Earlier this year, the European General Court (formerly the European Court of First Instance) rejected appeals brought by both FIFA and UEFA against decisions of the European Commission approving the inclusion of the two major international football tournaments on national lists of events that must be broadcast on ‘free to air’ television. As the governing body for world football, FIFA organises the World Cup finals every four years. Similarly, the European Championship finals are held by UEFA every leap year. Both organisations earn a significant portion of their revenue from the sale of the TV broadcasting rights of the relevant tournament. In its judgments, the Court considered certain issues arising from the EU’s ‘Television without Frontiers’ Directive as well as addressing key freedom to provide services and competition law issues.
Events of major importance for society
EU Directive 89/52 (OJ 1989 L 298) as amended by EU Directive 97/36 (OJ 1997 L 202) is commonly referred to as the ‘Television without Frontiers’ Directive. Article 3 (a) of this Directive allows EU Member States to designate events of major importance for society that must be shown on ‘free to air’ or terrestrial television. This provision also stipulates that a Member State must compile its list of such events in a clear and transparent manner before submitting same for approval to the European Commission.
The UK (in 1998) and Belgium (in 2003) notified their respective lists of events of major national importance to the Commission. The UK sought to ensure that both the World Cup and the European Championships are shown on ‘free to air’ TV whereas Belgium sought to the former is shown on terrestrial television. Indeed, the preamble to the ‘Television without Frontiers’ Directive specifically mentions both the World Cup and the European Championships as being events of major importance for society. The UK’s original application was delayed because, in 2005, the General Court overturned the Commission’s initial ‘green light’ due to a procedural defect.
Decisions of the European Commission
In two separate 2007 decisions, the Commission found that the UK and Belgian measures had each been taken in a clear and transparent manner. The Commission also held that the World Cup/European Championships met two criteria considered to be reliable indicators of the importance of events for society. First, the relevant tournament has a special general resonance to UK/Belgian society (not just to football fans). Secondly, the relevant event, considered as a whole not rather than as a series of individual matches, has traditionally been shown on terrestrial television and has attracted a large TV audience. Therefore, the Commission concluded that both the UK and the Belgian lists should be granted derogations from the fundamental EU law principle of the freedom to provide services on the basis of overriding public interest reasons, namely the protection of the right to information and ensuring wide public access to TV broadcasts of key sporting events. The Commission also found that both measures allow competition for the acquisition of the TV rights to these tournaments while not distorting competition in the downstream pay-TV or terrestrial television markets. On the basis of the above, the Commission approved both the UK and Belgian applications.
Grounds of appeal
Both FIFA and UEFA sought the annulment of the relevant Commission decisions on various grounds. Firstly, both governing bodies claimed that the Commission had incorrectly found that the procedure which led to the adoption of both measures was clear and transparent within the meaning of Article 3a of the ‘Television without Frontiers’ Directive. Secondly, they also argued that the Commission should not have supported the UK and Belgian findings that the relevant tournament in its entirety is an event of major importance. Thirdly, the applicants claimed that the Commission’s conclusions breached Treaty on the Functioning of the EU (“TFEU”) provisions regarding the freedom to provide services. Finally, FIFA and UEFA argued that the Commission’s findings infringed TFEU competition rules applicable to State measures.
Clear and transparent process
FIFA and UEFA both challenged the validity of how the UK and Belgian authorities compiled their respective lists of designated events. The General Court found that Article 3(a) gives Member States a margin of discretion in terms of the adoption of procedures for drawing up these lists while emphasising that the process must be clear and transparent as a whole. Therefore, the relevant procedure must be based on objective criteria set out in advance by the relevant national implementing measures. The Court found that an EU Member State should also indicate both the body responsible for compiling the list of ‘protected events’ and how interested parties may submit their comments. However, Article 3(a) does not oblige a Member State to take such submissions into account and/or to explain why it chose to ignore any recommendations of third parties. The Court held that both the UK and Belgium had followed these procedural rules and thus rejected FIFA/UEFA’s view that the process lacked clarity and/or was not transparent.
