Warm up
From the football pitch to the ice rink, sports enthusiasts are now eagerly awaiting several upcoming CJEU decisions. In no less than three cases, the EU’s highest court will rule on the application of EU (competition) law to the sports sector. In this article we will first outline these cases (II.) and then consider the opinions of the Advocates General at the CJEU (III.). On that basis, we present an outlook on the possible decisions of the CJEU and their consequences for the world of sports (IV.).
The situation on the pitch – the relationship between sports and antitrust
The more commercialized the sports sector becomes, the more questions of EU (competition) law arise. Accordingly, it’s no wonder the number of cases at the EU’s courts keep appear to be piling up. In the ISU case (C-124/21 P), the CJEU will rule on an appeal against decisions of the European Commission and the General Court (GC), in which the rules of the International Skating Union (ISU) on competitive skating were partially found to be in breach of Article 101 and 102 TFEU. The CJEU will also deal with the European Super League’s attempt to create an alternative to the UEFA Champions League (C-333/21 – European Super League) and, again concerning professional football, assess the UEFA’s so-called “home-grown player” rule (C-680/21 – Royal Antwerp FC). Although these three cases involve different facts and sports regulations, the common underlying question is: to what extent does sport enjoy a privilege under EU law? While this question also broaches certain fundamental freedoms of EU law and their application to the sports sector, one area of law has emerged as front and centre for legal disputes in professional sports: the applicability of EU competition law.
According to well-established CJEU case law (C-519/04 – Meca Medina), professional sports, which generates billions of Euros in revenues, is an economic activity and therefore also subject to EU competition law. At the same time, the peculiarities of sports, such as the monopolistic pyramid structures developed in local, national and international associations over decades and the need for a certain degree of cooperation and solidarity mechanisms, must be taken into account. In that same vein, the application of competition law must bear in mind Article 165 TFEU, a provision which sets out the EU’s objective and obligation to promote sports, as it contributes, inter alia, to social pillars such as public health and education. To reconcile these goals and factors, the CJEU has introduced a three-step test for assessing potential restrictions of competition. First, a legitimate aim must be identified, taking into account the overall context of the conduct in question. Second, the restriction of competition must be inherent in the pursuit of that legitimate objective. Finally, the restriction of competition must be proportionate to the achievement of that objective. If all these three criteria are met, the test is passed and the conduct in question does not fall foul of EU competition law.
Although many practical questions have been clarified on this basis, some have remained open, such as where exactly the boundaries of the “legitimate objective” are drawn and to what extent third parties, such as players’ agents (see C-428/23 – Rogon and Others), can also be restricted by regulations imposed by professional sports associations (of which these third parties are not themselves members). There remain some doubts as to whether and to what extent sports should actually be privileged, or whether it should instead be subject to the regular (strict) competition law standard like any other industry.
The view from the ref’s assistants – what the Advocates General say
In all three cases mentioned above, the Advocates General, legal experts who act as advisors to the competent judges, have already delivered their opinions – and offer a fairly mixed bag in terms of where the dividing line between permissible and illegal conduct might be.
In the Royal Antwerp FC case, the referring Belgian court asked the CJEU whether Article 101 TFEU precludes a UEFA rule which obliges football clubs to include in their team a minimum number of so-called home-grown players who have been trained by a club or by the national football association to which the club belongs. However, Advocate General Szpunar did not comment on this issue when he delivered his opinion in March 2023. Instead, he focused on the permissibility of the UEFA regulation under Article 45 TFEU (the free movement of workers).
Advocate General Rantos, on the other hand, in December 2022 dealt extensively with the application of EU competition law to the sports sector in ISU and European Super League. In both cases, he applied the above-mentioned Meca-Medina test of the CJEU.
