News & Views

Competition Law is sport's hottest ticket this summer

With the UEFA European Championship underway in Germany, the team at O’Connors has been looking at a different type of competition that’s making a big impact on football, and professional sports in general across Europe: competition law.

Back in December 2023 the Court of Justice of the European Union (CJEU) issued rulings on three European cases (dubbed by some as ‘The Luxembourg Trilogy’), which involved:

• the application of EU competition law and free movement principles in the sports world; and

• the restrictions that international sports governing bodies and associations imposed on their members wishing to join or organise competitions held by other associations.

The Superleague case

In the Superleague case, the highest profile of the three cases, it was argued by UEFA and FIFA that the creation of a new ‘Superleague’ of elite football clubs across Europe was prohibited without UEFA and FIFA’s approval, which they were not willing to give. The counter-argument was that this restriction was artificially controlling the football market and therefore restricting the movement of football clubs and players. Whilst the pursuit to create the Superleague has lost momentum (for now at least), the case progressed through the European court system and in December 2023 the CJEU passed its verdict. The court noted that the rules being imposed by FIFA and UEFA preventing the creation of alternative competitions (such as the Superleague) were in fact ‘unlawful’ and contrary to the nature of competition law in the EU.

The case was deferred by the CJEU back to the Madrid Commercial Court for a final ruling under case no.17.  On 27 May 2024 the Spanish court ruled in favour of the CJEU’s findings that the restrictions were anti-competitive. UEFA have since commented that this judgment was not ‘the green light’ for alternative competitions like the Superleague, but the reality is that the door is seemingly still open for the right ‘Superleague’ model. Whether or not football fans would accept it in any guise however is a different matter.

The ISU case

In the non-football case of the trio, the International Skating Union (ISU) were challenged on their organisation’s ability to prevent athletes from competing in events without the ISU’s prior authorisation. Again, the issue boiled down to the presence of anti-competitive provisions within the ISU’s constitution, regulations and practices. The CJEU determined that those rules and practices were anti-competitive and essentially prevented skaters from competing in non-ISU events organised by third parties. The CJEU essentially inferred that the ISU was penalising its athletes who participated in unauthorised competitions with measures that could result in their exclusion from all ISU authorised competitions for life, the results of which were key to determining qualification for the Winter Olympics.

The Royal Antwerp case

The finale to the trilogy was focussed back in the footballing arena (so to speak), and it was UEFA who were again under the spotlight, this time alongside the Royal Belgian Football Association. This case centred on the ‘homegrown player’ rules, a doctrine which seeks to ensure that local players train and join their domestic clubs within their national country. A case was brought by an international player and ultimately by their team, Royal Antwerp Football Club, arguing that the rule to maintain a minimum number of locally trained players on a team’s roster was in fact restricting competition between football clubs. In essence, two fundamental principles of building a football club were locking horns: (a) nurturing local talent and academies versus (b) the need to constantly grow and allow an open market for players.

As with the other two cases, the CJEU ruled in favour of promoting competition and found that the ‘home grown players’ rules were potentially infringing the free movement of workers and could further give rise to indirect discrimination based on nationality. Nevertheless, the court did allow for a body such as UEFA to implement proportionate measures to regulate and promote grassroots football with quotas for locally-trained players, subject to there being suitable evidence that nothing discriminatory or anti-competitive is being conducted.

The future

These decisions are slowly and separately making their own impact as to how professional sports are being governed. Each governing body will need to look more closely at their own constitution, rules, and regulations and tread more carefully when it comes to what restrictions they wish to put in place on their members. Moreover, the bigger picture highlights that the professional sporting world is not exempt from EU business laws and principles, and by that same token, those applied in the UK to the extent that those doctrines are already enshrined or otherwise mirrored within our domestic laws.

Furthermore, the number of high-profile cases around the regulation of sport is rising - especially so within the football world. Within the last two weeks Fifpro (a collective agency for professional football players) brought a lawsuit against FIFA relating to the sheer number of games now being played per season resulting in player burnout and impacting the welfare of individuals.

In the English Premier League, all eyes are still focussed on the pending decision and potential fallout of the 115 alleged breaches of the Associated Party Transaction Rules and Profit & Sustainability Rules by Manchester City. Whilst Everton and Nottingham Forest managed to stay in the Premier League despite their respective points deductions, both clubs and indeed all sporting clubs will no doubt be keeping a watchful eye on their governing bodies and regulators.

What action should you take now?

For governing bodies and associations, it is time to undergo an internal review of your constitutional documents and authorisation rules, supported by specialist legal and regulatory advice.

For clubs and athletes, there has never been a better time to challenge self-regulated governing bodies and associations, particularly if anti-competitive practices appear to be discriminatory or prohibiting commercial growth.

For further information, please email Phil Bowers or Mark Hughes or call 0151 906 1000.