Unitary nature of the World Cup and European Championships
FIFA and UEFA argued that the totality of matches in the World Cup/European Championships was not an event of major importance for society. More particularly, they did not accept that certain matches not involving England, Scotland, Wales or Northern Ireland or Belgium have a special resonance for UK or Belgian societies, respectively. In addition, both governing bodies did not accept that all matches at both tournaments have traditionally been broadcast on ‘free to air’ television attracting large television audiences.
The General Court held that Member States have considerable discretion in deciding which events are of major importance for their public. The specific reference to the World Cup and European Championships in the ‘Television without Frontiers’ Directive means that a Member State is not obliged to give specific reasons for including matches from these tournaments in its list of ‘protected events’. However, the inclusion of the event as a whole must be examined.
The Court found that in both the World Cup and European Championships, the participation of a particular team in the knockout stages of the tournament may depend on the results of matches in which the relevant side is not playing. (These fixtures are sometimes referred to as ‘non-prime’ matches.) Moreover, such matches often decide the opposition a relevant national side will face in the last 16 or quarter finals. Accordingly, both tournaments may reasonably be regarded as a single event rather than a series of individual matches divided up into ‘prime’ and ‘non-prime’ fixtures. The Court specified that not all ‘non-prime’ matches need be of major importance for the tournament as a whole to be ‘protected’. Of course when the broadcast rights are being sold, the identities of the teams that will be participating in the relevant tournament are unlikely to be known. The General Court found that it is sufficient that some of these ‘non-prime’ matches are of sufficient interest in a particular Member State for the tournament as a whole to be designated as an event of major importance to society.
Freedom to provide services
FIFA and UEFA claimed that the UK/Belgian lists restricted the freedom to provide services since they limit the number of broadcasters interested in acquiring the rights to broadcast World Cup/European Championship matches in their respective countries. The Court noted that limits to that freedom may be justified by overriding reasons in the public interest such as the protection of the right to information or ensuring public access to major sporting events provided that the national measures taken to achieve these goals are proportionate. The applicants argued that since each match of a World Cup/European Championships is not an event of major importance for society, the national rules designating the entire event were disproportionate. The Court found that this challenge was based an incorrect assumption. It thus upheld the Commission’s view that the inclusion of all World Cup/European Championships matches on a list of events to be shown on ‘free to air’ television was proportionate.
Competition rules applicable to State measures
Both governing bodies criticised the lack of analysis of the restriction of competition caused by the UK’s decision that the World Cup and European Championships must be shown on ‘free to air’ television. Specifically, FIFA and UEFA claimed that the UK list facilitated BBC and ITV’s abuse of a dominant position. EU competition rules on State measures are contained in Article 106 of the TFEU (formerly Article 86 of the EC Treaty). This provision prohibits an EU Member State from putting undertakings, to which they grant special or exclusive rights, in a position which these undertakings could not themselves attain without infringing various TFEU rules including those prohibiting the abuse of a dominant position.
The Court, however, found that the UK legislation in question does not grant special or exclusive rights to relevant UK terrestrial broadcasters at the expense of pay-TV providers. The national measure merely prevents the broadcast of the World Cup/European Championships on an exclusive basis. Both terrestrial and non-terrestrial providers may seek to acquire the relevant TV rights on a non-exclusive basis. If the latter do not wish to broadcast either tournament on a non-exclusive basis, this does not mean that BBC and ITV have been granted special or exclusive rights. Rejecting the claims of FIFA and UEFA, the General Court found that the UK measure does not prevent pay-TV companies from competing for the right to broadcast the World Cup or European Championships.
Implications
From an Irish perspective, the General Court views provide useful guidance for the Minister for Communications, Energy and Natural Resources when he compiles the list of events of major importance for Irish society. (Interestingly, Minister Rabbitte chose to ignore the wishes of his predecessor when he decided, last May, not to add events such as the Heineken Cup to this State’s list of designated events.) The Court’s judgments represent good news for those in both the UK and Belgium who wish to follow the major international football tournaments on terrestrial television. These decisions are, however, bad news for FIFA and UEFA who wish to maximise revenue from their respective showpiece events by selling broadcast rights for certain matches to the highest bidder. The issue of whether the entirety of a World Cup or European Championship may be protected will ultimately be decided by the European Court of Justice as both FIFA and UEFA have appealed.
This article was originally published in the Aug./Sept. 2011 edition of the Law Society Gazette.
