On December 21, 2023, the Court of Justice of the EU (“CJEU”) delivered two of the most anticipated judgments of the year: European Super League (“ESL”)[1] and International Skating Union (“ISU”).[2] The CJEU found that the ISU’s and FIFA/UEFA’s pre-authorization rules that prevent clubs and athletes from participating in unauthorized third-party sports events infringe EU competition rules because those rules are not based on transparent, objective, non-discriminatory, proportionate, and reviewable criteria.
I. Key Takeaways
- Sports are subject to EU competition rules if they entail an economic activity.
- Sports federations can participate in, and at the same time regulate, the market for the organization of sports competitions; therefore, sports federations are entitled to require affiliated entities as well as clubs and players to seek prior authorization before setting up, or competing in, parallel competitions (“pre-authorization rules”).
- Sports federations, however, must set out a legal framework governing the pre-authorization rules that is based on transparent, objective, non-discriminatory, proportionate, and reviewable criteria; non-compliance with these criteria will qualify the pre-authorization rules as a “restriction by object” under Article 101 TFEU or “abuse” under Article 102 TFEU.
- Pre-authorization rules that significantly distort competition cannot be exempted on public-interest objectives, though might benefit from an exemption under Article 101(3) TFEU if they generate quantifiable efficiencies, have a favorable impact on consumers, are necessary, and do not eliminate all competition.
- Dispute resolution rules attributing exclusive jurisdiction to the Court of Arbitration for Sport (the “CAS”) in case of ineligibility decisions do not offer an effective judicial remedy under EU law.
II. Case Summary
A. ESL
In 2021, certain leading European football clubs attempted to launch a new European football club competition, known as the “Super League.” The project intended to involve 12 to 15 football clubs as “permanent members” and additional “qualified clubs” selected according to a pre-determined process.
FIFA and UEFA issued statements in January and April 2021, refusing to recognize the ESL and threatening to revoke the membership of the football clubs and players involved in the ESL and to expel them from FIFA/UEFA’s competitions. The ESL vehicle established to pursue the project lodged an action before the Commercial Court of Madrid, arguing that FIFA/UEFA’s pre-authorization rules infringed Articles 101 and 102 TFEU and EU free movement rules. The Commercial Court of Madrid referred the matter for a preliminary ruling to the CJEU.
B. ISU
In December 2017, the European Commission (“Commission”) adopted a decision finding that ISU’s pre-authorization rules, which imposed severe penalties on athletes participating in unauthorized speed staking competitions, infringed Article 101 TFEU.[3]
The General Court upheld the Commission decision, finding that: (i) as a matter of principle, ISU could require prior authorization from affiliated members before participating in third-party competitions; but (ii) ISU’s pre-authorization rules were not based on transparent, non-discriminatory and clearly defined criteria and imposed disproportionate penalties on non-complying athletes.[4] ISU appealed the General Court’s judgment to the CJEU.
C. CJEU Judgments
On December 21, 2023, the CJEU issued judgments on the ESL preliminary ruling and the ISU appeal, addressing the following main legal points:
- Application of EU competition rules to sports federations. The CJEU recognized the social role of sports, as codified in Article 165 TFEU,[5] but made clear that this provision cannot exempt sports from the application of EU competition and free movement rules.[6]
- Dual role of sports federations as market participants and regulators creates a conflict of interest. The CJEU held that sports federations could simultaneously participate in the market for the organization of sports competitions and regulate access to that market, by establishing a pre-authorization system.[7] However, to mitigate the conflict of interest inherent in the dual role, the federation must set out a substantive framework governing the pre-authorization rules that is based on transparent, objective, non-discriminatory, proportionate, and reviewable criteria, so as to avoid arbitrary decision-making.[8] Failure to respect these requirements constitutes, “by [its] very nature,” an abuse of dominance under Article 102 TFEU or a “restriction by object” under Article 101 TFEU.[9]
The CJEU found that the discretionary nature of the pre-authorization rules of ISU and FIFA/UEFA makes it impossible to verify on a case-by-case basis whether their implementation is justified and proportionate in view of the specific characteristics of the international competition project at issue.[10] That said, the CJEU emphasized that it only ruled on the compatibility of FIFA/UEFA’s discretionary preauthorization rules with EU competition and free movement rules, and did not take a specific position on the ESL project.[11]
- Application of the “ancillary restraints” and Article 101(3) TFEU exemptions. Conduct may be exempted from the application of EU competition rules if it is necessary and proportionate to pursue a legitimate objective.[12] The CJEU held that insofar as ESL’s and ISU’s pre-authorization rules infringed, by their very nature, Articles 101 and 102 TFEU, they could not benefit from the ancillary restraints exemption.[13] However, the CJEU did not rule out a possible exemption under Article 101(3) TFEU,[14] which is left for the national court to assess, focusing on whether the pre-authorization rules generate quantifiable efficiencies, have a favorable impact on consumers, are necessary, and do not eliminate all competition.[15]
- CAS’s exclusive jurisdiction. Athletes affected by an ineligibility decision adopted by the ISU were required to bring arbitration proceedings exclusively before the CAS. The CAS’s exclusive jurisdiction did not allow for an effective review of ISU’s compliance with EU competition rules and did not satisfy the requirements of Article 267 TFEU insofar as the CAS, being an arbitration body established outside the EU, could not raise questions for a preliminary ruling to the CJEU on the interpretation of EU law.[16] The CJEU indicated that the lack of effective remedy could not be compensated by the fact that athletes could seek damages for the harm caused before national courts or lodge a complaint for an infringement of competition rules to the European Commission or national competition authorities.[17]
III. Reflections
The CJEU gave its final judgment on appeal in the ISU case, but the national judge will have the final word in the ESL case. The national ruling will unlikely be the end of the story: UEFA amended its pre-authorization framework in June 2022,[18] while ESL introduced changes to make the competition more open by eliminating permanent members and keeping domestic leagues as the foundation of European football.[19]
[1] European Superleague Company SL v. UEFA and FIFA (Case C-333/21) EU:C:2023:1011 (“ESL Judgment”).
[2] International Skating Union v. Commission (Case C-124/21 P) EU:C:2023:1012 (“ISU Judgment”).
[3] International Skating Union’s Eligibility rules (Case AT.40208), Commission decision of December 8, 2017.
[4] International Skating Union v. Commission (Case T-93/18) EU:T:2020:610.
[5] Article 165 TFEU provides that: “The Union shall contribute to 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 … Union action shall be aimed at: … developing 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.”
[6] ESL Judgment, paras. 101–104; ISU Judgment, paras. 91–96.
[7] ESL Judgment, paras. 143–146.
[8] ESL Judgment, paras. 134–138; ISU Judgment, paras. 125–126, 131–138, and 144.
[9] ESL Judgment, paras. 147–149 and 176–179; ISU Judgment, paras. 127–128 and 145–146.
[10] ESL Judgment, para. 148.
[11] ESL Judgment, paras. 80–81.
[12] ESL Judgment, para. 183; ISU Judgment, para. 111.
[13] ESL Judgment, paras. 185–186; ISU Judgment, paras. 113 and 148.
[14] ISU Judgment, para. 114.
[15] ESL Judgment, paras. 195–199.
[16] ISU Judgment, paras. 193, and 197–199.
[17] ISU Judgment, paras. 200–203.
[18] UEFA, “UEFA statement on the European Super League case”, December 21, 2023, available here.
[19] A22 Proposal, available here.