Today (21 December 2023), the European Court of Justice (ECJ) issued an important decision that will have ramifications for the governance of sport across the EU and beyond.
The judgment marks a culmination of the long-running and high-profile dispute involving the European Super League, a challenger tournament to FIFA/UEFA’s position. The ECJ also issued a judgment in a concurrent case relating to the International Skating Union (“ISU”), which raised similar important questions to the FIFA/UEFA matter. The cases were heard, and judgments, delivered concurrently. This article relates to the FIFA/UEFA judgment, which will receive the lion’s share of the press attention, but the ISU judgment should also be consulted.
Ahead of the judgments we outlined some background commentary in this article, explaining how we got to this point.
As regards the Superleague case, the critical question for the ECJ was whether it would follow the Advocate General’s opinion of 2022 (which the ECJ has regard to when considering its judgment), which advised that FIFA/UEFA’s rules were not anti-competitive.
Well, that question has now been answered: The ECJ has decided that the FIFA and UEFA rules on prior approval of interclub football competitions, such as the Super League, are contrary to EU law on competition.
We examine the judgment in further detail below and set out some initial thoughts on the next steps for interested parties (such as sports governing bodies).
Further details on the Superleague case
In an Abstract of the Judgment, the ECJ first observed that the questions before it dealt with two primary issues: (i) The FIFA/UEFA rules which mandated prior approval for international interclub football competitions and the participation therein of professional football clubs and their players (the “Rules”); and (ii) The rules on the exploitation of the various (commercial etc.) rights associated with those competitions (the “Commercial Rights”).
The questions before the ECJ were whether these issues come within the scope of EU laws relating to competition (under Articles 101 and 102 of the Treaty for the Functioning of the EU) and Treaty rules relating to free movement. In this analysis, we focus on the competition aspects.
A critical preliminary point related to the Treaty provisions under Article 165 – which specify EU objectives in the field of sport and which must be read in conjunction with the requirements of EU competition law under Articles 101 and 102. In this regard, the ECJ is clear that Article 165:
“…is not a special rule exempting sport from all or some of the other provisions of primary EU law liable to be applied to it…”
In essence, the provisions of Article 165 of the Treaty don’t give wide cover to any and all activities of sport governing bodies, and certainly don’t function to dis-apply competition law in all circumstances.
The ECJ also observed that:
“…FIFA and UEFA must be categorised as ‘undertakings’ for the purposes of EU competition law in so far as they pursue economic activities such as organising football competitions and exploiting the rights related thereto…”
In that sense, the ECJ then examined whether FIFA/UEFA’s Rules and Commercial Rights were lawful from a competition law perspective.
The ECJ ruled that while the adoption of rules and sanctions in the context of sports governance objectives are not problematic per se, the ECJ took issue with such rules and sanctions which lack a corresponding framework of:
“…substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, non-discriminatory and proportionate.”
Moreover, such a framework and criteria must be laid down in an accessible and transparent manner before their implementation. In addition to this, for those rules to be considered non-discriminatory, they must:
“…not make the organisation and marketing of third-party competitions and the participation of clubs and players therein subject to requirements which are either different from those applicable to competitions organised and marketed by the decision-making entity, or are identical or similar to them but are impossible or excessively difficult to fulfil in practice for an undertaking that does not have the same status as an association or the same powers at its disposal as that entity and which, accordingly, is in a different situation to that entity.”
In applying this to the present scenario, the ECJ considered that absent any such framework, as the ECJ found in this case, the FIFA/UEFA Rules constitute an abuse of a dominant position under Article 102.
The ECJ then went further, stating that under Article 101 (the prohibition of anti-competitive agreements), the Rules that were agreed between the undertakings in the present case were, by object, a breach of competition law by virtue of having no framework for ensuring that they are transparent, objective, non-discriminatory and proportionate. In other words, the breach was considered so grave that there was no need for the ECJ to examine the effects of the Rules. The ECJ made particular reference to the impact on players, who they considered to be in a ‘vulnerable’ position.
Having established that the Rules were anti-competitive, the ECJ went on to consider whether the Rules could benefit from an exemption under Article 101(3) – which is a ‘self-assessed’ exemption for parties can permit such agreement to exist provided they meet a four-limbed test under the Treaty.
The ECJ noted that some rules, such as ethical or principled rules adopted by an association, are liable to benefit from exemption even if they have an effect of restricting competition, provided they are justified in the pursuit of legitimate objectives and proportionate.
