On 21 December 2023, the Court of Justice of the European Union (ECJ) ruled in three separate cases concerning the jurisdiction and powers of sports governing bodies: Super League, International Skating Union, ISU and Royal Antwerp Football Club, Royal Antwerp.
The ECJ confirmed that sports governing bodies (and their internal rules) are not exempted from EU competition law rules insofar as they perform economic activities, such as organising matches and commercialising broadcasting rights.
These three judgments could also affect sectors beyond sports like the digital markets sector and standard-setting industries. Below, we analyse these judgments to provide you with some lessons learned from all three cases.
The lesson from Super League
Background
Twelve of the top European football teams announced in April 2021 that the ‘Super League’, a new professional football league, would be formed. In response, the Union of European Football Associations (UEFA) and the Fédération Internationale de Football Association (FIFA) released a joint statement disputing the legitimacy of the Super League and threatened to ban any football team or player involved in it from all FIFA/UEFA-affiliated events, including major tournaments like the FIFA World Cup and the UEFA Champions League. The statutory regulations of FIFA and UEFA gave them the authority to sanction external interclub tournaments and to fine clubs and players who took part in unapproved competitions.
ECJ’s findings
In this context, the ECJ concluded that the authorization rules gave UEFA and FIFA unlimited discretion to approve or disapprove competitions that would compete with UEFA and/or FIFA’s own competitions and to sanction participation in such competitions. These legal powers could be exercised in a non-transparent, non-objective, discriminatory, and/or disproportionate manner and in doing so, putting competing organisations at a disadvantage. According to the ECJ, it is unlikely that there would be a legitimate goal justifying this arbitral framework of decision-making.
The ECJ emphasized that if a self-regulatory organisation both regulates and competes in a market, they have to make their decision-making process clear to the public. The framework and its criteria should not discriminate, which in this case means that they ‘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 itself, 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 or does not have the same powers at its disposal as that entity and accordingly is in a different situation’ (para 151 of the judgment). Ultimately, penalties for non-compliance by the organisation’s members must be proportional and regulated by standards which are transparent, objective, precise, and non-discriminatory.
Broader implications
Taking this judgment broader, self-regulatory organizations, such as industry associations, chambers of commerce or other federations, can adopt and implement rules and sanctions provided these are accompanied by a suitable framework to prevent arbitrary decision-making. In the absence of a transparent, objective, proportional and non-discriminatory framework, the implementation of such rules may amount to a serious restriction of competition.
The lesson from ISU
Background
The International Skating Union judgement is comparable to the Super League one. ISU oversees and promotes figure skating and speed skating globally, managing international events and their associated rights. Like FIFA and UEFA, ISU had rules mandating prior approval for new international competitions and giving it the authority to sanction athletes for joining unauthorized events. These penalties could lead to lifelong exclusion from all ISU-approved competitions, which are crucial for Winter Olympics qualification. Interestingly, the reason for the investigation launched by the European Commission, which ultimately led to the case at issue, appears to be a complaint lodged by two world-famous Dutch speed skaters – Mark Tuitert and Niels Kerstholt. They claimed that ISU’s rules infringed EU competition law by preventing them from taking part in a speed skating event that the Korean company Icederby International planned to organise in 2014 in Dubai. That event was to involve a new format of races that would take place on a special ice track on which long-track and short-track speed skaters would compete together, but ISU rejected its approval and Tuitert and Kerstholt were threatened with a lifelong ban.
ECJ’s findings
The ECJ explicitly confirms the conclusions reached in the Super League case. The ECJ found ISU’s rules and relevant sanctions abusive and harmful to competition due to the arbitrary nature of ISU’s powers. Additionally, the ECJ ruled that ISU’s dispute resolution procedure, which mandated the Court of Arbitration for Sport (CAS in Lausanne) with all disputes pertaining to ISU decisions on an exclusive basis, reinforced the abuse. Given that CAS cannot refer to the CJEU when fundamental provisions of EU public policy are at stake, that arbitration mechanism compromised the effectiveness of the EU competition law.
Broader implications
If internal rules provide an arbitration body (for instance, a court of arbitration) with exclusive jurisdiction for hearing disputes, this body should have a status of a ‘court or tribunal’ within the meaning of Article 267 of the Treaty on the Functioning of the European Union (‘TFEU’) so that it is entitled to refer questions concerning the interpretation of EU law to the ECJ. Otherwise, the dispute mechanism jeopardizes the effectiveness of EU competition law. Therefore, self-regulation organizations should remember to ensure effective judicial review of their rules.
The lesson from Royal Antwerp
Background
The Royal Antwerp case concerned a set of UEFA rules that required football clubs participating in UEFA interclub competitions to have at least eight ‘home-grown players’ out of a team of 25. Similar rules were imposed by the Belgian Football Association for professional football teams that play in domestic leagues. Both essentially stated that ‘home-grown players’ are defined as those who, at the age of 15 to 21, have been training at their club or another club in the same national association for at least three years, regardless of their nationality.
ECJ’s findings
According to the ECJ, the rules on ‘home-grown players’ may restrict, by their very nature, the clubs’ freedom of choice to select players with the best performance. As a result, they limit an important aspect of interclub football competition, i.e. the recruitment and management of players for teams. However, the ECJ left it to the Belgian court to examine whether this could amount to the unlawful restriction of competition. This national court will have to consider that the rules limit the football clubs’ access to players as a “resource” essential to their success.
Broader implications
The ‘home-grown players’ rule reminds us of competition law infringements linked to labour markets, such as agreements between companies not to hire each other’s staff members or not to offer them a higher salary to move. These agreements limit employee mobility and may have a detrimental effect on competition by keeping new businesses out of markets where hiring workers with the necessary skill sets is essential to success. The reasoning presented in this case allows us to assume that a new category of competition law abuses in an employment context might arise, i.e. industry-wide agreements on recruitment requirements, especially in the markets where access to skilled labour might be considered a key parameter of competition. However, it is still too early to predict precisely how the Royal Antwerp’s findings will be applied outside the world of sport.
Summary
The conclusions of the Super League, ISU and Royal Antwerp cases are very relevant to the world of sport but also outside a sports sphere: Organization which are (commercially) active in certain markets and at the same time act as ‘gatekeepers’ by regulating those markets, should bear in mind that:
- They can adopt and implement rules and sanctions regarding access to markets, however, such rules must be accompanied by a suitable framework to prevent arbitrary decision-making;
- If such rules provide an arbitration body with exclusive jurisdiction for hearing disputes, this body should be a ‘court or tribunal of a Member State’ which it is entitled to refer questions for clarification of EU law to the CJEU;
- Industry-wide rules on recruitment requirements, especially in markets where access to skilled labour might be a key parameter of competition, should be carefully analysed from a competition law perspective.
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