The Court of Justice of the European Union (“CJEU”) rendered judgments in two cases regarding the interpretation and application of competition law in the field of sports: International Skating Union or “ISU” (C-124/21 P), and European Superleague Company or “Superleague” (C-333/21).
Below we highlight the most significant aspects of these judgments, available respectively here and here. The court departed from the non-binding Opinion issued in both cases by Advocate General (“AG”) Athanasios Rantos almost a year ago, which we analyzed in a previous post.
I. The International Skating Union case
Following a complaint by two Dutch professional skaters, the European Commission found that the ISU’s eligibility rules were not compatible with article 101 of the Treaty on the Functioning of the EU (“TFEU”; case AT.40208). In particular, the ISU regulations imposed a lifetime exclusion from ISU competitions on any member who participated in a competition not authorized by the ISU.
The Commission did not impose a fine but called for the cessation of the conduct. In response to ISU’s appeal, the General Court (“GC”) upheld the Commission’s decision classifying the regulations as a restriction of competition by object.
In his Opinion, the AG considered that the regulations of the governing bodies of sports entities and federations (such as the ISU) are not exempted from competition law. However, certain measures adopted by them do not constitute an infringement of competition law as long as they are justified by legitimate objectives and are proportionate. Therefore, the AG proposed to annul the GC’s judgment classifying the conduct as a restriction by object—but without excluding the existence of a restriction by effect.
II. The Superleague case
The ruling of the CJEU stems from several questions referred for a preliminary ruling by Commercial Court No. 17 of Madrid. The dispute arose from the announcement of a new European soccer competition by 12 major clubs. UEFA and FIFA reacted with the threat of sanctions against those clubs and their players, including exclusion from any competition organized or recognized by them.
The Superleague founders filed a lawsuit before the Commercial Court, considering that UEFA and FIFA’s system of prior authorizations, prohibitions and sanctions could constitute an abuse of a dominant position. In addition, the plaintiffs requested the adoption of interim measures to avoid the imposition of any sanction, which the court upheld.
In the context of these proceedings, the Commercial Court referred six questions to the CJEU—mainly to determine whether the system of prohibitions and sanctions under UEFA and FIFA rules are compatible with EU competition law.
The AG sided with UEFA and FIFA and proposed the CJEU to declare these prior authorization rules compatible with EU law. According to the AG’s Opinion, the rules pursue legitimate objectives (i.e., ensuring participation in sports competitions based on merit and results, equality of opportunity and the principle of solidarity) and are proportionate.
III. The CJEU’s judgments in the ISU and Superleague cases
In both judgments, the CJEU reaches the same conclusion and considers that the internal regulations of these institutions are not compatible with EU competition law.
The reasoning of the CJEU in both judgments is also based on the same premises:
- Both the organization of sporting events and the exploitation of audiovisual rights constitute economic activities and are therefore subject to competition law. This is without prejudice to the existence of sports institutions or associations with regulatory, supervisory or sanctioning powers.
- Sports institutions or associations, such as the ISU, FIFA or UEFA, are empowered to establish monitoring, control and disciplinary measures to ensure compliance with the rules governing the competitions they organize. However, these rules must be transparent, objective, non-discriminatory and proportionate.
In the ISU case, the CJEU confirms the European Commission’s view that the eligibility rules are not compatible with EU competition law, also confirming their classification as a restriction by object (contrary to the AG’s position). Furthermore, the CJEU considers that the restriction of competition resulting from the ISU’s eligibility rules affects groups insofar as: (i) any other entity interested in organizing new or different sporting events would be excluded from the market (or would not be able to enter the market in the first place); (ii) athletes would be deprived of the possibility to participate; and (iii) the public interested in following these events (either live or broadcast) would also be deprived of this possibility.
As regards the Superleague, the CJEU considers that FIFA’s and UEFA’s powers to determine the conditions under which other potentially competing undertakings may enter the market are not subject to any criteria ensuring transparency, objectivity, non-discrimination or proportionality. Consequently, UEFA and FIFA rules would constitute an unjustified restriction of competition.
However, the Superleague judgment is a preliminary ruling, so the CJEU does not confirm that the new competition must necessarily be authorized. It simply refers the matter to the Commercial Court hearing the main proceedings.
IV. Comments
The ISU and Superleague cases have certain parallels, both in relation to the factual background and the legal issues. In both cases, members of sports associations (whether athletes or clubs) raise the possibility of participating in or organizing events other than those sponsored by the institution to which they are affiliated. Also, both cases concern the compatibility with competition law of the regulations of sports associations that limit or prevent the participation in, or organization of, those sporting events.
The judgments of the CJEU and the underlying proceedings confirm that the sports sector is fully subject to competition law. The ISU case confirms that organizations in this sector may adopt rules on the organization of competitions and enforce them through sanctions. However, the regulatory framework must guarantee the transparency, objectivity, non-discrimination and proportionality of these rules, so as not to exclude other market participants and restrict competition. In the Superleague case, FIFA and UEFA abused their dominant position (thus infringing article 102 TFEU) given their position with regard to the organization of European and international soccer competitions and the absence of market access regulations meeting the above criteria.
All in all, the judgments of the CJEU make it clear that internal regulations of sports regulatory bodies and institutions must abide by competition law—which will probably require their review and amendment.