On March 14, 2024, the Madrid Commercial Court will hear the parties’ arguments in the ongoing European Super League (ESL) case following the December 2023 judgment of the Court of Justice of the European Union (CJEU). The case carries important implications for the future of the ESL and similar startups by third-party undertakings and the role of “gatekeeper” entities to act reasonably, transparently, and proportionately.
This case[1] has garnered much attention and controversy, as litigation involving sports excites: even more so when the CJEU judgment is contrary to the Opinion of the Advocate General.
The CJEU also issued judgments in two other cases related to sports associations, International Skating Union (ISU)[2] and Royal Antwerp, on December 21, 2023, underscoring the same key findings on the interplay of EU law and sports.[3]
EUROPEAN SUPER LEAGUE
The ESL case stems from the attempt to create a new European football league. In April 2021, a number of leading European soccer clubs formed the ESL, with the assistance of A22 Sports Management, a management company specifically created for that purpose. The structure of the ESL guaranteed the 12 founding members a permanent place in the league, while five slots remained available for relegation and promotion.
The announcement of the ESL’s establishment amounted to almost instant discourse from all quarters—not only from the existing official soccer institutions (both national and international) but also players, fans, and politicians. As a result, key ESL clubs were quick to walk away from the project. Nonetheless, FIFA and UEFA sought to penalize the founding members and their players by threatening to expel them from competitions, including national leagues and the World Cup.
The ESL took preemptive action by suing FIFA and UEFA before the Madrid Commercial Court, alleging breach of Articles 101 (on the prohibition of restrictive practices) and 102 (on the prohibition of abuses of dominant position) of the Treaty on the Functioning of the European Union (TFEU). The ESL argued that the requirement for prior approval from FIFA and UEFA to set up international interclub competitions for professional soccer clubs and the exploitation of commercial rights for FIFA- and UEFA-approved competitions were anticompetitive. The Madrid Court needed “an assist” and referred the case to the CJEU for a preliminary ruling.
OPINION OF THE ADVOCATE GENERAL
In his Opinion of December 15, 2022, Advocate General Rantos found that the restrictions inherent to the FIFA and UEFA rules were proportionate to the legitimate objectives pursued by the organizations; in so doing, he focused on the “specificity of sport” to allow a certain flexibility in the application of competition law to the behavior of sports organizations—even ones that grant themselves absolute regulatory powers. The CJEU did not agree with this Opinion, stating that as long as FIFA and UEFA are involved in an economic activity, EU competition law applies to them.
CJEU FINDINGS
In particular, the CJEU did not deviate from the consistent and wide interpretation of what constitutes an “undertaking” for competition law purposes. The CJEU specified that the organization and marketing of sport competitions qualify as economic activities, just as “artistes” are undertakings when they commercially exploit their artistic performances.[4] Therefore, sports organizations must adhere to the same rules as any other undertakings.[5] The CJEU also reaffirmed that any exceptions from competition rules must be narrowly construed.
The CJEU found that FIFA and UEFA had abused their dominant position by adopting and implementing rules requiring their prior approval to establish, on EU territory, a new interclub football competition by a third-party undertaking. The CJEU also determined that FIFA and UEFA were at fault for seeking to control the participation of professional football clubs and players in such a competition, on pain of sanctions, with “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.”[6]
This approach is in line with the MOTOE case, wherein a similar conflict of interest was a key factor determining the CJEU’s decision, as ELPA (a legal person representing the Greek International Motorcycling Federation) had to give its consent to applications for authorization to organize motorcycling competitions in Greece and, at the same time, ELPA organized and commercially exploited motorcycling events.[7] While the CJEU has stated that its conclusions did not mean that projects such as the ESL necessarily had to be approved, FIFA and UEFA’s rules would have only been compliant with Article 102 of the TFEU if they had contained objective limits to FIFA’s and UEFA’s powers.
Furthermore, the CJEU decided that each of FIFA and UEFA’s rules constituted a decision by an association of undertakings having as its object a restriction of competition under Article 101 of the TFEU due to their exclusionist aim, contrary to Advocate General Rantos’ Opinion.[8]
In both the ESL and ISU judgments, the CJEU follows a clear and consistent line in differentiating “by object” and “by effect” restrictions of competition under Article 101 TFEU, and applies that with the context of Article 102 TFUE, thereby aligning the assessment methodology for both.
The court further found that UEFA and FIFA’s powers to regulate, authorize, or control access to the football competition market should be subject to “restrictions, obligations and review suitable for eliminating the risk of abuse of a dominant position” and “must be placed within a framework of transparent, non-discriminatory detailed procedural rules relating, inter alia, to the time limits applicable to the submission of an application.”[9]
Relying on Article 106 TFUE, the CJEU drew a parallel between the position of public undertakings or undertakings granted special power or rights by member states and the position of organizations such as FIFA and UEFA. The CJEU stated that for such situations the relevant guardrails to avoid abusive behaviors are especially necessary.
According to the CJEU, only rules that are “transparent, objective, non-discriminatory and proportionate” could cure the anticompetitive conduct of FIFA and UEFA. That requires “convincing arguments and evidence” to demonstrate that all of the requisite conditions are satisfied. Based on the criteria enunciated by the CJEU, the parties will present their arguments for this factual determination to the Madrid Commercial Court on March 14, 2024 at 10:00 am CET.
