clubs participating in those competitions and the presence in the teams fielded by those clubs of home-grown players. It will therefore be for the referring court to rule inter alia, in the light of the specific arguments and evidence produced or to be produced by the parties, on the question whether, on the market which they primarily affect, namely that of the recruitment of players by those clubs, the rules at issue in the main proceedings have a genuine favourable effect not only on the players but also on all the clubs and on the spectators and television viewers or if, as has been argued before the Court, they operate, in practice, to the benefit of certain categories of clubs but also, at the same time, to the detriment of others." (ECJ, Royal Antwerp, para. 130)

ECJ: Effective judicial review requires that EU national courts review awards by sports arbitration bodies in relation to EU competition law

In International Skating Union, the ECJ also considered the cross-appeal regarding the fact that the sports federation's rules required arbitration before CAS of any disputes, including disputes raising issues of EU competition law.

In its original decision, the European Commission had found that the arbitration rules employed by the ISU, while not themselves in violation of Article 101(1) TFEU, were to be considered as reinforcing the infringement found in relation to the approval and sanctions scheme, because these rules require CAS arbitration which in turn is subject to a marginal review from a non-EU court (i.e. the Swiss Federal Tribunal) and thus renders ISU decisions immune from a (proper) review in relation to EU competition law.

The EU General Court had disagreed with this finding and annulled the Commission's decision insofar as it related to the ISU arbitration rules. It held that the ISU arbitration rules did not reinforce the violation of Article 101(1) TFEU and considered, inter alia, that by conferring binding and exclusive jurisdiction on the CAS to review decisions adopted by the ISU by virtue of its powers in respect of prior authorisation and sanctions, the arbitration rules could be justified by legitimate interests linked to the specific nature of the sport, consisting of enabling a single, specialised court to rule, in a quick, economic and uniform manner and on a multiplicity of disputes, often having an international dimension, to which the exercise of high-level professional sporting activity could give rise. It considered that athletes could still claim damages before national courts and/or file a complaint before the European Commission on the ground of violation of EU competition law.

On appeal, however, the ECJ sided with the Commission and set aside the General Court's judgement. According to the ECJ, arbitration rules adopted by sports associations cannot limit the exercise of rights and freedoms conferred on individuals by EU law. In the cases concerning the FIFA/UEFA and ISU authorisation and eligibility rules, the ECJ also required the possibility of an effective judicial review. The ECJ clarified that this means proper review by an authorised EU court of matters related to EU competition law given its status as matters of public policy in the EU. Disputes concerning the exercise of a sport as an economic activity which on that basis, come under EU competition law, cannot be subject to an arbitration requirement before CAS given that its decisions are subject only to review before the Swiss Federal Tribunal.

According to the ECJ, "judicial review must, in any event, be able to cover the question whether those awards comply with the fundamental provisions that are a matter of EU public policy, which include Articles 101 and 102 TFEU" and that "such a requirement is particularly necessary when such an arbitration mechanism must be regarded as being, in practice, imposed by a person governed by private law, such as an international sports association, on another, such as an athlete". (ECJ, ISU, para. 193). The Swiss Federal Tribunal's review does not guarantee respect for EU public policy and the requirement to resolve disputes through CAS, in the absence of a review before national EU courts, is thus inconsistent with EU law. (ECJ, ISU, para.193-208, para 225).

The ECJ thus confirmed the Commission's reasoning that the review of CAS decisions by the Swiss Federal Tribunal excluded the question of whether these decisions comply with the public order provisions of Articles 101 and 102 TFEU and that the Federal Tribunal, being a court outside the EU legal system, was not empowered to refer a question to the ECJ for a preliminary ruling.

It found that CAS was not an arbitration mechanism that was capable of being regarded, on the one hand, as allowing effective compliance with the public policy provisions that EU law contains to be ensured and, on the other hand, as being compatible with the principles underlying the judicial architecture of the European Union.

By doing so, the ECJ did not take issue with the existence and operation of the CAS, but rather with the "legal immunity enjoyed by the ISU" in light of EU competition law.

It highlighted that those rules are at issue, in the present case, not to the extent that they subject the review at first instance of decisions issued by the ISU to the CAS as an arbitration body, but only to the extent that they subject the review of the arbitral awards made by the CAS and the last-instance review of decisions of the ISU to the Tribunal Fédéral (Federal Supreme Court), that is to say, a court of a third State.

It is not entirely clear what this ruling means for the mandatory CAS arbitration mechanism found in the statutes of many international sports federations. However, it seems to be clear that a domestic EU court confronted with a dispute involving the economic aspects of sport and potentially affecting EU competition law will not be prevented from adjudicating such disputes as a result of a CAS arbitration requirement.

Nikolas Hertel (White & Case, Associate, Geneva) has contributed to the development of this publication.

_{1 European Court of Justice, Request for a preliminary ruling in the proceedings European Superleague Company SL v Fédération internationale de football association (FIFA), Union of European Football Associations (UEFA), C-333/21, Judgment of 21 December 2023, available here.
2 European Court of Justice, International Skating Union v European Commission, C‑124/21 P, Judgment of 21 December 2023, available here.
3 European Court of Justice, Request for a preliminary ruling in the proceedings SA Royal Antwerp Football Club v Union royale belge des sociétés de football association ASBL (URBSFA), C‑680/21, Judgment of 21 December 2023, available here.}

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