On December 21, 2023, the Court of Justice of the European Union (CJEU) issued three landmark rulings relating to the powers of sport governing bodies in
(i) Case C-333/21, European Superleague Company (Superleague)
(ii) Case C 124/21 P, International Skating Union v Commission (International Skating Union)
(iii) Case C-680/21, Royal Antwerp Football Club (Antwerp Football Club)
The CJEU reconfirmed that sport governing bodies (and their rules) are not immune from the reach of EU competition laws to the extent that these rules relate to economic activities, such as organizing competitions and commercializing broadcasting rights.
The judgments provide important clarifications on the application of EU competition rules to sports rules and regulations. In particular, rules that grant sport governing bodies the power to authorize competitions that would compete with the sport governing bodies’ own competition(s) are likely to infringe EU competition rules where the framework governing the exercise of these authorization powers gives the sport governing bodies essentially unfettered discretion in its decision-making and the consequences of nonauthorization are such as to prevent the effective establishment of competing tournaments.
The judgments are set to have broad practical implications. Sport governing bodies will need to assess their existing rules for compliance with EU competition rules, and attempts to establish “break away” competitions (such as the Super League) are likely to be reinvigorated.
Superleague: background and CJEU findings
In April 2021, a group of 12 leading European football clubs announced the formation of a new professional football competition, the “Super League.” Around the same time, the Fédération Internationale de Football Association (FIFA) and the Union of European Football Associations (UEFA) issued a joint statement refusing to recognise the Super League and stating that any football club or player who participated in the Super League would be expelled from FIFA/UEFA-affiliated competitions, including flagship competitions such as the UEFA Champions League and the FIFA World Cup.
At the relevant time, both FIFA and UEFA’s statutory rules provided the relevant sport governing body with broad discretion to authorize external interclub competitions and to penalise clubs and players participating in unauthorized competitions. The rules also granted UEFA/FIFA the exclusive right to commercialize the media rights associated with any competition and other events (including football matches) coming under the respective jurisdiction of UEFA/FIFA.
The Super League brought legal proceedings in the Madrid Commercial Court challenging FIFA and UEFA’s rules. The Madrid Commercial Court referred to the CJEU certain questions on the interpretation of EU competition law.
With respect to the authorization rules, the CJEU found that they provided UEFA and FIFA with essentially unfettered discretion to (refuse to) authorize competitions that would compete with UEFA and/or FIFA’s own competitions; that this prior authorization power was backed up with sweeping powers to penalize clubs and/or players who participated in an unauthorized competition; and that these aspects could therefore be exercised in a non-transparent, non-objective, discriminatory, and/or disproportionate manner. According to the CJEU, the absence of a framework providing for transparent, objective, nondiscriminatory, and proportionate decision-making is unlikely to be justified by any legitimate aim of sports regulation.
According to the CJEU, such a framework and its associated criteria should be made publicly available in an accessible manner prior to any implementation of those decision-making rules. In addition, the framework and its associated criteria should be nondiscriminatory, meaning that the organization and marketing of third-party competitions should not be made subject to different requirements from those applicable to competitions organized and marketed by UEFA and/or FIFA or to requirements that are “identical and similar” to them but that are “impossible or excessively difficult to fulfil in practice” for the third-party competition organiser. Penalties must be governed by transparent, objective, precise, and nondiscriminatory criteria and must be in line with the principle of proportionality.
While it remains for the Madrid Commercial Court to make a final determination, the CJEU suggested that these aspects of UEFA and FIFA’s rules constituted a breach of both Article 101 TFEU (in the form of an anti-competitive agreement restricting competition “by object”) and Article 102 TFEU (in the form of an abuse of dominant position).
As for the exclusive exploitation of media rights, the Judges preliminarily clarified that FIFA and UEFA could enjoy a monopoly position only in relation to media rights concerning competitions and events “organised” by them (i.e., excluding competitions and events organized by third parties such as the Super League). Nonetheless, the CJEU observed that those rules could constitute a breach of Articles 101 and 102 TFEU by, among others, preventing football clubs from marketing the rights related to their matches and thwarting competition in downstream media markets. The CJEU suggested, however, that the rules at issue may be justified by efficiency gains, such as the reduction of transaction costs and uncertainty associated with negotiating the purchase of rights on a case-by-case basis. The CJEU left it to the Madrid Commercial Court to determine whether such gains arose here.
