The Madrid Commercial Court has made a preliminary reference to the Court of Justice of the European Union (CJEU) pursuant to Article 267 the Treaty on the Functioning of the European Union (TFEU). The reference concerns Articles 101 and 102 of TFEU and whether they prohibit UEFA from requiring prior authorisation for a third party to launch a new pan-European club football competition.
Background
On 18 April 2021, 12 “founding clubs” announced they had agreed to establish a new mid-week football competition, the European Super League (Super League). The Super League would compete directly with the UEFA Champions League to become the premier club competition in world football. The founding clubs included Liverpool, Manchester United, Barcelona and Real Madrid. In response, FIFA, the governing body for world football stated that it would ban the clubs involved from playing in any other competition at domestic, European or world level. As such, their players could be denied the opportunity to represent their national teams. The ban would prevent players from Liverpool, Manchester United and the other founding clubs from playing in major international tournaments such as the Qatar World Cup 2022.
While the six English founding clubs subsequently announced their withdrawal from the Super League, Real Madrid, Barcelona and Juventus, have publicly stated that they are continuing with the plans. UEFA has opened a disciplinary investigation against these remaining clubs.
We will now explore the issues that are likely to be considered by the CJEU, having regard to recent European case-law involving the International Skating Union (ISU).
A Breach of EU Competition Law?
Article 101 of the TFEU prohibits “agreements between undertakings, decisions by associations of undertakings that prevent, restrict or distort competition in the EU, and which may affect trade between Member States”.
There is a three-stage test to determine if a decision or agreement breaches Article 101:
- Is the decision an agreement between undertakings or a decision of an association of undertakings?
- Does the decision have the object or effect of the restriction of competition?
- Does the decision affect trade between Member States?
FIFA is made up of individual national governing bodies or associations, including the Football Association of Ireland. Each national association is considered an undertaking. National associations comprise groupings of football clubs for which football is an economic activity. It is therefore accepted that FIFA is an ‘association of undertakings’. Any decision FIFA makes may potentially be captured by Article 101.
UEFA prior authorisation rules and consequent restrictions on the operation of the Super League may have the effect of restricting competition by preventing its operation, dissuading clubs from participating in the Super League and discouraging footballers from playing for those clubs because of any potential impact on their ability to play in international matches and tournaments, such as the World Cup.
UEFA and FIFA may seek to argue that its authorisation rules and the proposed ban are sporting rules and immune from challenge. However, it is clear from the 2006 CJEU Meca-Medina judgment that any sporting rule which restricts competition must be proportionate and in pursuit of a legitimate objective.
International Skating Union
Last December, the CJEU upheld a European Commission decision that the ISU had infringed Article 101 of the TFEU. The ISU imposed eligibility rules which banned professional speed skaters from taking part in international events unsanctioned by the ISU and organised by third parties. The unsanctioned events were financially lucrative compared to ISU events. The CJEU found a breach of EU competition law because the object of the eligibility rules was to restrict the restriction of competition. The ISU is required to ensure that third-party organisers of skating events are not unduly deprived access to the skating events market.
The CJEU found that the ISU’s aim to protect the integrity of sport by ensuring “that any organiser of sporting competitions comply with common standards” was a ‘legitimate objective’. However, its system of penalties was disproportionately punitive to athletes. The CJEU held that the ISU was restricting the athletes commercial freedom while enabling it to pursue its own commercial goals.
An Exception to Article 101
A potential exception for UEFA and FIFA is Article 101(3). A decision will not breach competition law if it “contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit.” UEFA and FIFA will have to demonstrate that its prior authorisation rules and restrictions fall within the framework of this exception. In doing so, however, UEFA and FIFA will have to show that the prior authorisation rules and restrictions would not eliminate competition.
Conclusion
The CJEU’s preliminary ruling could have a defining impact on FIFA and UEFA’s control of football, particularly in Europe. A ruling against UEFA and FIFA could open the door for competing competitions that are not organised or sanctioned by UEFA and FIFA, such as the Super League.
Governing bodies made up of individual associations or undertakings should be cognisant of the risk of disproportionately restricting competition when considering the imposition of eligibility rules. Ultimately, the question of whether sporting bodies can legally block proposed rival competitions under European law will be determined by the CJEU.
Contributed by Patrick Murphy & Stephen Dawson
