In the wake of World Cup 2022 fever and related scandals, come some clarifications from Advocate General Athanasios Rantos on the interplay between various EU rules when applied to the sports industry.
The facts of this case filed before the Court of Justice of the European Union (CJEU) revolve around a dispute which arose among the International Association Football Federation, (FIFA), football’s world governing body, the Union of European Football Associations (UEFA), football’s governing body at the European level, and European Super League Company (ESLC), a company governed by Spanish law which was set up by prestigious European football clubs.
In accordance with their statutes, FIFA and UEFA hold a monopoly in respect of the authorisation and the organisation of international professional football competitions in Europe.
ESLC planned to organise the first closed (or ‘semi-open’) annual European football competition, called the ‘European Super League’ (ESL), which would exist independently of UEFA but whose clubs would continue to participate in the football competitions organised by the national football federations and UEFA and FIFA.
Following the announcement of the ESL, FIFA and UEFA issued a statement signifying their refusal to recognise the new body. They also warned that any player or club taking part in the new competition would be expelled from competitions organised by FIFA and its confederations.
ESLC filed court proceedings claiming that the conduct of FIFA and UEFA was anti-competitive and hence, illegal in terms of EU competition rules, as well as in breach of the EU’s fundamental freedoms, as enshrined in the EU treaty. The national court seized of the case filed for a preliminary reference before the CJEU, requesting guidance from the latter as to whether certain provisions of the FIFA and UEFA statutes and the warnings or the threats of sanctions issued by these federations comply with EU competition law and the treaty articles enshrining the fundamental freedoms.
AG Rantos began his analysis by focusing on Article 165 of the TFEU which recognises the ‘European Sports Model’ at an EU level. The EU objectives, as set out in this article include, “the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function”, besides the development of “the European dimension in sport, by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports, and by protecting the physical and moral integrity of sportsmen and sportswomen, especially the youngest sportsmen and sportswomen”.
The AG explained that the ‘European sports model’ entrenched in this treaty article has as its primary objectives the promotion of open competitions, which are accessible to all by virtue of a transparent system. The model also encompasses 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.
The AG observed that Article 165 TFEU was inserted in the treaty specifically because sport is also an area of significant economic activity, though one with a special social character which may justify a difference in treatment in certain respects. Such article must, therefore, always be a point of reference when considering the application of more general treaty articles such as competition law ones to the sports industry.
Sport is also an area of significant economic activity, though one with a special social character
AG Rantos emphasised that this does not, however, mean that sporting activities fall outside the purview of treaty articles of general application such as those relating to anti-trust or the four fundamental freedoms. Nonetheless, the references to the specific nature and to the social and educational function of sport which emanate from Article 165 TFEU may be relevant for the purposes of considering any objective justification for restrictions on competition or on the fundamental freedoms.
The AG highlighted that the mere fact that the same entity performs the duties both of regulator and of organiser of sporting competitions does not, in itself, constitute an infringement of EU competition law. Nonetheless, a sports federation which holds a dominant position on the relevant market, such as UEFA, is obliged in terms of EU competition law to ensure, when examining requests for authorisation of a new competition, that third parties are not unduly denied access to the market, with the consequence that competition is distorted.
However, though the rules at issue relating to the prior approval scheme may have the effect of restricting the access of UEFA’s competitors to the market for the organisation of football competitions in Europe, this does not manifestly mean that such rules are in breach of EU competition rules.
AG Rantos conceded that the sanctions envisaged by UEFA against participants in the ESL, may have an impact on the willingness of the necessary clubs and players to form this new competition, in such a way that potential competitors are faced with barriers to entry in the market for the organisation of football competitions in Europe.
Nonetheless, he proceeded to observe that such restrictions could be considered as not falling foul of competition law since they pursue legitimate objectives and are proportionate to same. The purpose of the non-recognition by FIFA and UEFA of the ESL could be regarded as being inherent in the pursuit of a legitimate objective; the latter being the maintenance of the principles of participation based on sporting results, equal opportunities and solidarity upon which the pyramid structure of European football is founded, and to combat dual-membership scenarios.
Similarly, though the prior approval scheme being imposed on new competitors may be restrictive of the fundamental economic freedoms enshrined in the treaty, such restrictions may be justified by legitimate objectives related to the specific nature of sport. Indeed, requirement of a prior approval scheme may be appropriate and necessary for that purpose, taking into account the particular characteristics of the planned competition.
By way of conclusion, the AG opined that the FIFA-UEFA rules, in terms of which any new football competition is subject to prior approval, are compatible with EU competition law. The restrictive effects arising from the scheme are inherent in, and proportionate for achieving, the legitimate objectives related to the specific nature of sport that are pursued by UEFA and FIFA.
Furthermore, EU competition rules do not prohibit FIFA, UEFA, their member federations or their national leagues from issuing threats of sanctions against clubs affiliated to those federations when those clubs participate in a project to set up a new competition which would risk undermining the objectives legitimately pursued by those federations of which they are members.
The opinion of the AG is not binding on the CJEU and, therefore, one must await the court’s judgment for a final interpretation of the interplay of the different treaty articles insofar as the sports industry is concerned.
The importance and specificities of the sports industry are such as to have warranted an ad hoc article in the treaty itself, setting defined objectives for Europe in this regard. Clear guidance as to the applicability of various legislative provisions to this industry is necessary, to ensure legal certainty for all the different players in this market.