International Skating Union: background and CJEU findings
The International Skating Union judgment covers similar ground to the Superleague judgment. The judgment focuses on the prior authorization and eligibility rules of the International Skating Union (ISU). ISU regulates, governs, and promotes figure skating and speed skating and organizes, and exploits the rights associated with, international skating events. Similar to FIFA and UEFA, the ISU had rules in place requiring its prior authorization to set up new international competitions and empowering the ISU to penalize athletes who participated in unauthorized competitions. These included the exclusion for life from all ISU-authorized competitions, the results of which were key to determining qualification for the Winter Olympics (and, accordingly, constituted a significant deterrent).
In 2017, following an investigation arising from a complaint from certain professional speed skaters, the European Commission issued an infringement decision against the ISU finding that its prior -authorization and eligibility rules constituted an anti-competitive agreement restricting competition “by object” under Article 101 TFEU. After the decision was unsuccessfully challenged before the General Court of the EU in 2020, the ISU appealed to the CJEU.
The CJEU confirmed the economic nature of, and therefore the applicability of competition rules to, the relevant aspects of the ISU’s rules and the ISU’s conduct at issue. As in Superleague, the CJEU found that the relevant aspects of the ISU’s rules did not limit the ISU’s discretion on the basis of transparent, objective, nondiscriminatory, proportionate, and reviewable criteria and, accordingly, constituted an infringement of EU competition rules. As with the Superleague judgment, the CJEU did not consider that there was a legitimate aim of sports regulation that justified such unfettered discretion.
The CJEU also ruled that the ISU’s dispute settlement mechanism, which provided that all aspects of the ISU’s decisions were to be arbitrated before the Court of Arbitration for Sport, reinforced the infringement of Article 101 TFEU resulting from the prior authorization and eligibility rules as it purported to reduce the scope for effective EU-based judicial review for compliance with EU law, including competition rules.
Antwerp Football Club: background and CJEU findings
The Antwerp Football Club judgment concerned a set of UEFA rules stipulating that football clubs participating in UEFA interclub competitions must include a minimum of eight “home-grown players” out of a team of 25. The Belgian Football Association (URBSFA) had adopted similar rules for professional football clubs participating in domestic leagues. The substance of both sets of rules stipulated that “home-grown players” are those who, regardless of nationality, have received football training from their club or another club within the same national association for at least three years between the ages of 15 and 21. A professional player and the Royal Antwerp Football Club contested those rules before a Belgian court, which decided to seek the CJEU’s interpretative opinion through a preliminary ruling request.
The CJEU found that the “home-grown players” rules, prima facie, infringe Article 45 TFEU regarding the free movement of workers and are likely to give rise to indirect discrimination, based on nationality, at the expense of football players from another Member State.
With respect to EU competition rules, the CJEU left it for the Belgian court to examine and determine whether rules on home-grown players could restrict competition, noting that the rules appear to affect the essential parameters of competition in football, namely the recruitment of talented players.
The CJEU left open the possibility for UEFA and URBSFA to demonstrate (before the Belgian court) that the rules at issue are justified and proportionate to the achievement of their underlying objectives, that is, encouraging the recruitment and training of young players and ensuring the uniformity of the conditions whereby football teams are formed, and therefore would comply with EU law.
Insights from the judgments on the interface of EU competition rules and sports regulation
Several important observations arise from the judgments.
- Application of competition rules to sports. Notwithstanding the unique role of sport in society, the judgments confirm unequivocally that the regulatory activities of sport governing bodies fall within the scope of EU competition rules insofar as they relate to the pursuit of economic activities. The judgments make clear that despite some claims to the contrary, there is no general exemption from the reach of EU competition rules into sports regulation. In this respect, the judgments further clarify that Article 165 TFEU (which sets out the EU action and objectives in the field of sport) does not operate as a special rule exempting sport from competition rules or requiring special (more lenient) treatment for sport as opposed to other sectors. The regulation of sport is only outside the reach of EU competition rules where the specific rules are sport-specific and noneconomic in nature: for example, rules relating to player safety or the noneconomic aspects of the rules of the game.
