In December 2023, the European Court of Justice (ECJ) handed down three significant judgments for sports governance1 finding that certain sports governing bodies in football and ice skating were abusing their dominant positions by imposing certain rules regarding participation in football and ice skating competitions.2 The football judgment formed the backdrop to the introduction to UK Parliament in March 2024 of historic legislation (Football Governance Bill) to reform football governance in England. The Bill is set to establish an independent regulator which be able to prevent breakaway projects like the European Super League (Super League) from emerging. These developments, alongside other competition law arguments that have been successfully raised in other recent sporting disputes – including those involving FIFA‘s new Football Agent Regulations, suggest that competition law is likely to continue having an increasingly important impact on sporting activities.
The European Super League
The most high-profile of the judgments relates to the Super League (ESL Judgment). The Super League was an international football league proposed in 2021 by a group of professional English and European football clubs that would be distinct from FIFA and UEFA. After the project was launched, FIFA and UEFA issued statements refusing to recognise the Super League and affirming their respective rules that any professional club or player that took part in the Super League would “not be allowed to participate” in any competition organised by FIFA or UEFA. FIFA confirmed that all competitions needed prior approval of a relevant authorised body, which did not include the Super League.
The Super League challenged the opposition in the Commercial Court in Madrid.3 The Court requested the ECJ provide a preliminary ruling on the questions including whether the rules and decisions taken by FIFA and UEFA in respect of non-FIFA/UEFA competitions were an abuse of a dominant position in breach of Article 102 of the Treaty on the Functioning of the European Union (TFEU).
Ahead of the ECJ’s ruling, Advocate General Rantos delivered his opinion on the issues, finding that the rules complained of did not offend EU competition law and observing that Article 165 of the TFEU provides “constitutional recognition” of the European Sports Model which is described as a “pyramid structure with…at its summit, professional sport.”
The European Sports Model is known for its top-down, hierarchical approach, typically facilitated through national federations organising competitions and regulating their sport. Adopting this model, FIFA oversees football (and other sports) globally, while UEFA sits below FIFA in the “pyramid” as one of the six continental groups that oversee the sport. UEFA is made up of other organisations that act as the governing body for the national football associations across Europe. As explained in the Advocate General’s opinion, the organisation of the Model means that, within their geographical jurisdiction, sporting federations hold a monopoly over the governance and organisation of the sport.4 The Madrid Court observed that this monopoly appears to extend to an “economic and commercial monopoly – and therefore a dominant position – on the market concerned, which allows them to conduct themselves independently of any potential competition”.5
But in the EU, simply holding a dominant position does not fall foul of competition law; rather the prohibition is against conduct that abuses that position insofar as that conduct may affect trade between Member States. Such abuse may, for example, take the form of imposing unfair purchase prices or trading conditions or limiting technical development to the prejudice of consumers. The prohibition is similarly structured under UK competition law. The purpose of the prohibition, as stated by the ECJ, is to prevent competition from being restricted to the detriment of the public interest, individual undertakings, and consumers. Article 102 places a “special responsibility” on dominant undertakings not to allow their behaviour to impair competition on the merits or by impeding potentially competing undertakings at an earlier stage.6
The ECJ noted that it was an “indisputable” factual and legal premise of its consideration of the Madrid Court’s questions that FIFA and UEFA hold a dominant position on the market for the organisation and marketing of interclub football competitions on EU territory and the exploitation of associated rights, since they are the only associations that do so globally and at the European level.7 In this capacity, through the rules and powers they have granted to themselves, FIFA and UEFA have the power to authorise the establishment and organisation of new EU football competitions and control participation in such competitions. The ECJ observed that entrusting an undertaking which exercises a given economic activity with the power to decide which other undertakings can also engage in that activity, and under what conditions, gives rise to a conflict of interest that puts the former undertaking at an obvious advantage over its competitors and detrimentally affects competition.8
The ECJ held that the rules on prior approval and participation were not per se unlawful in this context, but where there is no framework of substantive criteria and detailed procedural rules to ensure the rules and any associated sanctions are “transparent, objective, precise, non-discriminatory and proportionate”, this is an abuse of a dominant position.9 The relevant powers of FIFA and UEFA were not subject to any such criteria and they were therefore found to be in breach of Article 102. For the same reason, the ECJ found that the FIFA and UEFA rules could be characterised as anti-competitive under Article 101. This judgment does not mean that FIFA and UEFA must approve breakaway competitions like the Super League, which the Madrid Court will determine, but it does mean that they need to amend or revoke the rules that obstructed the Super League project to comply with EU laws.