Advocate General Rantos found that the ISU is subject to EU competition law. Applying the three-step test, he found that Article 101 TFEU does not preclude the ISU’s right to prior approval of other competitions and its right to impose sanctions on athletes participating in unauthorized competitions, as they do not constitute a restriction of competition by object. He also agreed with the GC and rejected the claim that Article 101 TFEU conflicts with the ISU Arbitration Rules, which grant exclusive jurisdiction to the Court of Arbitration for Sport (CAS). Due to the special nature of sports, the ISU had a legitimate interest in conferring exclusive jurisdiction on the CAS. Furthermore, the arbitration rules themselves were not capable of restricting competition and impairing the effectiveness of EU law.
Similarly, in the European Super League case, the Advocate General found that Article 101 TFEU did not conflict with the provisions in the statutes of FIFA and UEFA granting them the right to pre-approve other competitions and to impose sanctions. After examining the legal and economic context, these rights had a potentially restrictive effect on competition, but were not found to constitute a restriction of competition by object. In particular, the potentially restrictive effect of the disciplinary system was limited to the jurisdiction of FIFA and UEFA, which had been voluntarily accepted by the individual football clubs. Furthermore, the potential anti-competitive effects with regard to the achievement of the objectives set out in Article 165 TFEU, such as the openness of competition or the redistribution of value, was considered to be proportionate.
It is worth pointing out that Advocate General Rantos did not only apply the Meca-Medina criteria to Article 101 TFEU, but also extended them to Article 102 TFEU which prohibits the abuse of a dominant position. While this move appears plausible, it is a subject which the CJEU has not yet ruled on. However, Rantos found the conduct of FIFA and UEFA to be in line with this provision. While both associations have a dominant market position, they have, in the eyes of the Advocate General, not abused it. As sports associations, they perform both (sports) regulatory functions and commercial activities. In this respect, they have a “special responsibility”. While taking into account that the two activities are intertwined and cannot be completely separated as FIFA and UEFA remain commercial organizations, this merely means that they must exercise their regulatory function in an objective, transparent, non-discriminatory and proportionate manner – which the Advocate General opined was the case. He also rejected the application of the essential facilities doctrine (based on which the breakaway clubs seeking to establish their own “Super League” sought to argue that they must retain access to UEFA’s competitions despite forming a league of their own). The reason: the “ecosystem” which has developed around UEFA and FIFA does not constitute an essential facility. An essential facility is an infrastructure or asset to which a third party requires access in order to offer its own product or service, and no duplication of the facility is possible for legal, economic or technical reasons. Finally, Rantos found that the exclusive commercialization of competition-related rights was not prohibited by Article 101 or 102 TFEU either as this exclusivity only pursues proportionate and legitimate objectives in line with the nature of sports.
Will winners keep on winning?
We are at a crossroads. If the CJEU follows the opinions of the Advocates General, the legal environment for sports clubs, teams and athletes will likely not change significantly. These stakeholders will have to continue to assess on a case-by-case basis whether their conduct restricts competition or pursues a legitimate and proportionate objective.
If, on the other hand, the CJEU decides to deviate from the opinions of the Advocates General or its own case law, resulting in a more restrictive stance which limits the associations’ regulatory autonomy in favor of more stringent antitrust enforcement, the world of professional sports might become a very different one overnight, with the clout of associations more or less significantly impaired. It would force them to comprehensively review many statutes, rules, agreements, etc. for possible violations of EU competition law.
Admittedly, it does not appear particularly likely that the CJEU will completely change its case law. It is also usually the case that the judges more or less agree with the opinions delivered by the Court’s Advocates General (if not on reasoning and legal arguments, then at least in terms of the outcome). In any event, however, the CJEU can be expected to provide additional guidance on the Meca-Medina test and the concept of a “legitimate objective”. This does not only seem desirable but also likely, considering that the Court made a point of scheduling all three of its pertinent rulings for the same date – and just days before Christmas. So when the new year arrives, a number of things well hopefully be clearer. In that sense, the opinions of the Advocates General were merely the first half of the match.
We’ll keep you posted.