- Assessment of the objectives pursued by sport. The unique nature of sport in society does, however, bring into play a range of objectives that could be used to justify rules/regulations of sport governing bodies, which may otherwise be an infringement of competition law; however, the effect of the judgments is to materially narrow the scope for such justifications to render lawful otherwise unlawful competition restrictions.
- Broader application of gatekeeping and ecosystem concepts. While the unique nature of sport in society and its regulatory structure limits somewhat the broader application of the judgments to sectors outside of sport, it is nevertheless interesting that in the Superleague judgment in particular, the CJEU grapples with concepts such as ecosystems and gatekeepers and the associated (arguably increased) obligations that competition law places on organizations that operate as gatekeepers or that have very strong positions on the market. These types of concepts have been developed in cases the European Commission has brought against so-called “Big Tech,” where it has seemingly placed increased obligations on businesses with a “gatekeeper” role or that have significant market positions to avoid using that power in a way that prevents or distorts the emergence of potential rivals.
Practical consequences for the Super League and beyond
A range of practical implications arises from the Judgments.
- Impact on Sport Governing Bodies. Sport governing bodies will now (more than ever) need to be aware of the rules regulating their organization and operation. As such, sport governing bodies will be well-served to undergo an internal review of (among others) their authorization rules, in particular with respect to any rules regulating the prior authorization of third-party competitions. As above, such rules and/or criteria relating to the prior authorization of third-party competitions will need to be transparent, objective, precise, and nondiscriminatory.
- Impact on “break away” leagues. “Break away” leagues may be emboldened to push for authorization. However, importantly, the judgments do not mean that rules requiring authorisation of third-party competitions, backed up with sanctions, are necessarily unlawful. Indeed, the CJEU noted that these types of rules can serve important and legitimate purposes such as guaranteeing “the homogeneity and coordination of those competitions within an overall match calendar” and effectively promoting “the holding of sporting competitions based on equal opportunities and merit.”
- Potential consequences for FIFA and UEFA before national courts. The Madrid Commercial Court in Superleague and the Belgian referring court in Antwerp Football Club are now tasked with applying the CJEU’s interpretative judgment to the respective disputes. The CJEU’s Superleague judgment did hint that the rules relating to the exclusive exploitation of media rights may be justified by efficiency gains (e.g., by ensuring a solidarity like redistribution of the profits generated by those media rights to amateur clubs and other stakeholders). As regards Antwerp Football Club, the terms of the CJEU’s judgment provides more scope for the national court to determine whether there has been a breach of EU competition rules.
- Future of the Super League. The CJEU has made clear in its press release that the judgment “does not mean that a competition such as the Super League project must necessarily be approved.” In June 2022, UEFA amended its rules regarding authorization criteria for new international club football competitions to bring them, in UEFA’s view, in line with EU competition rules; at the same time as the CJEU handed down its Superleague judgment, the Super League announced a revised format for the competitions. This new format now falls to be considered by UEFA’s applying its revised authorisation rules.
- Politically charged atmosphere. The initial plans for the Super League precipitated a wave of national-level political controversy. This remains a politically charged arena as illustrated by the 22 EU Member States that intervened in the CJEU process in support of UEFA. In the UK, following its fan-led review of football, the UK Government announced plans to bring forward a Football Governance Bill and introduce an independent regulator that will have powers, inter alia, to monitor and enforce compliance with “approved competitions.” The white paper that predated the Bill noted that “this will allow the Regulator to prevent English clubs from joining breakaway competitions that did not meet predetermined criteria, in consultation with the FA and fans [that will] safeguard against a future European Super League-style breakaway league.”
Thank you to Bronwyn Tonelli and Piers Edinborough, both trainees in Sidley’s Antitrust and Competition practice, for their significant contribution to this Sidley Update.
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