Further, the ECJ left open the possibility that the dominant undertaking may demonstrate that the rules are nonetheless justified such that they are exempt from Articles 101 and 102, which will similarly be considered by the Madrid Court.
International Skating Union
The ECJ’s judgment in relation to the prior authorisation and eligibility rules of the International Skating Union (ISU) addresses similar issues. Like FIFA and UEFA, the ISU regulates and governs competitive skating disciplines, like figure skating and speed skating, and organises international competitions. Various ISU rules required that any new international competitions be approved by the ISU, and the ISU could enforce penalties (including a total ban from ISU competitions) against athletes who participated in non-approved competitions. In 2017, the European Commission issued an infringement decision against the ISU finding that the relevant rules were an abuse of its dominant position. The ISU unsuccessfully appealed the finding to the General Court of the EU in 2020 and further to the ECJ.
Consistent with the findings in the ESL Judgment, the ECJ found that the rules were not subject to transparent, objective, non-discriminatory, proportionate and reviewable criteria and were therefore a breach of Article 102.
Historic legislation intended to protect English football
The Football Governance Bill is currently in its second reading in the House of Commons so there could still be some shifts in scope as legislators debate its contents, but the direction of travel is clear: protecting and preserving the competitiveness, heritage, and economic success of English football.
The Football Governance Bill is set to establish an Independent Regulator for English Football (IREF) which would, among other things, determine whether persons are suitable to be owners or officers of football clubs, licence clubs to compete in men’s elite football competitions in England, and – crucially for the Super League saga – have sweeping powers to decide whether certain competitions are “prohibited”. All regulated clubs will be under a duty not to participate in any prohibited competitions, in respect of which the IREF would have strict powers of enforcement. Any competition that English clubs may wish to participate in could be affected by this new jurisdiction.10
It follows that regulatory action to prevent English football clubs from participating in competitions such as the Super Legue would be a matter for the new IREF, a body which is stated to be “independent” of the UK Government. But the Government’s press release for the Football Governance Bill makes their intention clear: “breakaway closed-shop competitions such as the European Super League to be blocked under new legislation”.11 Indeed, the factors that the IREF must have regard to when considering whether to prohibit a competition appear to make it inevitable that a project like the Super League will be prohibited.12
It is difficult to avoid the conclusion that the IREF’s mandate reveals a political impetus to defend the world-leading cultural and economic status of English football from any potential instability following the Super League saga. Brexit has provided the opportunity for the UK to legislate against potential implications of the ECJ determinations. The impetus is apparent from Culture Secretary Lucy Frazer’s comments on the proposals: “…the new Independent Regulator of Football will set the game on a sustainable footing, strengthening clubs and the entire football pyramid for generations”.13
Comments
The Advocate General and the ECJ have acknowledged the important and legitimate role of sports governing bodies, and signalled that properly designed rules in relation to prior approval and participation can be legitimate. Such rules are not “in terms of their principle or generally…an abuse of a dominant position” and may ultimately be objectively justified.14 There are there potential lines of argument for these governing bodies to tackle, though they should ensure that any powers controlling participation in competitions are subject to a clear, fair, and objective framework.
Although the Football Governance Bill may make the position clear in relation to breakaway leagues in English football, outside of that arena, these significant judgments provide useful guidance for sports governing bodies, trade and other associations of undertakings, and their members to ensure that any rules giving these associations the power to determine behaviour of their competitors are appropriately transparent and fair. Together with the Super League saga, the recent finding that some of the FIFA Football Agent Regulations are incompatible with UK competition law indicates that competition law is likely to be an increasingly important consideration when assessing the lawfulness of activities both on and off the field.