The CJEU insinuated that FIFA and UEFA have a high bar to satisfy on the facts of this case. FIFA President Gianni Infantino said that the judgment does not change anything, and FIFA would nonetheless analyze the decision in detail. UEFA President Aleksander Čeferin stated in a press conference after the CJEU judgment that the organization has been working on updating “imperfect” rules since 2021. In December 2023, UEFA confirmed the organization’s compliance with EU law and assured that it “remains resolute in its commitment to uphold[ing] the European football pyramid . . . and to shap[ing] the European sports model collectively with national associations, leagues, clubs, fans, players, coaches, EU institutions, governments and partners alike.”
PUBLIC AND POLITICAL ATTENTION TO ESL
The economic impact of sports, and soccer in particular, is substantial.[10] The potential for a well-funded startup like the ESL to upset the established norms and structures inevitably gained significant public and political attention. Former UK PM Boris Johnson was concerned about “damage to football” back in 2021, and other critical statements were echoed in France and Italy. France’s sports minister, Roxana Maracineanu, told France Info radio that the ESL amounted to a “VIP club” aimed at “dominating in a world based solely on marketing and commerce, not on sport.”
Currently, the governments of France and Italy are pushing for EU legislation to block projects similar to the ESL. France recently teamed up with all member states, excluding Spain, to sign a joint statement that would require a “link between annual performance in domestic competitions and all European competitions.”
Next Steps
Any legislative action could be the “VAR” decision that permits the continuation of the status quo, albeit with some intervening modifications to the FIFA and UEFA rules to accommodate the CJEU criticisms. Accordingly, the Madrid Commercial Court may indeed be able to conclude that the FIFA and UEFA rules—as revised—could satisfy the criteria of being transparent, objectively nondiscriminatory, and proportionate.
In March 2023, the European Commission announced the preparation of new guidelines on exclusionary abuses of dominance based on its own practice and the case law of the EU courts. After public consultation and feedback received from stakeholders, the European Commission aims to adopt the final version of the guidelines in 2025. The inclusion of this recent case law on the applicability of Article 102 TFEU in the new guidelines would help shed some light on exclusionary practices.
The whistle for full time has not been blown yet: irrespective of the outcome on its specific facts, the ESL case is a further development and refinement of the access/essential facility/gatekeeper cases stretching back to the IBM Settlement of August 1984.[11] The ESL case confirmed that entities that find themselves as gatekeepers for either technological or structural reasons have a corresponding and increasingly delicate obligation to act reasonably, transparently, proportionately, and fairly.
[1] Judgment of December 21, 2023, Case C‑333/21, European Super League Company SL v FIFA and UEFA, EU:C:2023:1011 – Request for a preliminary ruling from the Madrid Commercial Court of May 11, 2021, in European Super League Company SL v. FIFA (Fédération Internationale de Football Association) and UEFA (Union of European Football Associations).
[2] Judgment of December 21, 2023, Case 124/21 P, International Skating Union v Commission, EU:C:2023:1012 – Appeal brought on February 26, 2021 by International Skating Union. The ISU contested the decision of the European Commission (and later the first-instance judgment of the General Court), holding that rules that severely penalize athletes for taking part in unsanctioned events are contrary to EU competition law. The CJEU stated that sports governing bodies can use a preauthorization system for events under several conditions—primarily that such rules must be proportionate to the pursuit of a legitimate objective.
[3] Judgment of December 21, 2023, Case 680/21, SA Royal Antwerp Football Club v URBSFA, EU:C:2023:1010 – Request for a preliminary ruling from the tribunal de première instance francophone de Bruxelles made by decision of October 15, 2021, in the proceedings UL, SA Royal Antwerp Football Club v Union royale belge des sociétés de football association ASBL (URBSFA). The question in this case concerned a UEFA and URBSFA regulation that requires clubs to include a minimum of eight homegrown players in their match schedule. The decision of the CJEU assessed the compatibility of sports regulations with Article 45 TFEU, finding that that those rules prima facie infringe on the freedom of movement for workers, but may be permitted if the measures pursue a legitimate objective and are not disproportionate.
[4] Commission decision of May 26, 1978, IV/29.559, RAI/UNITEL, relating to a proceeding under Article 85 of the EEC Treaty.
[5] The well-known Bosman case established that professional sport is an economic activity that cannot be hindered by the rules governing the transfer of players or limiting the number of players who are nationals of the European Union (Judgment of December 15, 1995, Case C-415/93, Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman, Royal club liégeois SA v Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v Jean-Marc Bosman, EU:C:1995:463). For the first application of Articles 101 and 102 TFEU in the sporting context, see Judgment of September 30, 2004, Case T-313/02, David Meca-Medina and Igor Majcen v Commission of the European Communities, EU:T:2004:282.
[6] See Judgment of December 21, 2023, Case C‑333/21, European Super League Company SL v FIFA and UEFA, EU:C:2023:1011, para. 152.
[7] See Judgment of July 1, 2008, Case C-49/07, Motosykletistiki Omospondia Ellados NPID v. Elliniko Dimosio, EU:C:2008:376.
[8] See Judgment of December 21, 2023, Case C‑333/21, European Super League Company SL v FIFA and UEFA, EU:C:2023:1011, paras. 171-179.
[9] Id. at para. 137.
[10] Statista Research Department, Revenue of the Big Five soccer leagues in Europe from 2012/13 to 2021/22, with a forecast to 2023/24, by league (Sept. 14, 2023).
[11] Commission Case IV/29.479.
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