That being said, this exemption will not apply to all situations, particularly where trying to justify a finding that the arrangements are by ‘object’ anti-competitive.
Under Article 101(3), it is for the parties relying on the exemption to demonstrate that they can meet the relevant test. In the present case, the ECJ stated that it will be for the referring Court (in Madrid) to ultimately determine whether FIFA/UEFA can justify an Article 101(3) exemption. However, the ECJ then goes on to give a very clear steer to the Madrid Court in how that Court should approach the assessment of the Article 101(3) conditions, in that:
“…as regards the last condition, concerning the maintenance of effective competition, the Court observes that the referring court will have to take account of the fact that there is no framework for the rules on prior approval, participation and sanctions providing for substantive criteria and detailed procedural rules suitable for ensuring that they are transparent, objective, precise and non-discriminatory, and that such a situation is liable to enable entities having adopted those rules to prevent any and all competition on the market for the organisation and marketing of interclub football competitions on European Union territory.”
The ECJ then went on to state that:
“In the present case, as regards, first, possible objective justification, the rules put in place by FIFA and UEFA have the aim of reserving the organisation of any such competition to those entities, at the risk of eliminating any and all competition from third-party undertakings, meaning that such conduct constitutes an abuse of a dominant position prohibited by Article 102 TFEU, one not justified, moreover, by technical and commercial necessities.”
In summary, the ECJ has determined that the FIFA/UEFA rules are anti-competitive and that it will be for the referring Court in Madrid to determine whether the Rules can benefit from an exemption from competition law under Article 101(3) – while giving a very clear steer to the Madrid Court that such an exemption will be challenging to justify.
Having dealt with the application of the Rules, the ECJ then went on to consider the issues relating to the rules on exploitation of the Commercial Rights associated with the competitions organised under the auspices of FIFA/UEFA rules.
In this, the ECJ made a clear judgment – the FIFA/UEFA rules relating to Commercial Rights are ‘by object’ anti-competitive. The ECJ stated:
“…as regards the FIFA and UEFA rules relating to the rights emanating from professional interclub football competitions organised by those entities… those rules are liable not only to prevent any and all competition between the professional football clubs affiliated to the national football associations which are FIFA and UEFA members in the marketing of the various rights related to the matches in which they participate, but also to affect the functioning of competition, to the detriment of third-party undertakings operating across a range of media markets for services situated downstream from that marketing, to the detriment of consumers and television viewers.
It follows that such rules have as their ‘object’ the prevention or restriction of competition on the different markets concerned within the meaning of Article 101(1) TFEU, and constitute ‘abuse’ of a dominant position within the meaning of Article 102 TFEU, unless it can be proven that they are justified, inter alia in the light of the achievement of efficiency gains and the profit reserved for users.”
Again, the ECJ stated that it will be for the referring Court in Madrid to determine whether the Commercial Right rules can be justified under an Article 101(3) exemption, similar to the Rules issue discussed above.
Wider impacts and next steps
While the ECJ has laid down clear determinations on the anti-competitive nature of the FIFA/UEFA rules, it will be down to the Court in Madrid, where the challenge originated, to determine whether these rules would be justified under the competition law exemptions available to it in Article 101(3). However, given the strength of the ECJ’s judgment and the steer it has given on various aspects – justifying an exemption seems like a tall order for FIFA/UEFA.
We and other practitioners will be examining the full impacts of this high-profile and significant ruling over the coming days and weeks. However, in terms of impacts on sports governing bodies generally, the judgment suggests a likely need for a review of governing bodies’ rules and procedures, with a particular focus on the procedural frameworks for their implementation to ensure that they are transparent, objective, non-discriminatory and proportionate.
Governing bodies will also need to consider the impact of this judgment on their activities in the round, particularly around the interplay between commercial and sporting objectives and the exploitation of commercial rights arising from the marketing of tournaments and competition.
In terms of UK impact, while the EU law no longer applies to the UK for the most part, and the ECJ’s judgment is not binding on UK Courts, it will be highly persuasive and influential – governing bodies in the UK will therefore need to take great care in examining the impacts of this decision.
Our team is made up of sports law experts and is deeply involved in the sector. Our top-ranked competition and regulation team supports a range of clients in the sector across the full breadth of competition law issues in sport. Please get in touch with a member of our team if you have any questions.