The final whistle is expected in important competition law judgments for sport governing bodies this week.
The European Court of Justice (ECJ) is expected to hand down an early Christmas present: decisions which will have important implications for sport governing bodies across the EU and beyond.
The judgments will deal with the European Superleague/ International Skating Union cases which were heard together earlier this year. The judgments will be delivered together on 21 December 2023.
The judgments are expected to clarify important points around how EU competition law rules apply to sport governing bodies.
European Super League
The European Superleague Company (ESLC), comprised of 12 prestigious European football clubs, announced the formation of a European Superleague (ESL) in 2021 after it highlighted what ESLC called the "instability in the existing European football economic model".
The clubs intended to compete in the breakaway ESL whilst continuing to compete in Fédération Internationale de Football Association (FIFA)-Union of European Football Associations (UEFA) led competitions, FIFA and UEFA being the dominant governing bodies for football globally and in Europe.
Under FIFA-UEFA Statutes, ESLC was required to seek prior approval for setting up the planned competition. As ESLC did not do this, FIFA-UEFA refused to recognise the ESL, declaring that teams and players competing in the ESL would not be permitted to play in any competition held by FIFA or UEFA and threatening sanctions for those who did.
ESLC raised a claim in the Commercial Court of Madrid, complaining of anti-competitive conduct on the part of FIFA-UEFA. The Court in Madrid then referred questions to the ECJ for a preliminary ruling on whether the conduct of FIFA-UEFA was in breach of EU law, specifically competition law.
In December 2022, Advocate General Rantos issued an opinion on the reference, which the ECJ will consider in making its judgment. Recognising the importance of this decision, AG Rantos states:
"...the future of European football will turn on the answers given by the Court to problems related primarily to competition law and, secondarily, to fundamental freedoms."
The opinion addresses firstly the special nature of the 'European Sports Model', as provided for in Article 165 of the Treaty for the Functioning of the EU (TFEU):
"Article 165 TFEU gives expression, moreover, to the 'constitutional' recognition of the 'European Sports Model', which is characterised by a series of elements applicable to a number of sporting disciplines on the European continent, including football. That model is based, first, on a pyramid structure with, at its base, amateur sport and, at its summit, professional sport. Secondly, its primary objectives include the promotion of open competitions, which are accessible to all by virtue of a transparent system in which promotion and relegation maintain a competitive balance and give priority to sporting merit, which is also a key feature of the model. That model is, lastly, based on a financial solidarity regime, which allows the revenue generated through events and activities at the elite level to be redistributed and reinvested at the lower levels of the sport."
However, while Article 165 lays down an important principle in terms of sports governance in the EU, this doesn't override the need to consider the requirements of EU competition law – the two elements must be considered hand in hand. In this regard the opinion states that EU competition law is:
"...also applicable in the field of sport (in particular where the activities in question have an economic dimension)."
Turning then to the key question, AG Rantos suggests that the FIFA-UEFA Statutes (including the need for prior approval and associated sanctions) did not breach EU competition law, stating:
- The rules under which FIFA-UEFA must approve any new competition are compatible with EU law as they are required to uphold the objectives relating to the nature of the sport and competitions.
- FIFA-UEFA are not prohibited under EU law from issuing threat of sanction against member clubs who are participating in other competitions which may undermine the objectives of FIFA-UEFA competitions.
- The FIFA Statute contains restrictions around exclusive marketing rights relating to its competitions. EU Law does not prohibit this as it is necessary for the performance of objectives relation to the nature of sport.
- EU law does not preclude the FIFA-UEFA Statutes that provide for prior approval of any European competition as it is necessary for the proper running of the competitions.
A prominent feature of the opinion was the fact that the ESL was set up to be a closed league which is in breach of European sporting objectives – competitions should be transparent and open to all.
AG Rantos also states that having the same entity performing the duties of regulator and organiser of competitions is not, in itself, an infringement of EU law.
International Skating Union
At the same time as issuing opinion in the ESL case, AG Rantos issued an opinion on a related case involving the International Skating Union (ISU), the governing body of skating.
The ISU is responsible for authorising new competitions as well as holding competitions itself. When the European Commission (the Commission) commenced proceedings against the ISU for breach of competition law by imposing eligibility rules on new competitions, the General Court of the EU ruled in favour of the Commission.
The ISU has appealed to the ECJ against the decision by the General Court, which ruled in 2020 that ISU rules were contrary to EU competition law. In doing so, the General Court upended the position of competition law application to sport governing bodies.
AG Rantos issued an opinion on the same day as the ESL opinion was released. As in the ESL case, he points out that that the ISU performs the functions of the regulator and organiser is not, in itself, an infringement of competition law. He also states that the main objective for sporting organisations is to ensure third parties have access to the markets, however, this access may be denied at times where it is justified by legitimate objectives, an opinion that he shared on the ESL case.
For this reason, AG Rantos believes that the General Court erred in its classification of the eligibility rules as a restriction of competition by object and this should therefore be set aside. However, since the effects were not considered by the General Court, AG Rantos considers that the case should be referred back to the General Court to consider whether the ISU's behaviour was anti-competitive by effect.
Read a more detailed analysis about the ISU case in our previous article.
Next steps
The critical question for the ECJ on the upcoming 21 December will be whether it follows AG Rantos' reasoning in the ESL and ISU opinion, essentially reverting to the pre-2020 position on the application of competition law to sport governing bodies, or whether the ECJ will align more closely with the position of the General Court.
The impact of this decision will be felt beyond the EU and particularly in the UK. While the UK is no longer part of the EU, decisions from the EU Courts in competition law are highly persuasive in the UK and will be taken into consideration by UK Courts, authorities, and practitioners.
This article was co-authored by Trainee Morgan McSherry.
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